<PAGE>
As filed with the Securities and Exchange Commission
on May 28, 1999
Registration No. 333-74295; 811-09253
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Pre-Effective Amendment No. ___ [_]
Post-Effective Amendment No. 1 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 2 [X]
_________________________
WELLS FARGO FUNDS TRUST
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
_________________________
Registrant's Telephone Number, including Area Code: (800) 643-9691
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With a copy to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster LLP
2000 Pennsylvania Ave., N.W.
Washington, D.C. 20006
It is proposed that this filing will become effective (check appropriate box):
[X] Immediately upon filing pursuant to Rule 485(b), or
[_] on _________ pursuant to Rule 485(b)
[_] 60 days after filing pursuant to Rule 485(a)(1), or
[_] on _________ pursuant to Rule 485(a)(1)
[_] 75 days after filing pursuant to Rule 485(a)(2), or
[_] on ___________pursuant to Rule 485(a)(2)
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
EXPLANATORY NOTE
----------------
This Post-Effective Amendment No. 1 to the Registration Statement of
Wells Fargo Funds Trust is being filed to register the definitive forms of
prospectuses and statements of additional information for the Trust, and to make
certain other non-material changes.
<PAGE>
WELLS FARGO FUNDS TRUST
-----------------------
Cross Reference Sheet
---------------------
Form N-1A Item Number
- ---------------------
Part A Prospectus Captions
- ------ -------------------
1 Front and Back Cover Pages
2 Objectives and Principal Strategies
Important Risks
3 Summary of Expenses
4 See Individual Fund Summaries
Objectives and Principal Strategies
Important Risk Factors
General Investment Risks
5 Not Applicable
6 Organization and Management of the Funds
7 Your Account
How to Buy Shares
Selling Shares
8 A Choice of Share Classes
Reduced Sales Charges
Exchanges
Distribution Plan
9 See Individual Fund Summaries
Part B Statement of Additional Information Captions
- ------ --------------------------------------------
10 Cover Page and Table of Contents
11 Historical Fund Information
12 Investment Restrictions
Additional Permitted Investment Policies
Risk Factors
13 Management
14 Capital Stock
15 Management
16 Portfolio Transactions
17 Capital Stock
18 Determination of Net Asset Value
Additional Purchase and Redemption Information
19 Federal Income Taxes
20 Management
21 Performance Calculations
22 Financial Information
Part C Other Information
- ------ -----------------
23-30 Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Document.
<PAGE>
Wells Fargo Funds Trust
PROSPECTUS
Asset Allocation Fund
Growth Fund
Income Equity Fund
Small Cap Fund
Income Fund
Intermediate Government Income Fund
Limited Term Government Income Fund
Tax-Free Income Fund
Money Market Fund
National Tax-Free Money Market Fund
Government Money Market Fund
Class A, Class B and Class C
Please read this prospectus and keep it for future reference. It is designed
to provide you with important information and to help you decide if a Fund's
goals match your own.
These securities have not been approved or disapproved by the Securities and
Exchange Commission ("SEC") nor has the SEC passed upon the accuracy or
adequacy of this Prospectus. Any representation to the contrary is a criminal
offense.
Fund shares are not deposits of Wells Fargo Bank, N.A. ("Wells Fargo Bank") or
any of its affiliates. Fund shares are not insured or guaranteed by the
federal deposit insurance corporation ("FDIC") or any other government agency.
An investment in a fund involves certain risks, including possible loss of
principal.
June 1, 1999
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
OVERVIEW
This section contains important summary information about the Funds.
Objectives and Principal Strategies................................. 3
Important Risks..................................................... 5
Summary of Expenses................................................. 7
THE FUNDS
This section contains important information about the individual
Funds.
Asset Allocation Fund............................................... 11
Growth Fund......................................................... 12
Income Equity Fund.................................................. 12
Small Cap Fund...................................................... 14
Income Fund......................................................... 15
Intermediate Government Income Fund................................. 16
Limited Term Government Income Fund................................. 17
Tax-Free Income Fund................................................ 18
Money Market Fund................................................... 19
National Tax-Free Money Market Fund................................. 20
Government Money Market Fund........................................ 21
General Investment Risks............................................ 21
Organization and Management of the Funds............................ 26
YOUR INVESTMENT
Turn to this section for information on your investments including
how to buy and sell Fund shares.
A Choice of Share Classes........................................... 28
Reduced Sales Charges............................................... 30
Exchanges........................................................... 33
Your Account........................................................ 35
How to Buy Shares................................................... 36
Selling Shares...................................................... 38
Additional Services and Other Information........................... 40
Table of Predecessors............................................... 42
GLOSSARY.............................................................. 43
</TABLE>
2
<PAGE>
WELLS FARGO FUNDS OVERVIEW
<TABLE>
<CAPTION>
Equity and
Allocation Funds Objective Principal Strategy
---------------- --------- ------------------
<C> <C> <S>
Asset Allocation Fund Seeks long-term total We allocate and reallocate
return, consistent assets among common stocks, U.S.
with reasonable risk. Treasury bonds and money market
instruments. We invest in asset
classes that we believe are
under-valued in order to achieve
better long-term, risk-adjusted
returns.
Growth Fund Seeks long-term We invest in equity securities
capital appreciation. of domestic and foreign
companies whose market
capitalization falls within the
range of the Russell 1000 Index,
which is considered a mid- to
large-capitalization index. We
buy stocks of companies that
have a strong earnings growth
trend and above-average
prospects for future growth, or
that we believe are undervalued.
Income Equity Fund Seeks long-term We invest in the common stocks
capital appreciation of large, high quality domestic
and above-average companies with above-average
dividend income. return potential and above-
average dividend income. We
consider "large" companies to be
those whose market
capitalization is greater than
the median of the companies in
the Russell 1000 Index, which is
considered a mid- to large-
capitalization index.
Small Cap Fund Seeks long-term We invest in equity securities
capital appreciation. of domestic and foreign
companies whose market
capitalization falls within the
range of the Russell 2000 Index,
which is considered a small
capitalization index. We buy
stocks that we believe have
above-average prospects for
capital growth, or that may be
involved in new or innovative
products, services and
processes.
</TABLE>
3
<PAGE>
WELLS FARGO FUNDS OVERVIEW
<TABLE>
<CAPTION>
Taxable Income Funds Objective Principal Strategy
-------------------- --------- ------------------
<C> <C> <S>
Income Fund Seeks current income We invest in corporate,
and total return. mortgage-backed, asset-backed,
and U.S. Government debt
securities primarily of
investment-grade quality or
better. We maintain the average
dollar-weighted maturity of the
portfolio between 3 and
15 years, and apply fundamental
economic, credit and market
analysis to increase portfolio
performance.
Intermediate Seeks current income, We invest in investment-grade,
Government Income consistent with intermediate-term (3-10 years)
Fund safety of principal. U.S. Government securities, and
also in certain debt securities
that are not U.S. Government
securities. We invest up to 50%
of our assets in mortgage-backed
securities, and up to 25% of our
assets in other asset-backed
securities.
Limited Term Seeks current income We invest in investment-grade,
Government Income and safety of short-term (1-5 years).
Fund capital.
<CAPTION>
Tax-Free Income Funds Objective Principal Strategy
--------------------- --------- ------------------
<C> <C> <S>
Tax-Free Income Fund Seeks current income We invest in investment-grade
exempt from federal municipal securities with
income taxes. average maturities of
10-20 years and with interest
that is exempt from federal
income taxes, though some of our
holdings may be subject to the
alternative minimum tax ("AMT").
<CAPTION>
Money Market Funds Objective Principal Strategy
------------------ --------- ------------------
<C> <C> <S>
Money Market Fund Seeks high current We invest in high-quality,
income, while short-term money market
preserving capital instruments.
and liquidity.
National Tax-Free Seeks high current We invest in high-quality,
Money Market Fund income exempt from short-term federally tax-exempt
federal income taxes, instruments, whose income may be
while preserving subject to the federal AMT. We
capital and may invest up to 35% of the
liquidity. Fund's assets in issuers in a
single state.
Government Money Seeks high current We invest in high-quality,
Market Fund income, while short-term U.S. Government
preserving capital obligations and in repurchase
and liquidity. agreements collateralized by
such obligations.
</TABLE>
4
<PAGE>
IMPORTANT RISKS
This section summarizes important risks that are common to all of the Funds
described in this Prospectus, and important risks that relate specifically to
particular Funds. Both are important to your investment choice. Additional
information about these and other risks is included in the individual Fund
Descriptions later in this Prospectus, under General Investment Risks
beginning on page , and in the Fund's statement of additional information.
An investment in a Fund is not a deposit of Wells Fargo Bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. Although the money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose money by
investing in these funds.
Common Risks for the Funds
Equity Securities. The equity and allocation funds invest in equity
securities, which are subject to equity market risk. This is the risk that
stock prices will fluctuate and can decline and reduce the value of a Fund's
portfolio. Certain types of stock and certain individual stocks selected for a
Fund's portfolio may underperform or decline in value more than the overall
market. As of the date of this Prospectus, the equity markets, as measured by
the S&P 500 Index and other commonly used indexes, are trading at or close to
record levels. There can be no guarantee that these levels will continue. The
Funds that invest in smaller companies, in foreign companies (including
investments made through American Depositary Receipts and similar
instruments), and in emerging markets are subject to additional risks,
including less liquidity and greater price volatility. A Fund's investments in
foreign companies and emerging markets are also subject to special risks
associated with international investing, including currency, political,
regulatory and diplomatic risks.
Debt Securities. The Asset Allocation Fund, the income funds and the money
market funds invest in debt securities, such as notes and bonds, which are
subject to credit risk and interest rate risk. Credit risk is the possibility
that an issuer of an instrument will be unable to make interest payments or
repay principal. Changes in the financial strength of an issuer or changes in
the credit rating of a security may affect its value. Interest rate risk is
the risk that interest rates may increase, which will reduce the resale value
of securities in a Fund's investments, including U.S. Government obligations.
Debt securities with longer maturities are generally more sensitive to
interest rate changes than those with shorter maturities. Changes in market
interest rates do not affect the rate payable on debt securities held in a
Fund, unless the securities have adjustable or variable rate features, which
can reduce interest rate risk. Changes in market interest rates may also
extend or shorten the duration of certain types of instruments, such as asset-
backed securities, and affect their value and the return on your investment.
The equity funds may invest some of their assets in debt securities.
5
<PAGE>
<TABLE>
<CAPTION>
Equity and Allocation Funds Specific Risks
--------------------------- --------------
These Funds are primarily subject to the equity securities risks described
in the Common Risks section above. The Asset Allocation Fund is also subject
to the debt securities risks described above.
<C> <S>
Asset Allocation Fund This Fund uses an investment model that seeks
undervalued asset classes. There is no guarantee
that the model will make accurate determinations
or that an asset class we believe is undervalued
will perform as expected.
Growth Fund The advisor selects growth stocks based on
prospects for future earnings, which may not
grow as expected. In addition, at times, the
overall market or the market for value stocks
may outperform growth stocks.
Income Equity Fund Stocks selected for their high dividend income
may be more sensitive to interest rate changes
than other stocks. This Fund is primarily
subject to the equity securities risks described
in the Common Risks section, above.
Small Cap Fund This Fund may invest in companies that pay low
or no dividends, have smaller market
capitalizations, have less market liquidity,
have no or relatively short operating histories,
or are newly public companies. Some of these
companies have aggressive capital structures,
including high debt levels, or are involved in
rapidly growing or changing industries and/or
new technologies. Because the Fund may invest in
such aggressive securities, share prices may
rise and fall more than the share prices of
other funds. In addition, our active trading
investment strategy may result in a higher-than-
average portfolio turnover ratio, increased
trading expenses, and higher short-term capital
gains. The advisor selects growth stocks based
on prospects for future earnings, which may not
grow as expected. In addition, at times, the
overall market or the market for value stocks
may outperform growth stocks.
<CAPTION>
Income Funds Specific Risks
------------ --------------
<C> <S>
Income Fund This Fund is primarily subject to the debt
securities risks described in the Common Risks
section above.
Intermediate Government The U.S. Government does not guarantee the
Income Fund market value or current yield of its
obligations. Not all U.S. Government obligations
are backed by the full faith and credit of the
U.S. Government. Mortgage-backed securities are
subject to prepayment risk and to extension
risk, either of which can reduce the rate of
return on the portfolio.
Limited Term Government The U.S. Government does not guarantee the
Income Fund market value or U.S. current yield of its
obligations. Not all U.S. Government obligations
are backed by the full faith and credit of the
U.S. Government. Mortgage-backed securities are
subject to prepayment risk and to extension
risk, either of which can reduce the rate of
return on the portfolio.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Income Funds Specific Risks
- ------------ --------------
<S> <C>
Tax-Free Income Fund Some of this Fund's investments are subject to federal
income and AMT taxes, so you may incur a tax liability on an
investment in this Fund. Municipal obligations backed by tax
revenues of the issuer's jurisdiction could be adversely
affected if the issuer cannot raise adequate revenues to
meet its obligations.
<CAPTION>
Money Market Funds Specific Risks
- ------------------ --------------
<S> <C>
Money Market Fund Although each of these Funds seeks to maintain a stable net
asset value of $1.00 per share, there is no assurance it
will be able to do so.
National Tax-Free
Money Market Fund
Government
Money Market Fund
</TABLE>
SUMMARY OF EXPENSES
Shareholder Fees
These tables are intended to help you understand the various costs and
expenses you will pay as a shareholder in a Fund.
<TABLE>
<CAPTION>
Equity and Money
Allocation Income Market All All
Funds Funds Funds Funds Funds
---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Class A Class A Class A Class B(3) Class C
Maximum sales charge (load)
imposed on purchases as a
percentage of offering price... 5.75% 4.50% None None None
Maximum deferred sales charge
(load) as a percentage of the
lower of the NAV at purchase or
the NAV at redemption.......... None None None 5.00% 1.00%
</TABLE>
7
<PAGE>
ANNUAL FUND OPERATING EXPENSES(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
Asset Allocation Fund Growth Fund Income Equity Fund Small Cap Fund
Equity and ----------------------- --------------- ----------------------- -----------------------
Allocation Funds Class A Class B Class C Class A Class B Class A Class B Class C Class A Class B Class C
- ---------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees......... .80 .80 .80 .75 .75 .75 .75 .75 .90 .90 .90
Distribution (12b-1)
Fees................... .00 .75 .75 .00 .75 .00 .75 .75 .00 .75 .75
Other Expenses(1)....... .41% .40 .54 .60 .51 .61 .51 .51 .76 .80 .68
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Annual Fund
Operating Expenses..... 1.21% 1.95 2.09 1.35 2.01 1.36 2.01 2.01 1.66 2.45 2.33
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
Fee Waivers(2).......... .22% .21% .35% .23 .14 .26 .16 .16 .37 .41 .29
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net Expenses............ .99% 1.74% 1.74% 1.12 1.87 1.10 1.85 1.85 1.29 2.04 2.04
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
- --------
(1) Other expenses are based on estimated amounts for the current fiscal year.
(2) Fee waivers are contractual and apply for one year from the closing date
of the reorganization for the Growth and Small Cap Funds, and for two
years from the closing date of the reorganization for the Asset Allocation
and Income Equity Funds. After this time, the advisor, with Board
approval, may reduce or eliminate the waivers.
<TABLE>
<CAPTION>
Limited Term
Intermediate Government Government
Income Fund Income Fund Income Fund Tax-Free Income Fund
--------------- ----------------------- --------------- -----------------------
Income Funds Class A Class B Class A Class B Class C Class A Class B Class A Class B Class C
- ------------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees......... .50 .50 .50 .50 .50 .50 .50 .40 .40 .40
Distribution (12b-1)
Fees................... .00 .75 .00 .75 .75 .00 .75 .00 .75 .75
Other Expenses(1)....... .59 .65 .53 .53 .56 .55 .51 .54 .55 .55
---- ---- ---- ---- ---- ---- ---- --- ---- ----
Total Annual Fund
Operating Expenses..... 1.09 1.90 1.03 1.78 1.81 1.05 1.76 .94 1.70 1.70
==== ==== ==== ==== ==== ==== ==== === ==== ====
Fee Waivers(2).......... .09 .15 .07 .07 .10 .09 .05 .14 .15 .15
---- ---- ---- ---- ---- ---- ---- --- ---- ----
Net Expenses............ 1.00 1.75 .96 1.71 1.71 .96 1.71 .80 1.55 1.55
==== ==== ==== ==== ==== ==== ==== === ==== ====
</TABLE>
- --------
(1) Other expenses are based on estimated amounts for the current fiscal year.
(2) Fee waivers are contractual and apply for one year from the closing date
of the reorganization. After this time, the advisor, with Board approval,
may reduce or eliminate the waivers.
<TABLE>
<CAPTION>
National Government
Tax-Free Money
Money Market Money Market Market
Fund Fund Fund
--------------- ------------ ----------
Money Market Funds Class A Class B Class A Class A
- ------------------ ------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees......... .40 .40 .25 .35
Distribution (12b-1)
Fees................... .00 .75 .00 .00
Other Expenses(1)....... .53 .53 .83 .54
--- ---- ---- ---
Total Annual Fund
Operating Expenses..... .93 1.68 1.08 .89
=== ==== ==== ===
Fee Waivers(2).......... .17 .17 .43 .14
--- ---- ---- --- --- --- --- --- --- --- ---
Net Expenses............ .76 1.51 .65 .75
=== ==== ==== === === === === === === === ===
</TABLE>
- --------
(1) Other expenses are based on estimated amounts for the current fiscal year.
(2) Fee waivers are contractual and apply for one year from the closing date
of the reorganization. After this time, the advisor, with Board approval,
may reduce or eliminate the waivers.
(3) If you exchange Class B shares of a Fund for Money Market Fund Class B
shares, and then redeem your Money Market Fund shares, you will be
assessed the CDSC applicable to the exchanged shares. Exchange privileges
are not available, and CDSCs do not apply, to Money Market Fund Class B
shareholders in certain accounts.
8
<PAGE>
Example of Expenses
These examples are intended to help you compare the cost of investing in a
Fund with the cost of investing in other mutual funds.
You would pay the following expenses on a $10,000 investment assuming a 5%
annual return and that you redeem your shares at the end of each period:
<TABLE>
<CAPTION>
Asset Allocation Fund Growth Fund Income Equity Fund Small Cap Fund
Equity and Allocation ----------------------- --------------- ----------------------- -----------------------
Funds Class A Class B Class C Class A Class B Class A Class B Class C Class A Class B Class C
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year.................. $670 $677 $277 $683 $690 $681 $688 $288 $ 699 $ 707 $307
3 Years................. $895 $871 $586 $957 $917 $931 $899 $599 $1,034 $1,024 $700
</TABLE>
<TABLE>
<CAPTION>
Intermediate Limited Term
Government Government Tax-Free
Income Fund Income Fund Income Fund Income Fund
--------------- ----------------------- --------------- -----------------------
Income Funds Class A Class B Class A Class B Class C Class A Class B Class A Class B Class C
- ------------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year.................. $547 $678 $544 $674 $274 $544 $674 $528 $658 $258
3 Years................. $772 $882 $756 $853 $560 $761 $849 $723 $821 $521
</TABLE>
<TABLE>
<CAPTION>
Money Market National Tax-Free Government Money
Fund Money Market Fund Market Fund
--------------- ----------------- ----------------
Money Market Funds Class A Class B Class A Class A
- ------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
1 Year....................... $ 78 $154 $ 72 $ 77
3 Years...................... $279 $519 $306 $270
</TABLE>
You would pay the following expenses on a $10,000 investment assuming a 5%
annual return and that you do NOT redeem your shares at the end of each period:
<TABLE>
<CAPTION>
Asset Allocation Fund Growth Fund Income Equity Fund Small Cap Fund
Equity and Allocation ----------------------- --------------- ----------------------- -----------------------
Funds Class A Class B Class C Class A Class B Class A Class B Class C Class A Class B Class C
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year.................. $670 $177 $177 $683 $190 $681 $188 $188 $ 699 $207 $207
3 Years................. $895 $571 $586 $957 $617 $931 $599 $599 $1,034 $724 $700
</TABLE>
<TABLE>
<CAPTION>
Intermediate Limited Term
Government Government Tax-Free
Income Fund Income Fund Income Fund Income Fund
--------------- ----------------------- --------------- -----------------------
Income Funds Class A Class B Class A Class B Class C Class A Class B Class A Class B Class C
- ------------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year.................. $574 $178 $544 $174 $174 $544 $174 $528 $158 $158
3 Years................. $772 $582 $756 $553 $560 $761 $549 $723 $521 $521
</TABLE>
<TABLE>
<CAPTION>
Money Market National Tax-Free Government Money
Fund Money Market Fund Market Fund
--------------- ----------------- ----------------
Money Market Funds Class A Class B Class A Class A
- ------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
1 Year....................... $ 78 $154 $ 72 $ 77
3 Years...................... $279 $519 $306 $270
</TABLE>
9
<PAGE>
The summary information on the previous pages is designed to provide you
with an overview of each Fund. The sections that follow provide more detailed
information about the investments and management of each Fund.
Important information you should look for:
Investment Objective and Investment Policies
What is the Fund trying to achieve? How do we intend to invest your money?
What makes a Fund different from the other Funds offered in this Prospectus?
Permitted Investments
A summary of the Fund's key permitted investments and practices.
Important Risk Factors
What are key risk factors for the Fund? They include the factors described
in "General Investment Risks" together with any special risk factors for each
Fund.
10
<PAGE>
ASSET ALLOCATION FUND
Investment Objective
The Asset Allocation Fund seeks long-term total return, consistent with
reasonable risk.
Investment Policies
We allocate and reallocate assets among common stocks, U.S. Treasury Bonds
and money market instruments. This strategy is based on the premise that asset
classes are at times undervalued or overvalued in comparison to one another
and that investing in undervalued asset classes offers better long-term, risk-
adjusted returns.
Permitted Investments
The asset classes we invest in are:
. Stock Investments--We invest in common stocks to replicate the S&P 500
Index. We do not individually select common stocks on the basis of
traditional investment analysis. Instead, we invest in each company
comprising the S&P 500 Index in proportion to its weighting in the
S&P 500 Index;
. Bond Investments--We invest in U.S. Treasury Bonds to replicate the
holdings of the Lehman Brothers 20+ Bond Index. Bonds in this Index have
remaining maturities of twenty years or more; and
. Money Market Investments--We invest this portion of the Fund in high-
quality money market instruments, including U.S. Government obligations,
obligations of foreign and domestic banks, short-term corporate debt
instruments and repurchase agreements.
In addition, under normal market conditions, we may invest:
. In call and put options on stock indexes, stock index futures, options on
stock index futures, and interest rate futures contracts as a substitute
for a comparable market position in stocks or bonds;
. In interest rate and index swaps; and
. Up to 25% of total assets in foreign obligations qualifying as money
market investments.
We manage the allocation of investments in the Fund's portfolio assuming a
"normal" allocation of 60% stocks and 40% bonds. This is not a "target"
allocation but rather is a design feature that is intended to set a level of
risk tolerance for the Fund.
We are not required to keep a minimum investment in any of the three asset
classes described above, nor are we prohibited from investing substantially
all of our assets in a single class. The allocation may shift at any time.
Important Risk Factors
Foreign obligations may entail additional risks, such as currency,
political, regulatory and diplomatic risks, which are described in more detail
in the General Investment Risks section below. The value of investments in
options on stock indexes and stock index futures is affected by price
movements for the stocks in a particular index, rather than price movements
for an individual security.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 21 and the specific risks listed here. They are all
important to your investment choice.
11
<PAGE>
GROWTH FUND
Investment Objective
The Growth Fund seeks long-term capital appreciation.
Investment Policies
We seek long-term capital appreciation by investing primarily in common
stocks and other equity securities and we look for companies that have a
strong earnings growth trend that we believe have above-average prospects for
future growth. We focus our investment strategy on larger capitalization
stocks.
Permitted Investments
Under normal market conditions, we invest:
. at least 65% of our total assets in equity securities, including common
and preferred stocks, and securities convertible into common stocks;
. the majority of our total assets in issues of companies with market
capitalization that falls within, but towards the higher end of, the
range of the Russell 1000 Index, an index comprised of the 1,000 largest
U.S. companies based on total market capitalization that is considered a
mid-capitalization index. (As of March 31, 1999, this range was from
$2.0 million to $452 billion. The range is expected to change
frequently.); and
. up to 25% of our total assets in foreign companies through American
Depositary Receipts and similar instruments.
Important Risk Factors
This Fund is primarily subject to the risks associated with equity
securities, including foreign equity and mid-capitalization equity securities,
described in the Common Risks section. The advisor selects growth stocks based
on prospects for future earnings, which may not grow as expected. In addition,
at times, the overall market or the market for value stocks may outperform
growth stocks.
You should consider the Common Risks on page 5, and the General Investment
Risks beginning on page 21. They are all important to your investment choice.
Portfolio Manager
. Kelli Hill
Principal--Core Equity Team Leader
Will manage the Growth Fund upon inception, and has been with Wells
Fargo/Wells Capital Management ("WCM") since 1987. Ms. Hill is the Core
Equity Team Leader, providing portfolio management and fundamental
security analysis for the team. She has over twelve years of equity
investment management experience.
INCOME EQUITY FUND
Investment Objective
The Income Equity Fund seeks long-term capital appreciation and above-
average dividend income.
Investment Policies
We invest primarily in the common stock of large, high-quality domestic
companies that have above-average return potential based on current market
valuations. We primarily emphasize investments in securities of companies with
above-average dividend income. We use various valuation measures when
selecting securities for the portfolio, including above-average dividend
12
<PAGE>
yields and below industry average price-to-earnings, price-to-book and price-
to-sales ratios. We consider large companies to be those whose market
capitalization is greater than the median of the Russell 1000 Index.
Permitted Investments
Under normal market conditions, we invest:
. at least 65% of our total assets in equity securities; and
. in issues of companies with market capitalization greater than the median
of the Russell 1000 Index (as of March 31, 1999, this median was
approximately $3.7 billion; the median is expected to change frequently).
We may invest in preferred stocks, convertible securities, and securities of
foreign companies. We will normally limit our investment in a single issuer to
10% or less of our total assets.
Important Risk Factors
Stocks selected for their high dividend yields may be more sensitive to
interest rate changes than other stocks. There can be no assurance that the
stocks that the advisor believes are undervalued will appreciate in value.
Stocks of foreign companies selected for the Fund may be more volatile and
less liquid than other securities.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 21 and the specific risks listed here. They are all
important to your investment choice.
Core/Gateway Arrangement
The Income Equity Fund is a "gateway" fund in a "core/gateway" arrangement.
In this arrangement, a "gateway" fund invests all of its assets in a "core"
portfolio that has a substantially identical investment objective and
substantially similar policies as the gateway fund. Gateway funds investing in
the same core portfolio can enhance their investment opportunities and reduce
their expense ratios through sharing the costs of managing a large pool of
assets. References to the investment activities of the Income Equity Fund also
refer to the core portfolio.
Portfolio Managers
. David L. Roberts, CFA
Will manage the Income Equity Fund upon inception. Mr. Roberts joins WCM
from Norwest Investment Management, Inc. ("NIM") where he had managed
portfolios for NIM or its affiliates since 1972. He has over twenty-six
years of investment management experience.
. Gary J. Dunn, CFA
Will co-manage the Income Equity Fund upon inception. Mr. Dunn joins WCM
from NIM, where he had managed portfolios for NIM or its affiliates since
1979. He has approximately twenty years of investment management
experience.
13
<PAGE>
SMALL CAP FUND
Investment Objective
The Small Cap Fund seeks long-term capital appreciation.
Investment Policies
We actively manage a diversified portfolio of common stocks issued by
companies whose market capitalization falls within the range of the Russell
2000 Index. As of March 31, 1999, the range was $3.8 million to $8.55 billion,
but it is expected to change frequently. We will sell the stock of any company
whose market capitalization exceeds the range of this index for sixty
consecutive days.
We invest in the common stocks of domestic and foreign companies we believe
have above-average prospects for capital growth, or that may be involved in
new or innovative products, services and processes.
Permitted Investments
Under normal market conditions, we invest:
. in an actively managed, broadly diversified portfolio of growth-oriented
common stocks;
. in at least 20 common stock issues spread across multiple industry groups
and sectors of the economy;
. up to 40% of our assets in initial public offerings or recent start-ups
and newer issues; and
. no more than 25% of our assets in foreign companies through American
Depositary Receipts or similar issues.
Important Risk Factors
This Fund is designed for investors willing to assume above-average risk. We
may invest in companies that:
. pay low or no dividends;
. have smaller market capitalization;
. have less market liquidity;
. have no or relatively short operating histories, or are new public
companies or are initial public offerings whose stocks are typically more
volatile than stocks of more seasoned companies;
. have aggressive capital structures including high debt levels; or
. are involved in rapidly growing or changing industries and/or new
technologies.
Because we may invest in such aggressive securities, share prices may rise
and fall more than the share prices of other funds. In addition, our active
trading investment strategy may result in a higher-than-average portfolio
turnover ratio, increased trading expenses, and higher short-term capital
gains. Stocks of foreign companies, whether purchased directly or through
American Depositary Receipts, may be more volatile and less liquid than other
comparable securities.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 21, and the specific risks listed here. They are all
important to your investment choice.
14
<PAGE>
Portfolio Managers
. Kenneth Lee
Will manage the Small Cap Fund, as lead manager, upon inception, and has
been with Wells Fargo/Wells Capital Management since 1993. Mr. Lee has
seven years of experience in the investment industry, and has managed
equity investment portfolios since 1995.
. Thomas Zeifang, CFA
Will co-manage the Small Cap Fund upon inception, and has been with Wells
Fargo/Wells Capital Management since 1995. Mr. Zeifang provided
fundamental security analysis for Fleet Investment Advisors for three
years prior to joining Wells Fargo. He has over five years of equity
investment management experience.
INCOME FUND
Investment Objective
The Income Fund seeks current income and total return.
Investment Policies
We invest in a diversified portfolio of debt and variable-rate debt
securities issued by domestic and foreign issuers. We invest in a broad
spectrum of U.S. issues, including U.S. Government obligations, mortgage- and
other asset-backed securities, and the debt securities of financial
institutions, corporations, and others. We target average portfolio duration
in a range based around the average portfolio duration of the mutual funds
included in the Lipper Corporate A-Rated Debt Average (which is currently
about 5-6 years, but is expected to change frequently). We attempt to enhance
the Fund's performance by adjusting the average duration within the range to
benefit from the effect of various economic factors, such as inflation, or
growth cycles.
Permitted Investments
Under normal market conditions, we invest:
. up to 70% of our total assets in corporate debt securities such as bonds,
debentures and notes, including debt securities that can be converted
into or exchanged for common stocks;
. at least 30% of our total assets in U.S. Government obligations;
. up to 50% of our total assets in mortgage-backed securities and up to 25%
of our assets in asset-backed securities; and
. at least 80% of our total assets in investment-grade debt securities. The
Fund may invest up to 20% of its total assets in below investment-grade
debt securities rated, at the time of purchase, in the fifth highest
long-term rating category assigned by an NRSRO or unrated and determined
by us to be of comparable quality.
We may also invest in zero coupon securities and enter into dollar roll
transactions. We invest primarily in securities with maturities (or average
life in the case of mortgage-backed and similar securities) ranging from
overnight to 40 years. It is anticipated that the Fund's portfolio will have
an average dollar-weighted maturity of between 3 and 15 years.
Important Risk Factors
Mortgage- and asset-backed securities may not be guaranteed by the U.S.
Treasury. Mortgage- and asset-backed securities are subject to prepayment
acceleration and extension risk,
15
<PAGE>
either of which can lower the rate of return on the portfolio. The Income Fund
may invest in lower rated securities, which tend to be more sensitive to
economic conditions and involve greater credit risk than higher rated
securities.
You should consider the Common Risks on page 5, and the General Investment
Risks beginning on page 21. They are all important to your investment choice.
Portfolio Manager
. Marjorie H. Grace, CFA
Will manage the Income Fund upon inception. Ms. Grace joins WCM from NIM,
where she was Director of Taxable Fixed-Income investments. She had
managed portfolios for NIM or its affiliates since 1992. She has over
eighteen years of investment management experience.
INTERMEDIATE GOVERNMENT INCOME FUND
Investment Objective
The Intermediate Government Income Fund seeks current income, consistent with
safety of principal.
Investment Policies
We invest primarily in fixed and variable rate U.S. Government obligations.
Under normal circumstances, we invest at least 65% of our total assets in U.S.
Government obligations and may invest up to 35% of our total assets in debt
securities that are not U.S. Government obligations. We target the average
portfolio duration in a range based on the average duration of 5-year U.S.
Treasury securities. As a result, the dollar-weighted average maturity of the
Fund, which was approximately 6.4 years as of May 1, 1999, generally ranges
from four to eight years. We emphasize the use of intermediate maturity
securities to manage interest rate risk and use mortgage-backed securities to
enhance yield.
Permitted Investments
Under normal market conditions, we invest:
. at least 65% of our total assets in U.S. Government obligations;
. up to 50% of our total assets in mortgage-backed securities, and up to
25% of our total assets in asset-backed securities; and
. up to 10% of our total assets in zero coupon securities.
As part of our mortgage-backed securities investments, we may enter into
dollar rolls. We may not invest more than 25% of our total assets in securities
issued or guaranteed by any single agency or instrumentality of the U.S.
Government, except the U.S. Treasury.
We will purchase only securities that are rated, at the time of purchase,
within the two highest rating categories assigned by an NRRO or, if unrated,
are determined by us to be of comparable quality.
Important Risk Factors
Mortgage- and asset-backed securities may not be guaranteed by the U.S.
Treasury. Mortgage- and asset-backed securities are subject to prepayment
acceleration and extension risk,
16
<PAGE>
either of which can reduce the rate of return on the portfolio. Asset-backed
securities are subject to risk of default on the underlying assets,
particularly during periods of economic downturn. Zero coupon securities are
sensitive to changes in interest rates, and tend to lose value in a rising
interest rate environment. Zero coupon securities also generate ordinary
income, which must be distributed to shareholders, even when they do not
generate funds to pay such distributions.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 21, and the specific risks listed here. They are all
important to your investment choice.
Portfolio Managers
. Marjorie H. Grace, CFA
Will manage the Intermediate Government Income Fund upon inception. Ms.
Grace joins WCM from NIM, where she was Director of Taxable Fixed-Income
investments. She had managed portfolios for NIM or its affiliates since
1992. She has over eighteen years of investment management experience.
LIMITED TERM GOVERNMENT INCOME FUND
Investment Objective
The Limited Term Government Income Fund seeks current income, while
preserving capital.
Investment Policies
We seek current income by actively managing a diversified portfolio
consisting primarily of short- to intermediate-term U.S. Government
obligations. We may invest in securities of any maturity. Under ordinary
circumstances, we expect to maintain a dollar-weighted average maturity of
between 2 and 5 years. We seek to preserve capital by shortening average
maturity when we expect interest rates to increase and to increase total
return by lengthening maturity when we expect interest rates to fall.
Permitted Investments
Under normal market conditions, we invest:
. at least 65% of our total assets in U.S. Government obligations or
repurchase agreements collateralized by U.S. Government obligations;
. in investment grade corporate debt securities including asset-backed
securities;
. no more than 5% of our total assets in securities downgraded below
investment-grade after we acquired them;
. up to 25% of assets in dollar-denominated debt of U.S. branches of
foreign banks or foreign branches of U.S. banks; and
. in stripped Treasury securities, adjustable-rate mortgage securities, and
adjustable portions of collateralized mortgage obligations ("CMOs").
Important Risk Factors
Mortgage- and asset-backed securities and CMOs may not be guaranteed by the
U.S. Treasury. Mortgage- and asset-backed securities and CMOs are subject to
prepayment acceleration and extension risk, either of which can reduce the
rate of return on the portfolio. Asset-backed securities are subject to risk
of default on the underlying assets, particularly during periods of
17
<PAGE>
economic downturn. Securities of U.S. branches of foreign banks and foreign
branches of U.S. banks are subject to additional risks, such as political
turmoil, the imposition of foreign withholding taxes, and the establishment of
exchange controls or the adoption of other foreign governmental restrictions
that may affect the payment of principal and or interest on these securities.
Stripped Treasury securities have greater interest rate risk than
traditional government securities with identical credit ratings and like
maturities.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 21, and the specific risks listed above. They are all
important to your investment choice.
Portfolio Managers
. Paul C. Single
Principal
Will manage the Limited Term Government Income Fund upon inception, and
has been with Wells Fargo/Wells Capital Management since 1989. Mr. Single
has over 16 years of investment management experience.
. Jacqueline A. Flippin
Principal
Will co-manage the Limited Term Government Income Fund upon inception, and
has been with Wells Fargo/Wells Capital Management since 1998. Before
joining the firm, Ms. Flippin was a short-term debt securities trader and
portfolio manager for McMorgan & Company, an investment advisor, since
1994. Ms. Flippin has over ten years of investment management experience.
TAX-FREE INCOME FUND
Investment Objective
The Tax-Free Income Fund seeks current income exempt from federal income
taxes.
Investment Policies
We invest primarily in a portfolio of investment grade municipal securities.
We invest at least 80% of our total assets in municipal securities paying
interest exempt from federal income taxes, including the federal AMT.
Permitted Investments
Under normal market conditions, we invest:
. at least 80% of our total assets in municipal obligations that pay
interest exempt from federal income tax;
. up to 20% of our total assets in securities whose income is subject to
the federal AMT; and
. in municipal obligations rated in the four highest credit categories by
nationally recognized rating organizations.
The average dollar-weighted maturity of the Fund's assets normally will be
between 10 and 20 years, but may vary depending on market conditions. In
general, the longer the maturity of a
18
<PAGE>
municipal security, the higher the rate of interest it pays. However, a longer
maturity security is generally subject to greater interest rate risk and price
volatility. We emphasize investments in municipal securities that produce
interest income rather than stability of the Fund's net asset value.
Important Risk Factors
Municipal obligations rely on the creditworthiness or revenue production of
their issuers. Municipal obligations may be difficult to obtain because of
limited supply, which may increase the cost of such securities and effectively
reduce the portfolio's yield. Typically, less information is available about a
municipal issuer than is available for other types of securities issuers.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 21, and the specific risks listed above. They are all
important to your investment choice.
Portfolio Manager
. William T. Jackson, CFA
Will manage the Tax-Free Income Fund upon inception. Mr. Jackson joins WCM
from NIM, where he was Managing Director of Tax-Exempt Fixed-Income
investing. He had managed portfolios for NIM or its affiliates since 1993.
He has over fourteen years of investment management experience.
MONEY MARKET FUND
Investment Objective
The Money Market Fund seeks high current income, while preserving capital
and liquidity.
Investment Policies
We actively manage a portfolio of U.S. dollar-denominated high-quality money
market instruments, including debt obligations with remaining maturities of
397 days or less. We maintain an overall dollar-weighted average maturity of
90 days or less. We may also make certain other investments including, for
example, repurchase agreements.
Permitted Investments
Under normal market conditions, we invest in:
. commercial paper rated at the date of purchase as "P-1" by Moody's or "A-
1+" or "A-1" by S&P;
. negotiable certificates of deposit and banker's acceptances;
. repurchase agreements;
. U.S. Government obligations;
. short-term, U.S. dollar-denominated debt obligations of U.S. branches of
foreign banks and foreign branches of U.S. banks;
. municipal obligations; and
. shares of other money market funds.
19
<PAGE>
Important Risk Factors
Although we seek to maintain a $1.00 per share net asset value, there is no
guarantee that we will be able to do so. Generally, short-term funds do not
earn as high a level of income as funds that invest in longer-term
instruments.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 21, and the specific risks listed above. They are all
important to your investment choice.
Typically, less information is available about a municipal issuer than is
available for other types of securities issuers. Investing in shares of other
money market funds will subject the Fund to the fees charged by the other
funds, which will reduce returns from these investments.
NATIONAL TAX-FREE MONEY MARKET FUND
Investment Objective
The National Tax-Free Money Market Fund seeks high current income exempt
from federal income taxes, while preserving capital and liquidity.
Investment Policies
We invest 100% of our assets in short-term municipal instruments, including
leases. These investments may have fixed, variable, or floating rates of
interest and may be zero coupon securities. We normally will invest at least
80% of our total assets in federally tax-exempt instruments, and up to 20% of
our total assets in securities that pay interest income subject to the federal
AMT.
Permitted Investments
Under normal market conditions, we invest:
. at least 80% of our assets in federally tax-exempt instruments;
. up to 20% of our assets in instruments whose income may be subject to the
federal AMT; and
. up to 35% of our assets in issuers located in a single state.
We may invest more than 25% of our total assets in industrial development
bonds and in participation interests in these securities.
Important Risk Factors
Although we seek to maintain a $1.00 per share net asset value, there is no
guarantee that we will be able to do so. Generally, short-term funds do not
earn as high a level of income as funds that invest in longer-term
instruments. Increased investment in the securities of issuers in a single
state increases the Fund's exposure to risks associated with economic
downturns or legislative or regulatory changes in the state.
Please remember that some securities in the portfolio may be subject to the
federal alternative minimum tax.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 21, and the specific risks listed above. They are all
important to your investment choice.
20
<PAGE>
GOVERNMENT MONEY MARKET FUND
Investment Objective
The Government Money Market Fund seeks high current income, while preserving
capital and liquidity.
Investment Policies
We actively manage a portfolio composed principally of U.S. Government
obligations, or repurchase agreements collateralized by such obligations. We
buy obligations with remaining maturities of 397 days or less.
Permitted Investments
Under normal market conditions, we invest substantially all of our assets:
. in U.S. Government obligations; and
. in repurchase agreements collateralized by U.S. Government obligations.
Important Risk Factors
Although we seek to maintain a $1.00 per share net asset value, there is no
guarantee that we will be able to do so. Generally, short-term funds do not
earn as high a level of income as funds that invest in longer-term
instruments.
You should consider the Common Risks on page 5, the General Investment Risks
beginning below, and the specific risks listed above. They are all important
to your investment choice.
GENERAL INVESTMENT RISKS
Understanding the risks involved in mutual fund investing will help you make
an informed decision that takes into account your risk tolerance and
preferences. You should carefully consider the risks common to investing in
all mutual funds, including the Wells Fargo Funds. Certain common risks are
identified in the Summary of Important Risks on page 5. Other risks of mutual
fund investing include the following:
. Unlike bank deposits such as CDs or savings accounts, mutual funds are
not insured by the FDIC.
. We cannot guarantee that we will meet our investment objectives.
. We do not guarantee the performance of a Fund, nor can we assure you that
the market value of your investment will not decline. We will not "make
good" any investment loss you may suffer, nor can anyone we contract with
to provide certain services, such as selling agents or investment
advisors, offer or promise to make good any such losses.
. Share prices--and therefore the value of your investment--will increase
and decrease with changes in the value of the underlying securities and
other investments.
. Investing in any mutual fund, including those deemed conservative,
involves risk, including the possible loss of any money you invest.
. An investment in a single Fund, by itself, does not constitute a complete
investment plan.
. The Funds may invest a portion of their assets in U.S. Government
obligations. It is important to recognize that the U.S. Government does
not guarantee the market value or
21
<PAGE>
current yield of those obligations. Not all U.S. Government obligations
are backed by the full faith and credit of the U.S. Treasury, and the U.S.
Government's guarantee does not extend to the Funds themselves.
. The Funds may use certain derivative instruments, such as options or
futures contracts. The term "derivatives" covers a wide number of
investments, but in general it refers to any financial instrument whose
value is derived, at least in part, from the price of another security or
a specified index, asset or rate. Some derivatives may be more sensitive
to interest rate changes or market moves, and some may be susceptible to
changes in yields or values due to their structure or contract terms.
. The Funds may temporarily hold assets in cash or in money market
instruments, including U.S. Government obligations, shares of other
mutual funds and repurchase agreements, or make other short-term
investments, either to maintain liquidity or for short-term defensive
purposes when we believe it is in the best interests of shareholders to
do so. Except with respect to the Money Market Funds, to the extent a
Fund's assets are so invested, they may cause a Fund not to achieve its
investment objective. This practice is expected to have limited, if any,
effect on the Fund's pursuit of their objectives over the long term.
. The Asset Allocation Fund and the taxable income funds invest a portion
of their assets in U.S. Government obligations, such as securities issued
or guaranteed by the Government National Mortgage Association ("GNMAs"),
the Federal National Mortgage Association ("FNMAs") and the Federal Home
Loan Mortgage Corporation ("FHLMCs"). Each are mortgage-backed securities
representing partial ownership of a pool of residential mortgage loans. A
"pool" or group of such mortgages is assembled and, after being approved
by the issuing or guaranteeing entity, is offered to investors through
securities dealers. Mortgage-backed securities are subject to prepayment
risk, which can alter the maturity of the securities and also reduce the
rate of return on the portfolio. Collateralized mortgage obligations
("CMOs") typically represent principal-only and interest-only portions of
such securities that are subject to increased interest-rate and credit
risk.
. The market value of lower-rated debt securities and unrated securities of
comparable quality that the Income Fund may invest in tends to reflect
individual developments affecting the issuer to a greater extent than the
market value of higher-rated securities, which react primarily to
fluctuations in the general level of interest rates. Lower-rated
securities also tend to be more sensitive to economic conditions than
higher-rated securities. These lower-rated debt securities are considered
by the rating agencies, on balance, to be predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal.
These securities generally involve more credit risk than securities in
higher-rating categories. Even securities rated "BBB" by S&P or by
Moody's ratings which are considered investment-grade, possess some
speculative characteristics.
Investment practices and risk levels are carefully monitored. Every attempt
is made to ensure that the risk exposure for each Fund remains within the
parameters of its objective.
What follows is a general list of the types of risks (some of which are
described above) that may apply to a given Fund and a table showing some of
the additional investment practices that each Fund may use and the risks
associated with them. Additional information about these practices is
available in the Statement of Additional Information.
Counter-Party Risk--The risk that the other party in a repurchase agreement
or other transaction will not fulfill its contract obligation.
Credit Risk--The risk that the issuer of a debt security will be unable to
make interest payments or repay principal on schedule. If an issuer does
default, the affected security could lose
22
<PAGE>
all of its value, or be renegotiated at a lower interest rate or principal
amount. Affected securities might also lose liquidity. Credit risk also
includes the risk that a party in a transaction may not be able to complete
the transaction as agreed.
Currency Risk--The risk that a change in the exchange rate between U.S.
dollars and a foreign currency may reduce the value of an investment made in a
security denominated in that foreign currency.
Diplomatic Risk--The risk that an adverse change in the diplomatic relations
between the United States and another country might reduce the value or
liquidity of investments in either country.
Experience Risk--The risk presented by a new or innovative security. The
risk is that insufficient experience exists to forecast how the security's
value might be affected by various economic conditions.
Information Risk--The risk that information about a security is either
unavailable, incomplete or is inaccurate.
Interest Rate Risk--The risk that changes in interest rates can reduce the
value of an existing security. Generally, when interest rates increase, the
value of a debt security decreases. The effect is usually more pronounced for
securities with longer maturities.
Leverage Risk--The risk that an investment practice, such as lending
portfolio securities or engaging in forward commitment or when-issued
securities transactions, may increase a Fund's exposure to market risk,
interest rate risk or other risks by, in effect, increasing assets available
for investment.
Liquidity Risk--The risk that a security cannot be sold, or cannot be sold
without adversely affecting the price.
Market Risk--The risk that the value of a stock, bond or other security will
be reduced by market activity. This is a basic risk associated with all
securities.
Political Risk--The risk that political actions, events or instability may
be unfavorable for investments made in a particular nation's or region's
industry, government or markets.
Prepayment Risk--The risk that consumers will accelerate or extend their
prepayment of mortgage loans or other receivables, which can shorten or
lengthen the maturity of a mortgage-backed or other asset-backed security, and
reduce a portfolio's return.
Regulatory Risk--The risk that changes in government regulations will
adversely affect the value of a security. Also the risk that an insufficiently
regulated market might permit inappropriate trading practices.
Year 2000 Risk--The Funds' principal service providers have advised the
Funds that they are working on the necessary changes to their computer systems
to avoid any system failure based on an inability to distinguish the year 2000
from the year 1900, and that they expect their systems to be adapted in time.
There can, of course, be no assurance of success. In addition, the companies
or entities in which the Funds invest also could be adversely impacted by the
Year 2000 issue, especially foreign entities, which may be less prepared for
Year 2000. The extent of such impact cannot be predicted.
23
<PAGE>
Investment Practice/Risk
The following tables list some of the additional investment practices of the
Funds, including some not disclosed in the Investment Objective and Investment
Policies sections of the Prospectus. The risks indicated after the description
of the practice are NOT the only potential risks associated with that
practice, but are among the more prominent. Market risk is assumed for each.
See the Investment Objective and Investment Policies for each Fund or the
Statement of Additional Information for more information on these practices.
These Investment Practices and Risks are Common to all the Funds:
<TABLE>
<CAPTION>
Investment Practice Risk ALL FUNDS
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Floating and Variable Rate Debt
Instruments with interest rates that are adjusted Interest Rate and .
either on a schedule or when an index or benchmark Credit Risk
changes.
- --------------------------------------------------------------------------------------------
Repurchase Agreements
A transaction in which the seller of a security agrees Credit and .
to buy back a security at an agreed upon time and Counter-Party Risk
price, usually with interest.
- --------------------------------------------------------------------------------------------
Other Mutual Funds
The temporary investment in shares of another mutual Market Risk .
fund. A pro rata portion of the other fund's expenses,
in addition to the expenses paid by the Funds, will be
borne by Fund shareholders.
- --------------------------------------------------------------------------------------------
Foreign Obligations
Dollar-denominated debt obligations of foreign Information, Political, .
branches of U.S. banks or U.S. branches of foreign Regulatory, Diplomatic,
banks and Liquidity Risk
- --------------------------------------------------------------------------------------------
Privately Issued Securities
Securities that are not publicly traded but which may Liquidity Risk .
or may not be resold in accordance with Rule 144A of
the Securities Act of 1933.
- --------------------------------------------------------------------------------------------
Loans of Portfolio Securities
The practice of loaning securities to brokers, dealers Credit, Counter-Party .
and financial institutions to increase return on those and Leverage Risk
securities. Loans may be made up to 1940 Act limits
(currently 33 1/3% of total assets).
- --------------------------------------------------------------------------------------------
Borrowing Policies
The ability to borrow from banks for temporary Leverage Risk .
purposes to meet shareholder redemptions.
- --------------------------------------------------------------------------------------------
Illiquid Securities
A security that cannot be readily sold, or cannot be Liquidity Risk .
readily sold without negatively affecting its fair
price. Limited to 15% of total assets (10% for money
market funds).
</TABLE>
24
<PAGE>
These Investment Practices and Risks are Common to the Equity and Allocation
Funds:
<TABLE>
<CAPTION>
Asset Income Small
Allocation Growth Equity Cap
Investment Practice Risk Fund Fund Fund Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Foreign Securities
Securities issued by a Information, . . . .
non-U.S. company or debt Political,
of a foreign government Regulatory,
in the form of an Diplomatic,
American Depositary Liquidity and
Receipt or similar Currency Risk
instrument.
- --------------------------------------------------------------------------------
Options
The right or obligation Credit, Information . . . .
to receive or deliver a and Liquidity Risk
security or cash payment
depending on the
security's price or the
performance of an index
or benchmark. Types of
options used may
include: options on
securities, options on a
stock index, stock index
futures and options on
stock index futures to
protect liquidity and
portfolio value.
These Investment Practices and Risks are Common to the Income Funds:
<CAPTION>
Ltd.
Int. Term Tax-
Gov't Gov't Free
Income Income Income Income
Investment Practice Risk Fund Fund Fund Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Foreign Securities
Securities issued by a Information, . . . .
non-U.S. company or debt Political,
of a foreign government Regulatory,
in the form of an Diplomatic,
American Depositary Liquidity and
Receipt or similar Currency Risk
instrument.
- --------------------------------------------------------------------------------
Forward Commitments,
When-Issued Securities
Delayed Delivery
Transactions
Securities bought or Interest Rate, . . . .
sold for delivery at a Leverage, Credit and
later date or bought or Experience Risk
sold for a fixed price
at a fixed date.
- --------------------------------------------------------------------------------
Mortgage- and Asset-
Backed Securities
Securities consisting of Interest Rate, . . . .
an undivided fractional Credit, Prepayment
interests in pools of and Experience Risk
consumer loans, such as
mortgage loans, car
loans, credit card debt,
or receivables held in
trust.
- --------------------------------------------------------------------------------
High Yield Securities
Debt securities of lower Interest Rate and .
quality that produce Credit Risk
generally higher rates
of return. These
securities, also known
as "junk bonds," tend to
be more sensitive to
economic conditions and
during sustained periods
of rising interest
rates, may experience
interest and/or
principal defaults.
- --------------------------------------------------------------------------------
Stripped Obligations
Securities that give Interest Rate Risk .
ownership to either
future payments of
interest or a future
payment of principal,
but not both. These
securities tend to have
greater interest rate
sensitivity than
conventional debt
obligations.
- --------------------------------------------------------------------------------
Loan Participations
Debt obligations that Credit Risk . . . .
represent a portion of a
larger loan made by a
bank. Generally sold
without guarantee or
recourse, some
participations sell at a
discount because of the
borrower's credit
problems.
</TABLE>
25
<PAGE>
ORGANIZATION AND MANAGEMENT OF THE FUNDS
A number of different entities provide services to the Funds. This section
shows how the Funds are organized, lists the entities that perform different
services, and explains how these service providers are compensated. Further
information is available in the Statement of Additional Information for the
Funds.
About Wells Fargo Funds Trust
Wells Fargo Funds Trust (the "Trust") was organized as a Delaware business
trust on March 10, 1999. The Board of Trustees of the Trust supervises each
Fund's activities, monitors its contractual arrangements with various service
providers and decides upon matters of general policy.
The Trust was created to succeed to the assets and operations of the various
mutual funds in the Stagecoach Family of Funds and the Norwest Advantage
Family of Funds. The holding company of Wells Fargo Bank, the investment
advisor to the Stagecoach Family of Funds, and the holding company of Norwest
Investment Management, Inc., the investment advisor to the Norwest Advantage
Family of Funds, merged in November 1998. Each of the Funds described in this
prospectus is intended to succeed to the assets and operations of one or more
Stagecoach and/or Norwest Advantage Funds. One of these predecessor funds is
expected to be the "accounting survivor," which means that its performance and
financial statement history will be assumed by the Wells Fargo Funds Trust
Fund. The succession transactions are conditioned on shareholder approval by
the shareholders of the various Stagecoach and Norwest Advantage Funds. The
Table on page 42 identifies the expected accounting survivors.
In the following sections, the percentages shown are the percentages of the
average daily net assets of each Fund class paid on an annual basis for the
services described.
BOARD OF TRUSTEES
Supervises the Funds' activities
<TABLE>
<CAPTION>
INVESTMENT ADVISOR CUSTODIANS
------------------ ----------
<C> <S>
Wells Fargo Bank, N.A. Norwest Bank Minnesota, N.A.
525 Market St., San Francisco, CA 6th St. & Marquette, Minneapolis, MN
(All Funds except Asset Allocation Fund)
Barclays Global Investors, N.A.
45 Fremont St., San Francisco, CA
(Asset Allocation Fund only)
Manages the Funds' investment
activities Provide safekeeping for the Funds' assets
INVESTMENT SUB-ADVISORS
Wells Capital Management, Inc. Barclays Global Fund Advisors
525 Market Street 45 Fremont Street
San Francisco, CA San Francisco, CA
(All Funds except Asset Allocation
Fund) (Asset Allocation Fund only)
Manages the Funds' investment
activities Manages the Funds' investment activities
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDER
DISTRIBUTOR ADMINISTRATOR FOR TRANSFER AGENT SERVICING AGENTS
- ----------- ----------------- -------------- ----------------
<S> <C> <C> <C>
Stephens Inc. Wells Fargo Bank, N.A. BFDS Various Agents
111 Center St. 525 Market St. Two Heritage Drive
Little Rock, AR San Francisco, CA Quincy, MA
Markets the Funds and Manages the Funds' Maintains records of Provide services to
distributes shares business activities shares and supervises customers
the paying of
dividends
</TABLE>
FINANCIAL SERVICES FIRMS AND SELLING AGENTS
-------------------------------------------
Advise current and prospective shareholders on their Fund investments
SHAREHOLDERS
26
<PAGE>
The Investment Advisor
Wells Fargo Bank provides portfolio management and fundamental security
analysis services as the advisor for each of the Funds. Wells Fargo Bank,
founded in 1852, is the oldest bank in the western United States and is one of
the largest banks in the United States. Wells Fargo Bank is a wholly owned
subsidiary of Wells Fargo & Company, a national bank holding company. As of
December 31, 1998, Wells Fargo Bank and its affiliates provided advisory
services for over $202 billion in assets.
For providing these services, Wells Fargo Bank is entitled to receive the
following fees:
<TABLE>
<CAPTION>
Equity and Allocation Funds
---------------------------
<S> <C>
Asset Allocation Fund.................................................... .80
Growth Fund.............................................................. .75
Income Equity Fund....................................................... .75
Small Cap Fund........................................................... .90
Income Funds
------------
Income Fund.............................................................. .50
Intermediate Government Income Fund...................................... .50
Limited Term Government Income Fund...................................... .50
Tax-Free Income Fund..................................................... .40
Money Market Funds
------------------
Money Market Fund........................................................ .40
National Tax-Free Money Market Fund...................................... .25
Government Money Market Fund............................................. .35
</TABLE>
The Sub-Advisors
Wells Capital Management ("WCM"), a wholly owned subsidiary of Wells Fargo
Bank N.A., is the sub-advisor for the Growth, Small Cap, Limited Term
Government Income and Money Market Funds. In this capacity, it is responsible
for the day-to-day investment management activities of the Funds. As of
December 31, 1998, WCM provided advisory services for over $39 billion in
assets.
Barclays Global Fund Advisors ("BGFA"), a wholly owned subsidiary of
Barclays Global Investors, N.A. and an indirect subsidiary of Barclays Bank
PLC, is the sub-advisor for the Asset Allocation Fund. In this capacity, it is
responsible for the model that is used to manage the investment portfolio and
the selection of securities for the portfolio. BGFA was created from the
reorganization of Wells Fargo Nikko Investment Advisors, a former affiliate of
Wells Fargo Bank, and is one of the largest providers of index portfolio
management services. As of December 31, 1998, BGFA provided investment
advisory services for $619 billion in assets.
The Administrator
Wells Fargo Bank provides the Funds with administrative services, including
general supervision of each Fund's operation, coordination of the other
services provided to each Fund, compilation of information for reports to the
SEC and state securities commissions, preparation of proxy statements and
shareholder reports, and general supervision of data compilation in connection
with preparing periodic reports to the Trust's Trustees and officers. Wells
Fargo Bank also furnishes office space and certain facilities to conduct each
Fund's business. For providing these services, Wells Fargo Bank is entitled to
receive a fee of .15% of the average annual net assets of each Fund.
27
<PAGE>
Shareholder Servicing Plan
We have a shareholder servicing plan for each Fund. Under this plan, we have
engaged various shareholder servicing agents to process purchase and
redemption requests, to service shareholder accounts, and to provide other
related services. For these services, each Fund pays shareholder servicing
agents up to 0.25% of its average annual net assets.
A Choice of Share Classes
After choosing a Fund, your next most important choice is which share class
to buy. The following classes of shares are available through this Prospectus:
. Class A Shares--with a front-end sales charge, volume reductions and
lower on-going expenses than Class B and Class C shares.
. Class B Shares--with a contingent deferred sales charge ("CDSC") payable
upon redemption that diminishes over time, and higher on-going expenses
than Class A shares.
. Class C Shares--with a 1.00% CDSC on redemptions made within one year of
purchase, and higher on-going expenses than Class A shares.
The choice between share classes is largely a matter of preference. You
should consider, among other things, the different fees and sales loads
assessed on each share class and the length of time you anticipate holding
your investment. If you prefer to pay sales charges up front, wish to avoid
higher on-going expenses, or, more importantly, you think you may qualify for
volume discounts based on the amount of your investment, then Class A shares
may be the choice for you.
You may prefer instead to see "every dollar working" from the moment you
invest. If so, then consider Class B or Class C shares. Please note that Class
B shares convert to Class A shares after seven years to avoid the higher on-
going expenses assessed against Class B shares.
Class C shares are available for the Asset Allocation, Income Equity, Small
Cap, Intermediate Government Income and Tax-Free Income Funds only. They are
similar to Class B shares, with some important differences. Unlike Class B
shares, Class C shares do not convert to Class A shares. The higher on-going
expenses will be assessed as long as you hold the shares. The choice between
Class B and Class C shares may depend on how long you intend to hold Fund
shares before redeeming them.
Please see the expenses listed for each Fund and the following sales charge
schedules before making your decision. You should also review the "Reduced
Sales Charges" section of the Prospectus. You may wish to discuss this choice
with your financial consultant.
Class A Share Sales Charge Schedule
If you choose to buy Class A shares, you will pay the Public Offering Price
(POP) which is the Net Asset Value (NAV) plus the applicable sales charge. The
money market funds listed in this prospectus do not impose sales charges on
the purchase of Class A shares. Since sales charges are reduced for Class A
share purchases above certain dollar amounts, known as "breakpoint levels",
the POP is lower for these purchases.
28
<PAGE>
Class A Shares of the Equity and Allocation Funds Listed in this Prospectus
have the Following Sales Charge Schedule:
<TABLE>
<CAPTION>
Front-End
Sales Dealer
Front-End Sales Charge as Allowance as
Charge as % of % of % of
Public Offering Net Amount Public Offering
Amount of Purchase Price Invest Price
------------------ --------------- ---------- ---------------
<S> <C> <C> <C>
Less than $50,000................. 5.75% 6.10% 5.00%
$50,000 to $99,999................ 4.75% 4.99% 4.00%
$100,000 to $249,999.............. 3.75% 3.90% 3.00%
$250,000 to $499,999.............. 2.75% 2.83% 2.25%
$500,000 to $999,999.............. 2.00% 2.04% 1.75%
$1,000,000 and over(1)............ 0.00% 0.00% 1.00%
</TABLE>
- --------
(1) We will assess Class A shares purchases of $1,000,000 or more a 1.00% CDSC
if they are redeemed within one year from the date of purchase. Charges
are based on the lower of the NAV on the date of purchase or the date of
redemption.
Class A Shares of the Equity and Allocation Funds Listed in this Prospectus
have the Following Sales Charge Schedule:
<TABLE>
<CAPTION>
Front-End
Sales Dealer
Front-End Sales Charge as Allowance as
Charge as % of % of % of
Public Offering Net Amount Public Offering
Amount of Purchase Price Invest Price
------------------ --------------- ---------- ---------------
<S> <C> <C> <C>
Less than $50,000................. 4.50% 4.71% 4.00%
$50,000 to $99,999................ 4.00% 4.17% 3.50%
$100,000 to $249,999.............. 3.50% 3.63% 3.00%
$250,000 to $499,999.............. 2.50% 2.56% 2.25%
$500,000 to $999,999.............. 2.00% 2.04% 1.75%
$1,000,000 and over(1)............ 0.00% 0.00% 1.00%
</TABLE>
- --------
(1) We will assess Class A shares purchases of $1,000,000 or more a 1.00% CDSC
if they are redeemed within one year from the date of purchase. Charges
are based on the lower of the NAV on the date of purchase or the date of
redemption.
Class B Share CDSC Schedule
If you choose Class B shares, you buy them at NAV and agree that if you
redeem your shares within six years of the purchase date, you will pay a CDSC
based on how long you have held your shares. Certain exceptions apply (see
"Class B and Class C Share CDSC Reductions" and "Waivers for Certain
Parties"). The CDSC schedule is as follows:
Class B Shares Listed in this Prospectus have the Following Sales Charge
Schedule:
<TABLE>
<CAPTION>
Redemption 1
within Year 2 Years 3 Years 4 Years 5 Years 6 Years 7 Years
- ---------- ----- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
5.00% 4.00% 3.00% 3.00% 2.00% 1.00% 0.00%
</TABLE>
The CDSC percentage you pay is based on the lower of the NAV of the shares
on the date of the original purchase, or the NAV of the shares on the date of
redemption.
29
<PAGE>
We always process partial redemptions so that the least expensive shares are
redeemed first in order to reduce your sales charges. After shares are held
for six years, the CDSC expires. After shares are held for seven years, the
Class B shares are converted to Class A shares to reduce your future on-going
expenses.
Class B shares received in the reorganization of the Stagecoach Funds are
subject to the above CDSC schedule based on the purchase date(s) of the
Stagecoach shares, and such shares convert to Class A shares automatically
after six years.
Class B shares exchanged by shareholders of former Stagecoach Fund shares
that were purchased prior to March 3, 1997 are subject to a CDSC if they are
redeemed within four years of the original purchase. The CDSC Schedule for
these shares is below:
<TABLE>
<CAPTION>
Redemption within 1 Year 2 Years 3 Years 4 Years 5 Years 6 Years
- ----------------- ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CDSC............................. 3.00% 2.00% 1.00% 1.00% 0.00% 0.00%
</TABLE>
Class B shares received in the reorganization of the Norwest Advantage Funds
are subject to the following sales charge schedules on the exchanged shares:
Norwest Advantage Equity Funds
<TABLE>
<CAPTION>
Redemption
within Year 2 Years 3 Years 4 Years 5 Years 6 Years 7 Years 8 Years
- ---------- ---- ------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4.0% 3.0% 3.0% 2.0% 2.0% 1.0% 0.0% A Shares
</TABLE>
Norwest Advantage Income Funds
<TABLE>
<CAPTION>
Redemption
within Year 2 Years 3 Years 4 Years 5 Years 6 Years 7 Years
- ---------- ---- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
3.0% 2.0% 2.0% 1.0% 0.0% 0.0% A Shares
</TABLE>
The above-described schedules for shares of the former Stagecoach Funds and
Norwest Advantage Funds do not apply for any new shares purchased. If you
exchange the Class B shares received in the reorganization for Class B shares
of another Fund, you will retain these CDSC schedules on your exchanged
shares. Additional shares purchased will age at the higher CDSC schedule.
Class C Share CDSC Schedule
If you choose Class C shares, you buy them at NAV and agree that if you
redeem your shares within one year of the purchase date, you will pay a CDSC
of 1.00%.
The CDSC percentage you pay is based on the lower of the NAV on the date of
the original purchase, or the NAV on the date of redemption. The distributor
pays sales commissions of up to 1.00% of the purchase price of Class C shares
to selling agents at the time of the sale, and up to 1.00% annually
thereafter.
We always process partial redemptions so that the least expensive shares are
redeemed first in order to reduce your sales charges. Class C shares do not
convert to Class A shares, and therefore continue to pay the higher on-going
expenses.
Reduced Sales Charges
Generally, we offer more sales charge reductions for Class A shares than for
Class B and Class C shares, particularly if you intend to invest greater
amounts. You should consider whether you are eligible for any of the potential
reductions when you are deciding which share class to buy.
30
<PAGE>
Class A Share Reductions:
. You pay no sales charges on Fund shares you buy with reinvested
distributions.
. You pay a lower sales charge if you are investing an amount over a
breakpoint level. See the "Class A Share Sales Charge Schedule" above.
. By signing a Letter of Intent (LOI), you pay a lower sales charge now in
exchange for promising to invest an amount over a specified breakpoint
within the next 13 months. We will hold in escrow shares equal to
approximately 5% of the amount you intend to buy. If you do not invest
the amount specified in the LOI before the expiration date, we will
redeem enough escrowed shares to pay the difference between the reduced
sales load you paid and the sales load you should have paid. Otherwise,
we will release the escrowed shares when you have invested the agreed
amount.
. Rights of Accumulation (ROA) allow you to combine the amount you invest
with the total NAV of shares you own in other Wells Fargo front-end load
Funds in order to reach breakpoint levels for a reduced load. We give you
a discount on the entire amount of the investment that puts you over the
breakpoint level.
. If you are reinvesting the proceeds of a Wells Fargo Fund redemption for
shares on which you have already paid a front-end sales charge, you have
120 days to reinvest the proceeds of that redemption with no sales charge
into a Fund that charges the same or a lower front-end sales charge. If
you use such a redemption to purchase shares of a Fund with a higher
front-end sales charge, you will have to pay the difference between the
lower and higher charge.
. You may reinvest into a Wells Fargo Fund with no sales charge a required
distribution from a pension, retirement, benefits, or similar plan for
which Wells Fargo Bank acts as trustee provided the distribution occurred
within the 30 days prior to your reinvestment.
If you believe you are eligible for any of these reductions, it is up to you
to ask the selling agent or the shareholder servicing agent for the reduction
and to provide appropriate proof of eligibility.
You, or your fiduciary or trustee, may also tell us to extend volume
discounts, including the reductions offered for rights of accumulation and
letters of intent, to include purchases made by:
. a family unit, consisting of a husband and wife and children under the
age of twenty-one or single trust estate;
. a trustee or fiduciary purchasing for a single fiduciary relationship; or
. the members of a "qualified group" which consists of a "company" (as
defined in the Investment Company Act of 1940 ("1940 Act")), and related
parties of such a "Company," which has been in existence for at least six
months and which has a primary purpose other than acquiring Fund shares
at a discount.
How a Letter of Intent Can Save You Money!
If you plan to invest, for example, $100,000 in a Wells Fargo Fund in
installments over the next year, by signing a letter of intent you would pay
only a 3.75% sales load on the entire purchase. Otherwise, you might pay 5.75%
on the first $50,000, then 4.75% on the next $49,999!
31
<PAGE>
Class B and Class C Share CDSC Reductions:
. You pay no CDSC on Funds shares you purchase with reinvested
distributions.
. We waive the CDSC for all redemptions made because of scheduled or
mandatory distributions for certain retirement plans. (See your
retirement plan disclosure for details.)
. We waive the CDSC for redemptions made in the event of the shareholder's
death or for a disability suffered after purchasing shares. ("Disability"
is defined by the Internal Revenue Code of 1986.)
. We waive the CDSC for redemptions made at the direction of Wells Fargo in
order to, for example, complete a merger or close an account whose value
has fallen below the minimum balance.
. We waive Class C share CDSC for certain types of accounts.
For Class B shares purchased outside of an IRA or other qualified plan after
May 18, 1999 for former Norwest Advantage Fund shareholders, after July 17,
1999 for former Stagecoach Funds shareholders, and after September 17, 1999
for all other shareholders, no CDSC is imposed on withdrawals that occur under
the following circumstances:
. Withdrawals are made by participating in the Systematic Withdrawal Plan;
. Withdrawals may not exceed 10% of your fund assets annually based on your
anniversary date in the Systematic Withdrawal Plan; and
. You must participate in the dividend and capital gain reinvestment
program.
Waiver for Certain Parties
If you are eligible for certain waivers, we will sell you Class A shares so
you can avoid higher on-going expenses. The following people can buy Class A
shares at NAV:
. Current and retired employees, directors and officers of:
. Wells Fargo Funds and its affiliates;
. Wells Fargo Bank, Norwest Bank and their affiliates;
. Stephens and its affiliates; and
. Broker-Dealers who act as selling agents.
. The spouses of any of the above, as well as the grandparents, parents,
siblings, children, grandchildren, aunts, uncles, nieces, nephews,
fathers-in-law, mothers-in-law, brothers-in-law and sisters-in-law of
either the spouse or the current or retired employee, director or
officer.
You may also buy Class A Fund shares at NAV if they are to be included in
certain retirement, benefits, pension or investment "wrap accounts" with whom
Wells Fargo Funds has reached an agreement, or through an omnibus account
maintained with a Fund by a broker/dealer.
We reserve the right to enter into agreements that reduce or eliminate sales
charges for groups or classes of shareholders, or for Fund shares included in
other investment plans such as "wrap accounts." If you own Fund shares as part
of another account or package such as an IRA or a sweep account, you must read
the directions for that account. These directions may supersede the terms and
conditions discussed here.
32
<PAGE>
Distribution Plan
We have adopted a Distribution Plan pursuant to Rule 12b-1 for the Class B
and Class C shares each class of the Funds. The plan authorizes the payment of
all or part of the cost of preparing and distributing prospectuses and
distribution-related services including ongoing compensation to selling
agents. The plan also provides that, if and to the extent any shareholder
servicing payments are recharacterized as payments for distribution-related
services, they are approved and payable under the distribution plan.
The fees paid under these plans are as follows:
<TABLE>
<CAPTION>
Fund Class B Class C
---- ------- -------
<S> <C> <C>
Asset Allocation Fund........................................ .75% .75%
Growth Fund.................................................. .75% N/A
Income Equity Fund........................................... .75% .75%
Small Cap Fund............................................... .75% .75%
Income Fund.................................................. .75% N/A
Intermediate Government Income Fund.......................... .75% .75%
Limited Term Government Income Fund.......................... .75% N/A
Tax-Free Income Fund......................................... .75% .75%
Money Market Fund............................................ .75% N/A
National Tax-Free Money Market Fund.......................... N/A N/A
Government Money Market Fund................................. N/A N/A
</TABLE>
These fees are paid out of the Funds' assets on an on-going basis. Over
time, these fees will increase the cost of your investment and may cost you
more than paying other types of sales charges.
Exchanges
Exchanges between Wells Fargo Funds are two transactions: a sale of shares
of one Fund and the purchase of shares of another. In general, the same rules
and procedures that apply to sales and purchases apply to exchanges. There
are, however, additional factors you should keep in mind while making or
considering an exchange:
. You should carefully read the Prospectus for the Fund into which you wish
to exchange.
. Every exchange involves selling Fund shares and that sale may produce a
capital gain or loss for federal income tax purposes.
. If you are making an initial investment into a new Fund through an
exchange, you must exchange at least the minimum first purchase amount of
the Fund you are redeeming, unless your balance has fallen below that
amount due to market conditions.
. Any exchange between Funds you already own must meet the minimum
redemption and subsequent purchase amounts for the Funds involved.
. Exchanges between Class B shares, between Class C shares or between
either Class B or Class C shares and a Wells Fargo money market fund will
not trigger the CDSC. The new shares will continue to age according to
their original schedule while in the new Fund and will be charged the
CDSC applicable to the original shares upon redemption.
. Exchanges from any share class to a money market fund can only be
reexchanged for the original share class.
33
<PAGE>
. In order to discourage excessive Fund transaction expenses that must be
borne by other shareholders, we reserve the right to limit or reject
exchange orders. Generally, we will notify you 60 days in advance of any
changes in your exchange privileges.
. You may make exchanges between like share classes. You may also exchange
from Class A, Class B or Class C shares and non-institutional class
shares to a non-institutional money market fund.
. Exchanges into Money Market Fund Class B shares are subject to certain
restrictions in addition to those described above.
34
<PAGE>
YOUR ACCOUNT
This section tells you how Fund shares are priced, how to open an account
and how to buy and sell Fund shares once your account is open.
Pricing Fund Shares:
. As with all mutual fund investments, the price you pay to purchase shares
or the price you receive when you redeem shares is not determined until
after a request has been received in proper form.
. We determine the Net Asset Value ("NAV") of each class of the Funds'
shares each business day as of the close of regular trading on the NYSE.
We determine the NAV by subtracting the Fund class's liabilities from its
total assets, and then dividing the result by the total number of
outstanding shares of that class. Each non-money market Fund's assets are
generally valued at current market prices. Each money market Fund uses
the amortized cost method to value portfolio securities pursuant to Rule
2a-7 under the 1940 Act. See the Statement of Additional Information for
further disclosure.
. We process requests to buy or sell shares of the non-money market funds
each business day as of the close of regular trading on the New York
Stock Exchange ("NYSE"), which is usually 1:00 p.m. (Pacific time)/3:00
p.m. (Central time). The Money Market Fund calculates NAV at 12:00 noon
(Pacific time)/2:00 p.m. (Central time), and the other money market funds
calculate NAV at 2:00 p.m. (Pacific time)/4:00 p.m. (central time). If
the markets close early, the Funds may close early and may value their
shares at earlier times under these circumstances. Any request we receive
in proper form before these times is processed the same day. Requests we
receive after the cutoff times are processed the next business day.
. The non-money market Funds are open for business on each day the NYSE is
open for business. NYSE holidays include New Year's Day, Martin Luther
King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. When any holiday
falls on a weekend, the NYSE typically is closed on the weekday
immediately before or after such holiday.
. The money market Funds are open for business each day Wells Fargo Bank is
open for business and are closed generally on federal bank holidays.
You Can Buy Fund Shares:
. By opening an account directly with the Fund (simply complete and return
a Wells Fargo Funds Trust application with proper payment);
. Through a brokerage account with an approved selling agent; or
. Through certain retirement, benefits and pension plans, or through
certain packaged investment products (please see the providers of the
plan for instructions).
Minimum Investments:
. $1,000 per Fund minimum initial investment(1); or
. $100 per Fund if you use the Systematic Purchase Program; and
. $100 per Fund for all investments after your first.
- --------
(1) Purchases of Class B shares in amounts of $250,000 or more require the
prior approval of your selling agent.
35
<PAGE>
We may waive the minimum for Funds you purchase through certain retirement,
benefit and pension plans, through certain packaged investment products, or
for certain classes of shareholders as permitted by the SEC. Check the
specific disclosure statements and applications for the program through which
you intend to invest.
How to Buy Shares
The following section explains how you can buy shares directly from Wells
Fargo Funds. For Funds held through brokerage and other types of accounts,
please consult your Selling Agent.
By Mail
If you are buying shares for the first time:
. Complete a Wells Fargo Funds application. Be sure to indicate the Fund
name and the share class into which you intend to invest. Failure to
complete an application properly may result in a delay in processing your
request.
. Enclose a check for at least $1,000 made out in the full name and share
class of the Fund. For example, "Growth Fund, Class B."
. You may start your account with $100 if you elect the Systematic Purchase
Plan option on the application.
Mail to:
Wells Fargo Funds Trust
PO Box 8266
Boston, MA 02266-8266
If you are buying additional shares:
. Make a check payable to the full name and share class of your Fund for at
least $100. Be sure to write your account number on the check as well.
. Enclose the payment stub/card from your statement if available.
Mail to:
Wells Fargo Funds Trust
PO Box 8266
Boston, MA 02266-8266
36
<PAGE>
By Wire
If you are buying shares for the first time:
. If you do not currently have an account, complete a Wells Fargo Funds
application. You must wire at least $1,000. Be sure to indicate the Fund
name and the share class into which you intend to invest.
. Mail the completed application.
. You may also fax the completed application (with original to follow). You
must first call BFDS at 1-800-222-8222 to notify them of an incoming wire
trade.
Mail application to:
Wells Fargo Funds Trust
c/o BFDS
PO Box
Quincy, MA 02171
or Fax application to:
1-617-483-5765
Wire money to:
Wells Fargo Funds Trust
c/o State Street Bank & Trust
Boston, MA
Bank Routing Number:
ABA 011000028
Wire Purchase Account Number:
9905-437-1
Attention:
Wells Fargo Funds
(Name of Fund and Share Class)
Account Name:
(Registration Name Indicated on Application)
If you are buying additional shares:
. Instruct your wiring bank to transmit at least $100 according to the
instructions given to the right. Be sure to have the wiring bank include
your current account number and the name your account is registered in.
Wire money to:
Wells Fargo Funds Trust
c/o State Street Bank & Trust
Boston, MA
Bank Routing Number:
ABA 011000028
Wire Purchase Account Number:
9905-437-1
Attention:
Wells Fargo Funds
(Name of Fund and Share Class)
Account Name:
(Registration Name Indicated on Application)
37
<PAGE>
By Phone
If you are buying shares for the first time:
. You can only make your first purchase of a Fund by phone if you already
have an existing Wells Fargo Funds Trust Account.
. Call Investor Services and instruct the representative to either:
. transfer at least $1,000 from a linked settlement account, or
. exchange at least $1,000 worth of shares from an existing Wells Fargo
Fund. Please see "Exchanges" for special rules.
Call:
1-800-222-8222
If you are buying additional shares:
. Call Investor Services and instruct the representative to either:
. transfer at least $100 from a linked settlement account, or
. exchange at least $100 worth of shares from another Wells Fargo Fund.
Call:
1-800-222-8222
Selling Shares:
The following section explains how you can sell shares held directly through
an account with Wells Fargo Funds by mail or telephone. For Fund shares held
through brokerage and other types of accounts, please consult your Selling
Agent.
By Mail
If you are selling shares for the first time:
. Write a letter stating your account registration, your account number,
the Fund you wish to redeem and the dollar amount ($100 or more) of the
redemption you wish to receive (or write "Full Redemption").
. Make sure all the account owners sign the request.
. You may request that redemption proceeds be sent to you by check, by ACH
transfer into a bank account, or by wire. Please call Investor Services
regarding requirements for linking bank accounts or for wiring funds. We
reserve the right to charge a fee for wiring funds although it is not
currently our practice to do so.
. Signature Guarantees are required for mailed redemption requests over
$5,000. You can get a signature guarantee at financial institutions such
as a bank or brokerage house. We do not accept notarized signatures.
Mail to:
Wells Fargo Funds Trust
PO Box 8266
Boston, MA 02266-8266
38
<PAGE>
By Phone
. Call Investor Services to request a redemption of at least $100. Be
prepared to provide your account number and Taxpayer Identification
Number.
. Unless you have instructed us otherwise, only one account owner needs to
call in redemption requests.
. You may request that redemption proceeds be sent to you by check, by
transfer into an ACH-linked bank account, or by wire. Please call
Investor Services regarding requirements for linking bank accounts or for
wiring funds. We reserve the right to charge a fee for wiring funds
although it is not currently our practice to do so.
. Telephone privileges are automatically made available to you unless you
specifically decline them on your application or subsequently in writing.
. Phone privileges allow us to accept transaction instructions by anyone
representing themselves as the shareholder and who provides reasonable
confirmation of their identity, such as providing the Taxpayer
Identification Number on the account. We will not be liable for any
losses incurred if we follow telephone instructions we reasonably believe
to be genuine.
. Telephone requests are not accepted if the address on your account was
changed by phone in the last 15 days.
Call:
1-800-222-8222
General Notes for Selling Shares
We determine the NAV of non-money market funds each day as of the close of
regular trading on the NYSE, which is generally 1:00 PM (Pacific time)/3:00
P.M. (Central time). We determine the NAV of the Money Market Fund at 12:00
noon (Pacific time)/2:00 P.M. (Central time) and we determine the NAV of the
other money market funds each day as of 2:00 P.M. (Pacific time)/ 4:00 P.M.
(Central time). If any of the markets for the Funds close early, the Funds may
close early, and may value their shares at earlier times under these
circumstances.
Your redemptions are net of any applicable CDSC.
We will process requests to sell shares at the first NAV calculated after a
request in proper form is received. Requests received before the cutoff times
are processed on the same business day.
If your purchased shares through a packaged investment product or retirement
plan, read the directions for selling shares provided by the product or plan.
There maybe special requirements that supersede the directions in this
Prospectus.
We reserve the right to delay payment of a redemption so that we may be
reasonably certain that investments made by check or Systematic Purchase Plan
have been collected. Payments of redemptions also may be delayed under
extraordinary circumstances or as permitted by the SEC in order to protect
remaining shareholders.
Generally, we pay redemption requests in cash, unless the redemption request
is for more than $250,000 or 1% of the net assets of the Fund by a single
shareholder over any ninety-day period. If a request for a redemption is over
these limits, it may be to the detriment of existing shareholders to pay such
redemption in cash. Therefore, we may pay all or part of the redemption in
securities of equal value.
39
<PAGE>
Additional Services and Other Information
Automatic Programs:
These programs help you conveniently purchase and/or redeem shares each
month. Call Investor Services 1-800-222-8222 for more information.
. Systematic Purchase Plan--With this program, you can regularly purchase
shares of a Wells Fargo Fund with money automatically transferred from a
linked bank account. Simply select the Fund you would like to purchase,
specify an amount of at least $100, and tell us the day of the month you
would like the money invested. If you do not specify a date, we will
transfer the money and invest in shares of the Fund you select on or
about the 25th day of the month.
. Systematic Exchange Plan--With this program, you can regularly exchange
shares of a Wells Fargo Fund you own for shares of another Wells Fargo
Fund. The exchange amount must be at least $100, and the exchange will
take place on or about the 25th of each month. See the "Exchanges"
section of this prospectus for the conditions that apply to your shares.
This feature may not be available for certain types of accounts.
. Systematic Withdrawal Plan--With this program, you can regularly redeem
shares and receive the proceeds by check or by transfer to a linked bank
account. Simply specify an amount of at least $100 and we will sell your
shares equal to that amount on or about the 25th of each month. To
participate in this program, you:
. must have a Fund account value at $10,000 or more;
. must have your distributions reinvested; and
. may not simultaneously participate in the Systematic Purchase Plan.
It generally takes about ten days to establish a plan once we have received
your instructions. It generally takes about five days to change or cancel
participation in a plan. We automatically cancel your program if the linked
bank account your specified is closed.
Dividend and Capital Gain Distributions Options
The Funds in this Prospectus pay dividends periodically and make capital
gains distributions annually. The equity funds, except the Small Cap Fund, pay
any dividends quarterly. The Small Cap Fund pays any dividends annually. The
income and money market funds pay any dividends monthly.
We offer the following distribution options:
. Automatic Reinvestment Option--Lets you buy new shares of the same class
of the Fund that generated the distributions. The new shares are
purchased at NAV generally on the day the income is paid. This option is
automatically assigned to your account unless you specify another plan.
. Check Payment Option--Allows you to receive checks for distributions
mailed to your address of record or to another name and address which you
have specified in written, signature guaranteed instructions. If checks
remain uncashed for six months or are undeliverable by the Post Office,
we will reinvest the distributions at the earliest date possible.
40
<PAGE>
Two Things To Keep in Mind About Distributions
Remember, distributions have the effect of reducing the NAV per share by the
amount distributed. Also, distributions on new shares shortly after purchase
would be in effect a return of capital, although the distribution may still be
taxable to you.
Taxes
The following discussion regarding taxes is based on laws that were in
effect as of the date of this Prospectus. The discussion summarizes only some
of the important tax considerations that affect the Funds and you as a
shareholder. It is not intended as a substitute for careful tax planning. You
should consult your tax advisor about your specific tax situation. Federal
income tax considerations are discussed further in the Statement of Additional
Information.
Dividends distributed from the Tax-Free Income Fund and Municipal Money
Market Fund attributable to their net interest income from tax-exempt
securities will not be subject to federal income tax. Dividends distributed
from these and the other Funds attributable to their income from other
investments and net short-term capital gain (generally, the excess of net
short-term capital gains over net long-term capital losses) will be taxable to
you as ordinary income. Corporate shareholders may be able to deduct a portion
of their dividends when determining their taxable income.
We will pass on to you any net capital gain (generally the excess of net
long- term capital gains over net short-term capital losses) earned by a Fund
as a capital gain distribution. In general, these distributions will be
taxable to you as long-term capital gains which may qualify for taxation at
preferential rates in the hands of non-corporate shareholders. Any
distribution that is not from net investment income, short term capital gains,
or net capital gain may be characterized as a return of capital to
shareholders.
In general, all distributions will be taxable to you when paid even if they
are paid in additional Fund shares. However, distributions declared in
October, November and December are distributed by the following January will
be taxable as if they were paid on December 31 of the year in which they were
declared. We will notify you annually as to the status of your Fund
distributions.
If you buy shares of a Fund shortly before any distribution, your
distribution from the Fund will, in effect, be a taxable return of part of
your investment. Similarly, if you buy shares of a Fund that holds appreciated
securities in its portfolio, you will receive a taxable return of part of your
investment is and when the Fund sells the appreciated securities and realizes
the gain. Some of the Funds have built up, or have the potential to build up,
high levels of unrealized appreciation.
Except in the case of Money Market Funds, your redemptions (including
redemptions in-kind) and exchanges of Fund shares will ordinarily result in a
taxable capital gain or loss, depending on the amount you receive for your
shares (or are deemed to receive in the case of exchanges) and the amount you
paid (or are deemed to have paid) for them. As long as a Money Market Fund
continually maintains a $1.00 NAV, you ordinarily will not recognize taxable
gain or loss on the redemption or exchange of such Fund shares.
Foreign shareholders may be subject to different tax treatment, including
withholding taxes. In certain circumstances, U.S. residents may also be
subject to backup withholding at a 13% rate on distributions from and
redemption proceeds paid by a Fund.
41
<PAGE>
TABLE OF PREDECESSORS
The Funds described in this Prospectus were created as part of the
reorganization of the Stagecoach Family of Funds, advised by Wells Fargo Bank,
N.A., and the Norwest Advantage Family of Funds, advised by Norwest Investment
Management, Inc., into a single mutual fund complex. The reorganization
followed the merger of the advisors' parent companies.
The chart below indicates the Stagecoach and Norwest Advantage portfolios
that are expected to be the accounting survivors.
<TABLE>
<CAPTION>
Wells Fargo Funds Trust Accounting Survivor
----------------------- -------------------
<S> <C>
Equity and Allocation Funds
Asset Allocation Fund Stagecoach Asset Allocation Fund
Growth Fund Stagecoach Growth Fund
Income Equity Fund Norwest Advantage Income Equity Fund
Small Cap Fund Stagecoach Small Cap Fund
Income Funds
Income Fund Norwest Advantage Income Fund
Intermediate Government Norwest Advantage Intermediate Government
Income Fund Income Fund
Limited Term Government Stagecoach Short-Intermediate U.S. Government
Income Fund Income Fund
Tax-Free Income Fund Norwest Advantage Tax-Free Income Fund
Money Market Funds
Money Market Fund Stagecoach Money Market Fund
National Tax-Free Money Norwest Advantage Municipal Money
Market Fund Market Fund
Government Money Market Fund Norwest Advantage U.S. Government Fund
</TABLE>
42
<PAGE>
GLOSSARY
We provide the following definitions to assist you in reading this
prospectus. For a more complete understanding of these terms you should
consult your financial adviser.
ACH
Refers to the "Automated Clearing House" system maintained by the Federal
Reserve Bank which allows banks to process checks, transfer funds and perform
other tasks.
American Depositary Receipts ("ADRS")
Receipts for non-U.S. company stocks. The stocks underlying ADRs are
typically held in bank vaults. The ADR's owner is entitled to any capital
gains or dividends. ADRs are one way of owning an equity interest in foreign
companies.
Annual and Semi-Annual Report
A document that provides certain financial and other important information
for the most recent reporting period and each Fund's portfolio of investments.
Asset-Backed Securities
Securities consisting of an undivided fractional interest in pools of
consumer loans, such as car loans or credit card debt, or receivables held in
trust.
Below Investment-Grade
Securities rated BBB or lower by S&P or Baa or lower by Moody's Investor
Services, or that may be unrated securities or securities considered to be
"high risk."
Business Day
Any day the New York Stock Exchange is open is a business day for the Funds.
Capital Appreciation, Capital Growth
The increase in the value of a security. See also "total return."
Capitalization
When referring to the size of a company, capitalization means the total
number of a company's outstanding shares of stock multiplied by the price per
share. This is an accepted method of determining a company's size and is
sometimes referred to as "market capitalization."
Capital Structure
Refers to how a company has raised money to operate. Can include, for
example, borrowing or selling stock.
Collateralized Mortgage Obligation ("CMOs")
Securities collateralized by portfolios of mortgage pass-through securities.
CMOs are structured into multiple classes, and are paid according to class
maturity, shortest maturities paid first.
43
<PAGE>
Commercial Paper
Debt instruments issued by banks, corporations and other issuers to finance
short-term credit needs. Commercial paper typically is of high credit quality
and offers below market interest rates.
Convertible Debt Securities
Bonds or notes that are exchangeable for equity securities at a set price on
a set date or at the election of the holder.
Current Income
Earnings in the form of dividends or interest as opposed to capital growth.
See also "total return."
Debt Securities
Generally, a promise to pay interest and repay principal by an individual or
group of individuals sold as a security. The owner of the security is entitled
to receive any such payments. Examples include bonds and mortgage- and other
asset-backed securities and can include securities in which the right to
receive interest and principal repayment have been sold separately.
Derivatives
Securities whose values are derived in part from the value of another
security or index. An example is a stock option.
Distributions
Dividends and/or capital gains paid by a Fund on its shares.
Diversified
A diversified fund, as defined by the Investment Company Act of 1940, is one
that invests in cash, Government securities, other investment companies and no
more than 5% of its total assets in a single issuer. These policies must apply
to 75% of the Funds' total assets.
Dollar-Denominated
Securities issued by foreign banks, companies or governments in U.S.
dollars.
Dollar Rolls
Similar to a reverse Repurchase Agreement, dollar rolls are simultaneous
agreements to sell a security held in a portfolio and to purchase a similar
security at a future date at an agreed-upon price.
Duration
A measure of a security's or portfolio's sensitivity to changes in interest
rates. Duration is usually expressed in years, with longer durations typically
more sensitive to interest rate changes than shorter durations.
44
<PAGE>
FDIC
The Federal Deposit Insurance Corporation. This is the company that provides
federally sponsored insurance covering bank deposits such as savings accounts
and CDs. Mutual funds are not FDIC insured.
FHLMC
FHLMC securities are commonly known as "Freddie Mac" and are issued by the
Federal Home Loan Mortgage Corporation.
FNMA
FNMA securities are known as "Fannie Maes" are issued by the Federal
National Mortgage Association, and FHLMC securities as "Freddie Mac" and are
issued by the Federal Home Loan Mortgage Corporation.
GNMA
GNMA securities, commonly known as "Ginnie Maes," are mortgage pass-through
securities issued by the Government National Mortgage Association and
guaranteed by the U.S. Government.
Hedge
Strategy used to offset investment risk. A perfect hedge is one eliminating
the possibility of future gain or loss.
Illiquid Security
A security which cannot be readily sold, or cannot be readily sold without
negatively affecting its fair price.
Initial Public Offering
The first time a company's stock is offered for sale to the public.
Investment-Grade Debt
A type of bond rated in the top four investment categories by a nationally
recognized ratings organization. Generally these are bonds whose issuers are
considered to have a strong ability to pay interest and repay principal,
although some investment-grade bonds may have some speculative
characteristics.
Lehman Brothers 20+ Bond Index
An unmanaged index composed of U.S. Treasury bonds with 20 years or longer
dates-to-maturity.
Liquidity
The ability to readily sell a security at a fair price.
45
<PAGE>
Money Market Instruments
High-quality short-term instruments meeting the requirements of Rule 2a-7 of
the 1940 Act, such as bankers' acceptances, commercial paper, repurchase
agreements and government obligations. In a money market fund, average
portfolio maturity does not exceed 90 days, and all investments have
maturities of 397 days or less at the time of purchase.
Moody's
A nationally recognized ratings organization.
Nationally Recognized Rating Organization (NRRO)
A company that examines the ability of a bond issuer to meet its obligations
and which rates the bonds accordingly.
Net Asset Value (NAV)
The value of a single fund share. It is determined by adding together all of
a Fund's assets, subtracting accrued expenses and other liabilities, then
dividing by the total number of shares. The NAV is calculated separately for
each class of the Fund, and is determined as of the close of regular trading
on each business day the NYSE is open, typically 1:00 P.M. (Pacific time).
Options
An option is the right to buy or sell a security based on an agreed upon
price for at a specified time. For example, an option may give the holder of a
stock the right to sell the stock to another party, allowing the seller to
profit if the price has fallen below the agreed price. Options may also be
based on the movement of an index such as the S&P 500.
Preservation of Capital
The attempt by a fund's manager to reduce drops in the net asset value of
fund shares in order to preserve the initial investment.
Principal Stability
The degree to which share prices for a fund remain steady. Money market
funds attempt to achieve the highest degree of principal stability by
maintaining a $1.00 per share net asset value. More aggressive funds may not
consider principal stability an objective.
Public Offering Price (POP)
The NAV with the sales load added.
Price-to-Earnings Ratio
The ratio between a stock's price and its historical, current or anticipated
earnings. Low ratios typically indicate a high yield. High ratios are
characteristic of growth stocks which generally have low current yields.
Repurchase Agreement
An agreement between a buyer and seller of a security in which the seller
agrees to repurchase the security at an agreed upon price and time.
46
<PAGE>
Russell 1000 Index
An index comprised of the 1000 largest firms listed on the Russell 3000
Index. The Russell 3000 Index is a listing of 3000 corporations maintained by
the Frank Russell Company that is intended to be representative of the U.S.
economy. The Russell 1000 is considered a "large cap" index.
Russell 2000 Index
An index comprised of the 2000 smallest firms listed on the Russell 3000
Index. The Russell 3000 Index is a listing of 3000 corporations maintained by
the Frank Russell Company that is intended to be representative of the U.S.
economy. The Russell 2000 is considered a "small cap" index.
Selling Agent
A person who has an agreement with the Funds' distributors that allows them
to sell a Fund's shares.
Shareholder Servicing Agent
Anyone appointed by the Fund to maintain shareholder accounts and records,
assist and provide information to shareholders or perform similar functions.
Signature Guarantee
A guarantee given by a financial institution that has verified the identity
of the maker of the signature.
S&P, S&P 500 Index
Standard and Poors, a nationally recognized ratings organization. S&P's also
publishes various indexes or lists of companies representative of sectors of
the U.S. economy.
Statement of Additional Information
A document that supplements the disclosure made in the Prospectus.
Stripped Treasury Securities
Debt obligations in which the interest payments and the repayment of
principal are separated and sold as securities.
Taxpayer Identification Number
Usually the social security number for an individual or the Employer
Identification Number for a corporation.
Total Return
The total value of capital growth and the value of all distributions,
assuming that distributions were used to purchase additional shares of the
Funds.
47
<PAGE>
Turnover Ratio
The percentage of the securities held in a Fund's portfolio, other than
short-term securities, that were bought or sold within a year.
Undervalued
Describes a stock that is believed to be worth more than its current price.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Value Strategy
A strategy of investing which tries to identify and buy undervalued stocks
under the assumption that the stock will eventually rise to its "fair market"
value.
Warrants
The right to buy a stock at a set price for a set time.
Weighted-Average Maturity
The average maturity for the debt securities in a portfolio on a dollar-for-
dollar basis.
Zero Coupon Bonds
Bonds that make no periodic interest payments and which are usually sold at
a discount to their face value. Zero coupon bonds are subject to interest rate
and credit risk.
48
<PAGE>
WELLS FARGO FUNDS TRUST
You may wish to review the following document:
A Statement of Additional Information supplements the disclosures made by
this Prospectus. The Statement of Additional Information has been filed with
the SEC and is incorporated by reference into this Prospectus and is legally
part of this Prospectus.
This document is available free of charge:
Call 1-800-222-8222, or
Write to: Wells Fargo Funds Trust
PO Box 7066
San Francisco, CA 94120-7066
Visit the SEC's web site: http://www.sec.gov, or
Request copies for a fee by writing to:
SEC Public Reference Room, Washington, DC 20549-6009
(call: 1-800-SEC-0330 for details)
49
<PAGE>
Wells Fargo Funds Trust
PROSPECTUS
Asset Allocation Fund
Growth Fund
Income Equity Fund
Small Cap Fund
Income Fund
Intermediate Government Income Fund
Limited Term Government Income Fund
Tax-Free Income Fund
Cash Investment Money Market Fund
National Tax-Free Institutional
Money Market Fund
Treasury Plus Institutional Money Market Fund
Government Money Market Fund
Service Class and Institutional Class
Please read this prospectus and keep it for future reference. It is designed
to provide you with important information and to help you decide if a Fund's
goals match your own.
These securities have not been approved or disapproved by the Securities and
Exchange Commission ("SEC") nor has the SEC passed upon the accuracy or
adequacy of this Prospectus. Any representation to the contrary is a criminal
offense.
Fund shares are not deposits of Wells Fargo Bank, N.A. ("Wells Fargo Bank"),
or any of its affiliates. Fund shares are not insured or guaranteed by the
federal deposit insurance corporation ("FDIC"), or any other government
agency. An investment in a fund involves certain risks, including possible
loss of principal.
June 1, 1999
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
OVERVIEW
This section contains important summary information about the Funds.
Objectives and Principal Strategies..................................... 3
Important Risks......................................................... 5
Summary of Expenses..................................................... 7
THE FUNDS
This section contains important information about the individual Funds.
Asset Allocation Fund................................................... 11
Growth Fund............................................................. 12
Income Equity Fund...................................................... 13
Small Cap Fund.......................................................... 14
Income Fund............................................................. 15
Intermediate Government Income Fund..................................... 16
Limited Term Government Income Fund .................................... 17
Tax-Free Income Fund.................................................... 18
Cash Investment Money Market Fund....................................... 19
National Tax-Free Institutional Money Market Fund....................... 20
Treasury Plus Institutional Money Market Fund........................... 20
Government Money Market Fund............................................ 21
General Investment Risks................................................ 22
Organization and Management of the Funds................................ 27
YOUR INVESTMENT
Turn to this section for information on your investments including how
to buy and sell Fund shares.
Your Account............................................................ 29
How to Buy Shares....................................................... 30
How to Sell Shares...................................................... 30
Exchanges............................................................... 31
Other Information....................................................... 32
Table of Predecessors................................................... 33
GLOSSARY.................................................................. 34
</TABLE>
2
<PAGE>
WELLS FARGO FUNDS OVERVIEW
<TABLE>
<CAPTION>
Equity and
Allocation Funds Objective Principal Strategy
---------------- --------- ------------------
<C> <C> <S>
Asset Allocation Seeks long-term total We allocate and reallocate assets
Fund return, consistent among common stocks, U.S. Treasury
with reasonable risk. bonds and money market
instruments. We invest in asset
classes that we believe are under-
valued in order to achieve better
long-term, risk-adjusted returns.
Growth Fund Seeks long-term We invest in equity securities of
capital appreciation. domestic and foreign companies
whose market capitalization falls
within the range of the Russell
1000 Index, which is considered a
mid- to large-capitalization
index. We buy stocks of companies
that have a strong earnings growth
trend and above-average prospects
for future growth, or that we
believe are undervalued.
Income Equity Fund Seeks long-term We invest in the common stocks of
capital appreciation large, high quality domestic
and above-average companies with above-average
dividend income. return potential and above-average
dividend income. We consider
"large" companies to be those
whose market capitalization is
greater than the median of the
companies in the Russell 1000
Index, which is considered a mid-
to large-capitalization index.
Small Cap Fund Seeks long-term We invest in equity securities of
capital appreciation. domestic and foreign companies
whose market capitalization falls
within the range of the Russell
2000 Index, which is considered a
small capitalization index. We buy
stocks that we believe have above-
average prospects for capital
growth, or that may be involved in
new or innovative products,
services and processes.
</TABLE>
3
<PAGE>
WELLS FARGO FUNDS OVERVIEW
<TABLE>
<CAPTION>
Taxable Income Funds Objective Principal Strategy
-------------------- --------- ------------------
<C> <C> <S>
Income Fund Seeks current income We invest in corporate, mortgage-
and total return. backed, asset-backed, and U.S.
Government debt securities
primarily of investment-grade
quality or better. We maintain the
average dollar-weighted maturity
of the portfolio between 3 and 15
years, and apply fundamental
economic, credit and market
analysis to increase portfolio
performance.
Intermediate Seeks current income, We invest in investment-grade,
Government Income consistent with intermediate-term (3-10 years)
Fund safety of principal. U.S. Government securities, and
also in certain debt securities
that are not U.S. Government
securities. We invest up to 50% of
our assets in mortgage-backed
securities, and up to 25% of our
assets in other asset-backed
securities.
Limited Term Seeks current income We invest in investment-grade,
Government Income and safety of short-term (1-5 years).
Fund capital.
<CAPTION>
Tax-Free Income
Funds Objective Principal Strategy
--------------- --------- ------------------
<C> <C> <S>
Tax-Free Income Fund Seeks current income We invest in investment-grade
exempt from federal municipal securities with average
income taxes. maturities of 10-20 years and with
interest that is exempt from
federal income taxes, though some
of our holdings may be subject to
the alternative minimum tax
("AMT").
<CAPTION>
Money Market Funds Objective Principal Strategy
------------------ --------- ------------------
<C> <C> <S>
Cash Investment Seeks high current We invest in high-quality, short-
Money Market Fund income, preservation term money market instruments.
of capital and
liquidity.
National Tax-Free Seeks high current We invest in high-quality, short-
Institutional Money income exempt from term federally tax-exempt
Market Fund federal income taxes, instruments, whose income may be
while preserving subject to the federal AMT. We may
capital and invest up to 35% of the Fund's
liquidity. assets in issuers in a single
state.
Treasury Plus Seeks current income We invest in obligations issued or
Institutional Money and stability of guaranteed by the U.S. Treasury,
Market Fund principal. and in notes, bonds and repurchase
agreements which are
collateralized or secured by
Treasury obligations.
Government Money Seeks high current We invest in high-quality, short-
Market Fund income, while term U.S. Government obligations
preserving capital and in repurchase agreements
and liquidity. collateralized by such
obligations.
</TABLE>
4
<PAGE>
IMPORTANT RISKS
This section summarizes important risks that are common to all of the Funds
described in this Prospectus, and important risks that relate specifically to
particular Funds. Both are important to your investment choice. Additional
information about these and other risks is included in the individual Fund
Descriptions later in this Prospectus and under General Investment Risks
beginning on page . An investment in a Fund is not a deposit of Wells Fargo
Bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although the money market funds
seek to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in these funds.
Common Risks for the Funds
Equity Securities. The equity and allocation funds invest in equity
securities, which are subject to equity market risk. This is the risk that
stock prices will fluctuate and can decline and reduce the value of a Fund's
portfolio. Certain types of stock and certain individual stocks selected for a
Fund's portfolio may underperform or decline in value more than the overall
market. As of the date of this Prospectus, the equity markets, as measured by
the S&P 500 Index and other commonly used indexes, are trading at or close to
record levels. There can be no guarantee that these levels will continue. The
Funds that invest in smaller companies, in foreign companies (including
investments made through American Depositary Receipts and similar
instruments), and in emerging markets are subject to additional risks,
including less liquidity and greater price volatility. A Fund's investments in
foreign companies and emerging markets are also subject to special risks
associated with international investing, including currency, political,
regulatory and diplomatic risks.
Debt Securities. The Asset Allocation Fund, the income funds, and money
market funds invest in debt securities, such as notes and bonds, which are
subject to credit risk and interest rate risk. Credit risk is the possibility
that an issuer of an instrument will be unable to make interest payments or
repay principal. Changes in the financial strength of an issuer or changes in
the credit rating of a security may affect its value. Interest rate risk is
the risk that interest rates may increase, which will reduce the resale value
of securities in a Fund's investments, including U.S. Government obligations.
Debt securities with longer maturities are generally more sensitive to
interest rate changes than those with shorter maturities. Changes in market
interest rates do not affect the rate payable on debt securities held in a
Fund, unless the have adjustable or variable rate features, which can reduce
interest rate risk. Changes in market interest rates may also extend or
shorten the duration of certain types of instruments, such as asset-backed
securities, and affect their value and the return on your investment. The
equity funds may invest some of their assets in debt securities.
<TABLE>
<CAPTION>
Equity and Allocation Funds Specific Risks
--------------------------- --------------
These Funds are primarily subject to the equity securities risks described in
the Common Risks section above. The Asset Allocation Fund is also subject to
the debt securities risks described above.
<C> <S>
Asset Allocation Fund This Fund uses an investment model that seeks
undervalued asset classes. There is no guarantee
that the model will make accurate determinations
or that an asset class we believe is undervalued
will perform as expected.
Growth Fund The advisor selects growth stocks based on
prospects for future earnings, which may not
grow as expected. In addition, at times, the
overall market or the market for value stocks
may outperform growth stocks.
Income Equity Fund Stocks selected for their high dividend income
may be more sensitive to interest rate changes
than other stocks. This Fund is primarily
subject to the equity Risks section, above.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Equity and Allocation Funds Specific Risks
--------------------------- --------------
<C> <S>
Small Cap Fund This Fund may invest in companies that pay low
or no dividends, have smaller market
capitalizations, have less market liquidity,
have no or relatively short operating histories,
or are newly public companies. Some of these
companies have aggressive capital structures,
including high debt levels, or are involved in
rapidly growing or changing industries and/or
new technologies. Because the Fund may invest in
such aggressive securities, share prices may
rise and fall more than the share prices other
funds. In addition, our active trading
investment strategy may result in a higher-than-
average portfolio turnover ratio, increased
trading expenses, and high short-term capital
gains. The advisor selects growth stocks based
on prospects for future earnings, which may not
grow as expected. In addition, at times, the
overall market or the market for value stocks
may outperform growth stocks.
<CAPTION>
Income Funds Specific Risks
------------ --------------
<C> <S>
Income Fund This Fund is primarily subject to the debt
securities risks described in the Common Risks
section above.
Intermediate Government The U.S. Government does not guarantee the
Income Fund market value or current yield of its
obligations. Not all U.S. Government obligations
are backed by the full faith and credit of the
U.S. Government. Mortgage-backed securities are
subject to prepayment risk which can reduce the
rate of return on the portfolio.
Limited Term Government The U.S. Government does not guarantee the
Income Fund market value or U.S. current yield of its
obligations. Not all U.S. Government obligations
are backed by the full faith and credit of the
U.S. Government. Mortgage-backed securities are
subject to prepayment risk which can reduce the
rate of return on the portfolio.
Tax-Free Income Fund Some of this Fund's investments are subject to
federal income and AMT taxes, so you may incur a
tax liability on an investment in this Fund.
Municipal obligations backed by tax revenues of
the issuer's jurisdiction affected if the issuer
cannot raise adequate revenues to meet its
obligations.
<CAPTION>
Money Market Funds Specific Risks
------------------ --------------
<C> <S>
Cash Investment Money Market Although each of these Funds seeks to maintain a
Fund stable net asset value of $1.00 per share, there
is no assurance it will be able to do so.
National Tax-Free
Institutional Money Market
Fund
Treasury Plus Institutional
Money Market Fund
Government Money Market Fund
</TABLE>
6
<PAGE>
SUMMARY OF EXPENSES
Shareholder Fees
These tables are intended to help you understand the various costs and
expenses you will pay as a shareholder in a Fund.
<TABLE>
<CAPTION>
All Funds
--------------
Service Class,
Inst. Class
--------------
<S> <C>
Maximum sales charge (load) imposed on purchases as a
percentage of offering price ............................... None
Maximum deferred sales charge (load) as a percentage of the
lower of the NAV at purchase or the NAV at redemption ...... None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
Asset
Allocation Income Equity Small Cap
Fund Growth Fund Fund Fund
Equity and Allocation Institutional Institutional Institutional Institutional
Funds Class Class Class Class
--------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Management Fees......... .80 .75 .75 .90
Distribution (12b-1)
Fees................... .00 .00 .00 .00
Other Expenses(1)....... .25 .26 .26 .47
---- ---- ---- ----
Total Annual Fund
Operating Expenses .... 1.05 1.01 1.01 1.37
==== ==== ==== ====
Fee Waivers(2).......... .05 .01 .16 .17
---- ---- ---- ----
Net Expenses............ 1.00 1.00 .85 1.20
==== ==== ==== ====
</TABLE>
- --------
(1) Other expenses are based on estimated amounts for the current fiscal year.
(2) Fee waivers are contractual and apply for one year from the closing date
of the reorganization for the Growth and Small Cap Funds, and for two
years from the closing date of the reorganization for the Asset Allocation
and Income Equity Funds. After this time, the advisor, with Board
approval, may reduce or eliminate the waivers.
<TABLE>
<CAPTION>
Intermediate Limited Term
Government Government Tax-Free
Income Fund Income Fund Income Fund Income Fund
Institutional Institutional Institutional Institutional
Income Funds Class Class Class Class
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Management Fees......... .50 .50 .50 .40
Distribution (12b-1)
Fees................... .00 .00 .00 .00
Other Expenses(1)....... .27 .25 .24 .30
--- --- --- ---
Total Annual Fund
Operating Expenses..... .77 .75 .74 .70
=== === === ===
Fee Waivers(2).......... .02 .07 .06 .10
--- --- --- ---
Net Expenses............ .75 .68 .68 .60
=== === === ===
</TABLE>
- --------
(1) Other expenses are based on estimated amounts for the current fiscal year.
(2) Fee waivers are contractual and apply for one year from the closing date
of the reorganization. After this time, the advisor, with Board approval,
may reduce or eliminate the waivers.
7
<PAGE>
<TABLE>
<CAPTION>
National
Cash Tax-Free Treasury Plus
Investment Institutional Institutional Government
Money Market Money Money Money
Fund Market Fund Market Fund Market Fund
------------- ------------- ------------- -------------
Service Inst. Service Inst. Service Inst.
Money Market Funds Class Class Class Class Class Class Service Class
------------------ ------- ----- ------- ----- ------- ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fees......... .10 .10 .10 .10 .10 .10 .35
Distribution (12b-1)
Fees................... .00 .00 .00 .00 .00 .00 .00
Other Expenses(1)....... .45 .19 .47 .22 .47 .22 .19
--- --- --- --- --- --- ---
Total Annual Fund
Operating Expenses..... .55 .29 .57 .32 .57 .32 .54
=== === === === === === ===
Fee Waivers(2).......... .07 .04 .12 .02 .11 .07 .04
--- --- --- --- --- --- ---
.07Net Expenses......... .48 .25 .45 .30 .46 .25 .50
=== === === === === === ===
</TABLE>
- --------
(1) Other expenses are based on estimated amounts for the current fiscal year.
(2) Fee waivers are contractual and apply for one year from the closing date of
the reorganization. After this time, the advisor, with Board approval, may
reduce or eliminate the waivers.
8
<PAGE>
Example of Expenses
These examples are intended to help you compare the cost of investing in a
Fund with the cost of investing in other mutual funds.
You would pay the following expenses on a $10,000 investment assuming a 5%
annual return and that you redeem your shares at the end of each period:
<TABLE>
<CAPTION>
Asset
Allocation
Fund Growth Fund
Equity and Institutional Institutional Income Equity Fund Small Cap Fund
Allocation Funds Class Class Institutional Class Institutional Class
---------------- ------------- ------------- ------------------- -------------------
<S> <C> <C> <C> <C>
1 Year.................. $102 $102 $ 87 $122
3 Years................. $324 $321 $289 $417
<CAPTION>
Intermediate
Government Limited Term
Income Fund Income Fund Government Tax-Free Income
Institutional Institutional Income Fund Fund
Income Funds Class Class Institutional Class Institutional Class
------------ ------------- ------------- ------------------- -------------------
<S> <C> <C> <C> <C>
1 Year.................. $ 77 $ 69 $ 69 $ 61
3 Years................. $244 $233 $231 $214
</TABLE>
<TABLE>
<CAPTION>
National Treasury
Cash Tax-Free Plus Government
Investment Institutional Institutional Money
Money Market Money Market Money Market
Fund Fund Market Fund Fund
------------- ------------- ------------- ----------
Service Inst. Service Inst. Service Inst. Service
Money Market Funds Class Class Class Class Class Class Class
------------------ ------- ----- ------- ----- ------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year.................. $ 49 $26 $ 46 $ 31 $ 47 $26 $ 51
3 Years................. $169 $89 $171 $101 $172 $96 $169
</TABLE>
9
<PAGE>
The summary information on the previous pages is designed to provide you
with an overview of each Fund. The sections that follow provide more detailed
information about the investments and management of each Fund.
Important information you should look for:
Investment Objective and Investment Policies
What is the Fund trying to achieve? How do we intend to invest your money?
What makes a Fund different from the other Funds offered in this Prospectus?
Permitted Investments
A summary of the Fund's key permitted investments and practices.
Important Risk Factors
What are key risk factors for the Fund? They include the factors described
in "General Investment Risks" together with any special risk factors for each
Fund.
10
<PAGE>
ASSET ALLOCATION FUND
Investment Objective
The Asset Allocation Fund seeks long-term total return, consistent with
reasonable risk.
Investment Policies
We allocate and reallocate assets among common stocks, U.S. Treasury Bonds
and money market instruments. This strategy is based on the premise that asset
classes are at times undervalued or overvalued in comparison to one another
and that investing in undervalued asset classes offers better long-term, risk-
adjusted returns.
Permitted Investments
The asset classes we invest in are:
. Stock Investments--We invest in common stocks to replicate the S&P 500
Index. We do not individually select common stocks on the basis of
traditional investment analysis. Instead, we invest in each company
comprising the S&P 500 Index in proportion to its weighting in the S&P
500 Index;
. Bond Investments--We invest in U.S. Treasury Bonds to replicate the
holdings of the Lehman Brothers 20+ Bond Index. Bonds in this Index have
remaining maturities of twenty years or more; and
. Money Market Investments--We invest this portion of the Fund in high-
quality money market instruments, including U.S. Government obligations,
obligations of foreign and domestic banks, short-term corporate debt
instruments and repurchase agreements.
In addition, under normal market conditions, we may invest:
. In call and put options on stock indexes, stock index futures, options on
stock index futures, and interest rate futures contracts as a substitute
for a comparable market position in stocks or bonds;
. In interest rate and index swaps; and
. Up to 25% of total assets in foreign obligations qualifying as money
market investments.
We manage the allocation of investments in the Fund's portfolio assuming a
"normal" allocation of 60% stocks and 40% bonds. This is not a "target"
allocation but rather is a design feature that is intended to set a level of
risk tolerance for the Fund.
We are not required to keep a minimum investment in any of the three asset
classes described above, nor are we prohibited from investing substantially
all of our assets in a single class. The allocation may shift at any time.
Important Risk Factors
Foreign obligations may entail additional risks, such as currency,
political, regulatory and diplomatic risks, which are described in more detail
in the General Investment Risks section below. The value of investments in
options on stock indexes and stock index futures is affected by price
movements for the stocks in a particular index, rather than price movements
for an individual security.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 22 and the specific risks listed here. They are all
important to your investment choice.
11
<PAGE>
GROWTH FUND
Investment Objective
The Growth Fund seeks long-term capital appreciation.
Investment Policies
We seek long-term capital appreciation by investing primarily in common
stocks and other equity securities and we look for companies that have a
strong earnings growth trend that we believe have above-average prospects for
future growth. We focus our investment strategy on larger capitalization
stocks.
Permitted Investments
Under normal market conditions, we invest:
. at least 65% of our total assets in equity securities, including common
and preferred stocks, and securities convertible into common stocks;
. the majority of our total assets in issues of companies with market
capitalization that falls within, but towards the higher end of, the
range of the Russell 1000 Index, an index comprised of the 1,000 largest
U.S. companies based on total market capitalization that is considered a
mid-capitalization index. (As of March 31, 1999, this range was from
$20 million to $452 billion. The range is expected to change
frequently.); and
. up to 25% of our total assets in foreign companies through American
Depositary Receipts and similar instruments; and
. up to 15% of our total assets in emerging markets.
Important Risk Factors
This Fund is primarily subject to the risks associated with equity
securities, including foreign equity and mid-capitalization equity securities
described in the Common Risks section. The advisor selects growth stocks based
on prospects for future earnings, which may not grow as expected. In addition,
at times, the overall market or the market for value stocks may outperform
growth stocks.
You should consider the Common Risks on page 5, and the General Investment
Risks beginning on page 22. They are all important to your investment choice.
Portfolio Manager
. Kelli Hill
Principal--Core Equity Team Leader
Will manage the Growth Fund upon inception, and has been with Wells
Fargo/Wells Capital Management ("WCM") since 1987. Ms. Hill is the Core
Equity Team Leader, providing portfolio management and fundamental
security analysis for the team. She has over twelve years of equity
investment management experience.
12
<PAGE>
INCOME EQUITY FUND
Investment Objective
The Income Equity Fund seeks long-term capital appreciation and above-
average dividend income.
Investment Policies
We invest primarily in the common stock of large, high-quality domestic
companies that have above-average return potential based on current market
valuations. We primarily emphasize investments in securities of companies iwth
above-average dividend income. We use various valuation measures when
selecting securities for the portfolio, including above-average dividend
yields and below industry average price-to-earnings, price-to-book and price-
to-sales ratios. We consider large companies to be those whose market
capitalization is greater than the median of the Russell 1000 Index.
Permitted Investments
Under normal market conditions, we invest:
. at least 65% of our total assets in equity securities; and
. in issues of companies with market capitalization greater than the median
of the Russell 1000 Index (as of March 31, 1999, this median was
approximately $3.7 billion; the median is expected to change frequently).
We may invest in preferred stock, convertible securities, and securities of
foreign companies. We will normally limit our investment in a single issuer to
10% or less of our total assets.
Important Risk Factors
Stocks selected for their high dividend yields may be more sensitive to
interest rate changes than other stocks. There can be no assurance that the
stocks that the advisor believes are undervalued will appreciate in value.
Stocks of foreign companies selected for the Fund may be more volatile and
less liquid than other securities.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 21 and the specific risks listed here. They are all
important to your investment choice.
Core/Gateway Arrangement
The Income Equity Fund is a "gateway" fund in a "core/gateway" arrangement.
In this arrangement, a "gateway" fund invests all of its assets in a "core"
portfolio that has a substantially identical investment objective and
substantially similar policies as the gateway fund. Gateway funds investing in
the same core portfolio can enhance their investment opportunities and reduce
their expense ratios through sharing the costs of managing a large pool of
assets. References to the investment activities of the Income Equity Fund also
refer to the core portfolio.
Portfolio Managers
. David L. Roberts, CFA
Will manage the Income Equity Fund upon inception. Mr. Roberts joins WCM
from Norwest Investment Management, Inc. ("NIM"), where he had managed
portfolios for NIM or its affiliates since 1972. He has over twenty-six
years of investment management experience.
. Gary J. Dunn, CFA
Will co-manage the Income Equity Fund upon inception. Mr. Dunn joins WCM
from NIM, where he had managed portfolios for NIM or its affiliates since
1979. He has over twenty years of investment management experience.
13
<PAGE>
SMALL CAP FUND
Investment Objective
The Small Cap Fund seeks long-term capital appreciation.
Investment Policies
We actively manage a diversified portfolio of common stocks issued by
companies whose market capitalization falls within the range of the Russell
2000 Index. As of March 31, 1999, the range was $3.8 million to $8.55 billion,
but it is expected to change frequently. We will sell the stock of any company
whose market capitalization exceeds the range of this index for sixty
consecutive days.
We invest in the common stocks of domestic and foreign companies we believe
have above-average prospects for capital growth, or that may be involved in
new or innovative products, services and processes.
Permitted Investments
Under normal market conditions, we invest:
. in an actively managed, broadly diversified portfolio of growth-oriented
common stocks;
. in at least 20 common stock issues spread across multiple industry groups
and sectors of the economy;
. up to 40% of our assets in initial public offerings or recent start-ups
and newer issues; and
. no more than 25% of our assets in foreign companies through American
Depositary Receipts or similar issues.
Important Risk Factors
This Fund is designed for investors willing to assume above-average risk. We
may invest in companies that:
. pay low or no dividends;
. have smaller market capitalization;
. have less market liquidity;
. have no or relatively short operating histories, or are new public
companies or are initial public offerings whose stocks are typically more
volatile than stocks of more seasoned companies;
. have aggressive capital structures including high debt levels; or
. are involved in rapidly growing or changing industries and/or new
technologies.
Because we may invest in such aggressive securities, share prices may rise
and fall more than the share prices of other funds. In addition, our active
trading investment strategy may result in a higher-than-average portfolio
turnover ratio, increased trading expenses, and higher short-term capital
gains. Stocks of foreign companies, whether purchased directly or through
American Depositary Receipts, may be more volatile and less liquid than other
comparable securities.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 22, and the specific risks listed here. They are all
important to your investment choice.
14
<PAGE>
Portfolio Managers
.Kenneth Lee
Will manage the Small Cap Fund, as lead manager, upon inception, and has
been with Wells Fargo/Wells Capital Management since 1993. Mr. Lee has
seven years of experience in the investment industry, and has managed
equity investment portfolios since 1995.
.Thomas Zeifang, CFA
Will co-manage the Small Cap Fund upon inception, and has been with Wells
Fargo/Wells Capital Management since 1995. Mr. Zeifang provided
fundamental security analysis for Fleet Investment Advisors for three
years prior to joining Wells Fargo. He has over five years of equity
investment management experience.
INCOME FUND
Investment Objective
The Income Fund seeks current income and total return.
Investment Policies
We invest in a diversified portfolio of debt and variable rate debt
securities issued by domestic and foreign issuers. We invest in a broad
spectrum of U.S. issues, including U.S. Government obligations, mortgage- and
other asset-backed securities, and the debt securities of financial
institutions, corporations, and others. We target average portfolio duration
in a range based on the average portfolio duration of the mutual funds
included in the Lipper Corporate A-Rated Debt Average (a peer group comparison
of funds with similar objectives and policies). The published average duration
of these funds is currently about 5.6 years, but is expected to change over
time. We attempt to enhance the Fund's performance by adjusting the average
duration within the range to benefit from the effect of various economic
factors, such as inflation, or growth cycles.
Permitted Investments
Under normal market conditions, we invest:
. up to 70% of our total assets in corporate debt securities such as bonds,
debentures and notes, including debt securities that can be converted
into or exchanged for common stocks;
. at least 30% of our total assets in U.S. Government obligations;
. up to 50% of our total assets in mortgage-backed securities and up to 25%
of our assets in asset-backed securities; and
. at least 80% of our total assets in investment-grade debt securities. The
Fund may invest up to 20% of its total assets in below investment-grade
debt securities rated, at the time of purchase, in the fifth highest
long-term rating category assigned by an NRSRO or unrated and determined
by us to be of comparable quality.
We may also invest in zero coupon securities and enter into dollar roll
transactions. We invest primarily in securities with maturities (or average
life in the case of mortgage-backed and similar securities) ranging from
overnight to 40 years. It is anticipated that the Fund's portfolio will have
an average dollar-weighted maturity of between 3 and 15 years.
Important Risk Factors
Mortgage- and asset-backed securities may not be guaranteed by the U.S.
Treasury. Mortgage- and asset-backed securities are subject to prepayment
acceleration and extension risk,
15
<PAGE>
either of which can reduce the rate of return on the portfolio. The Income
Fund may invest in lower-rated securities, which tend to be more sensitive to
economic conditions and involve greater credit risk than higher-rated
securities.
You should consider the Common Risks on page 5, and the General Investment
Risks beginning on page 22. They are all important to your investment choice.
Portfolio Manager
.Marjorie H. Grace, CFA
Will manage the Income Fund upon inception. Ms. Grace joins WCM from NIM,
where she was Director of Taxable Fixed-Income investments. She had
managed portfolios for NIM or its affiliates since 1992. She has over
eighteen years of investment management experience.
INTERMEDIATE GOVERNMENT INCOME FUND
Investment Objective
The Intermediate Government Income Fund seeks current income, consistent
with safety of principal.
Investment Policies
We invest primarily in fixed and variable rate U.S. Government obligations.
Under normal circumstances, we invest at least 65% of our total assets in U.S.
Government obligations and may invest up to 35% of our total assets in debt
securities that are not U.S. Government obligations. We target average
portfolio duration in a range based on the average duration of 5-year U.S.
Treasury securities. Average portfolio maturity tends to be between four and
eight years. We emphasize the use of intermediate maturity securities to
manage interest rate risk and use mortgage-backed securities to enhance yield.
Permitted Investments
Under normal market conditions, we invest:
. at least 65% of our total assets in U.S. Government obligations;
. up to 50% of our total assets in mortgage-backed securities, and up to
25% of our total assets in asset-backed securities; and
. up to 10% of our total assets in zero coupon securities.
As part of our mortgage-backed securities investments, we may enter into
dollar rolls. We may not invest more than 25% of our total assets in
securities issued or guaranteed by any single agency or instrumentality of the
U.S. Government, except the U.S. Treasury.
We will purchase only securities that are rated, at the time of purchase,
within the two highest rating categories assigned by an NRRO or, if unrated,
are determined by us to be of comparable quality.
Important Risk Factors
Mortgage- and asset-backed securities may not be guaranteed by the U.S.
Treasury. Mortgage- and asset-backed securities are subject to prepayment
acceleration and extension risk, either of which can reduce the rate of return
on the portfolio. Asset-backed securities are subject to risk of default on
the underlying assets, particularly during periods of economic downturn. Zero
coupon securities are sensitive to changes in interest rates, and tend to lose
value in a rising interest rate environment. Zero coupon securities also
generate ordinary income, which must be distributed to shareholders, even when
they do not generate funds to pay such distributions.
16
<PAGE>
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 22, and the specific risks listed here. They are all
important to your investment choice.
Portfolio Managers
.Marjorie H. Grace, CFA
Will manage the Intermediate Government Income Fund upon inception. Ms.
Grace joins WCM from NIM, where she was Director of Taxable Fixed-Income
investments. She had managed portfolios for NIM or its affiliates since
1992. She has over eighteen years of investment management experience.
LIMITED TERM GOVERNMENT INCOME FUND
Investment Objective
The Limited Term Government Income Fund seeks current income, while
preserving capital.
Investment Policies
We seek current income by actively managing a diversified portfolio
consisting primarily of short- to intermediate-term U.S. Government
obligations. We may invest in securities of any maturity. Under ordinary
circumstances, we expect to maintain a dollar-weighted average maturity of
between 2 and 5 years. We seek to preserve capital by shortening average
maturity when we expect interest rates to increase and to increase total
return by lengthening maturity when we expect interest rates to fall.
Permitted Investments
Under normal market conditions, we invest:
. at least 65% of our total assets in U.S. Government obligations or
repurchase agreements collateralized by U.S. Government obligations;
. in investment grade corporate debt securities including asset-backed
securities;
. no more than 5% of our total assets in securities downgraded below
investment-grade after we acquired them;
. up to 25% of assets in dollar-denominated debt of U.S. branches of
foreign banks or foreign branches of U.S. banks; and
. in stripped Treasury securities, adjustable-rate mortgage securities, and
adjustable portions of collateralized mortgage obligations ("CMOs").
Important Risk Factors
Mortgage- and asset-backed securities and CMOs may not be guaranteed by the
U.S. Treasury. Mortgage-backed securities, asset-backed securities and CMOs
are subject to prepayment risk, which can reduce the rate of return on such
securities. Asset-backed securities are subject to risk of default on the
underlying assets, particularly during periods of economic downturn.
Securities of U.S. branches of foreign banks and foreign branches of
U.S. banks are subject to additional risks, such as political turmoil, the
imposition of foreign withholding taxes, and the establishment of exchange
controls or the adoption of other foreign governmental restrictions that may
affect the payment of principal and or interest on these securities.
Stripped Treasury securities have greater interest rate risk than
traditional government securities with identical credit ratings and like
maturities.
17
<PAGE>
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 22, and the specific risks listed above. They are all
important to your investment choice.
Portfolio Managers
.Paul C. Single
Principal
Will manage the Short-Intermediate U.S. Government Income Fund upon
inception, and has been with Wells Fargo/Wells Capital Management since
1989. Mr. Single has over 16 years of investment management experience.
.Jacqueline A. Flippin
Principal
Will co-manage the Short-Intermediate U.S. Government Income Fund upon
inception, and has been with Wells Fargo/Wells Capital Management since
1998. Prior to joining the firm, Ms. Flippin was a short-term debt
securities trader and portfolio manager for McMorgan & Company, an
investment advisor, since 1994. Ms. Flippin has over ten years of
investment management experience.
TAX-FREE INCOME FUND
Investment Objective
The Tax-Free Income Fund seeks current income exempt from federal income
taxes.
Investment Policies
We invest primarily in a portfolio of investment grade municipal securities.
We invest at least 80% of our total assets in municipal securities paying
interest exempt from federal income taxes, including the federal AMT.
Permitted Investments
Under normal market conditions, we invest:
. at least 80% of our total assets in municipal obligations that pay
interest exempt from federal income tax;
. up to 20% of our total assets in securities whose income is subject to
the federal AMT; and
. in municipal obligations rated in the four highest credit categories by
nationally recognized rating organizations.
The average dollar-weighted maturity of the Fund's assets normally will be
between 10 and 20 years, but may vary depending on market conditions. In
general, the longer the maturity of a municipal security, the higher the rate
of interest it pays. However, a longer maturity security is generally subject
to greater interest rate risk and price volatility. We emphasize investments
in municipal securities that produce interest income rather than stability of
the Fund's net asset value.
Important Risk Factors
Municipal obligations rely on the creditworthiness or revenue production of
their issuers. Municipal obligations may be difficult to obtain because of
limited supply, which may increase the cost of such securities and effectively
reduce the portfolio's yield. Typically, less information is available about a
municipal issuer than is available for other types of securities issuers.
18
<PAGE>
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 22, and the specific risks listed above. They are all
important to your investment choice.
Portfolio Manager
.William T. Jackson, CFA
Will manage of the Tax-Free Income Fund upon its inception. Mr. Jackson
joins WCM from NIM, where he was Managing Director of Tax-Exempt Fixed-
Income investing. He had managed portfolios for NIM or its affiliates
since 1993. He has over fourteen years of investment management
experience.
CASH INVESTMENT MONEY MARKET FUND
Investment Objective
The Cash Investment Fund seeks high current income, preservation of capital
and liquidity.
Investment Policies
We invest in a broad spectrum of high quality money market instruments.
These include commercial paper, negotiable certificates of deposit, bank
notes, bankers' acceptances and time deposits of U.S. banks (including savings
banks and savings associations), foreign branches of U.S. banks, foreign banks
and their non-U.S. branches, U.S. branches and agencies of foreign banks, and
wholly owned banking-related subsidiaries of foreign banks. We limit our
investments in obligations of financial institutions to institutions that at
the time of investment have total assets in excess of $1 billion, or the
equivalent in other currencies.
Permitted Investments
Under normal market conditions, we invest:
. at least 80% of our assets in high-quality, short-term instruments of
domestic and foreign issuers;
. up to 25% of our assets in foreign obligations; and
. not more than 25% of our assets in any single industry, subject to
certain exceptions (see Statement of Additional Information for details).
Important Risk Factors
Although we seek to maintain a $1.00 per share net asset value, there is no
guarantee that we will be able to do so. Generally, short-term funds do not
earn as high a level of income as funds that invest in longer-term
instruments. Securities of U.S. branches of foreign banks and foreign branches
of U.S. banks are subject to additional risks, such as political turmoil, the
imposition of foreign withholding taxes, and the establishment of exchange
controls or the adoption of other foreign governmental restrictions that may
affect the payment of principal and or interest on these securities.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 22, and the specific risks listed above. They are all
important to your investment choice.
19
<PAGE>
NATIONAL TAX-FREE INSTITUTIONAL MONEY MARKET FUND
Investment Objective
The National Tax-Free Institutional Money Market Fund seeks high current
income exempt from federal income taxes, while preserving capital and
liquidity.
Investment Policies
We invest 100% of our assets in short-term municipal instruments, including
leases. These investments may have fixed, variable, or floating rates of
interest and may be zero coupon securities. We normally will invest at least
80% of our total assets in federally tax-exempt instruments, and up to 20% of
our total assets in securities that pay interest income subject to the federal
AMT.
Permitted Investments
Under normal market conditions, we invest:
. at least 80% of our assets in federally tax-exempt instruments;
. up to 20% of our assets in instruments whose income may be subject to the
federal AMT; and
. up to 35% of our assets in issuers located in a single state.
We may invest more than 25% of our total assets in industrial development
bonds and in participation interests in these securities.
Important Risk Factors
Although we seek to maintain a $1.00 per share net asset value, there is no
guarantee that we will be able to do so. Generally, short-term funds do not
earn as high a level of income as funds that invest in longer-term
instruments. Increased investment in the securities of issuers in a single
state increases the Fund's exposure to risks associated with economic down
turns or legislative or regulatory changes in the state.
Please remember that some securities in the portfolio may be subject to the
federal alternative minimum tax.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 22, and the specific risks listed above. They are all
important to your investment choice.
TREASURY PLUS INSTITUTIONAL MONEY MARKET FUND
Investment Objective
The Treasury Plus Institutional Money Market Fund seeks current income and
stability of principal.
Investment Policies
We invest in obligations issued or guaranteed by the U.S. Treasury, "plus"
we also invest in repurchase agreements and other instruments collateralized
or secured by Treasury obligations. We buy obligations with remaining
maturities of 397 days or less.
Permitted Investments
Under normal market conditions, we invest substantially all of our assets:
. in U.S. Treasury obligations; and
. in repurchase agreements collateralized by U.S. Treasury obligations.
20
<PAGE>
Important Risk Factors
Although we seek to maintain a $1.00 per share net asset value, there is no
guarantee that we will be able to do so. Generally, short-term funds do not
earn as high a level of income as funds that invest in longer-term
instruments. Investing in shares of other money market funds with
substantially similar objectives and investment policies will subject the Fund
to the fees charged by the other funds, which will reduce returns from these
investments.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 22, and the specific risks listed above. They are all
important to your investment choice.
GOVERNMENT MONEY MARKET FUND
Investment Objective
The Government Money Market Fund seeks high current income, while preserving
capital and liquidity.
Investment Policies
We invest in U.S. Government obligations, or repurchase agreements
collateralized by such obligations. We buy obligations with remaining
maturities of 397 days or less.
Permitted Investments
Under normal market conditions, we invest substantially all of our assets:
. in U.S. Government obligations; and
. in repurchase agreements collateralized by U.S. Government obligations.
Important Risk Factors
Although we seek to maintain a $1.00 per share net asset value, there is no
guarantee that we will be able to do so. Generally, short-term funds do not
earn as high a level of income as funds that invest in longer-term
instruments.
You should consider the Common Risks on page 5, the General Investment Risks
beginning on page 22, and the specific risks listed above. They are all
important to your investment choice.
21
<PAGE>
GENERAL INVESTMENT RISKS
Understanding the risks involved in mutual fund investing will help you make
an informed decision that takes into account your risk tolerance and
preferences. You should carefully consider the risks common to investing in
all mutual funds, including the Wells Fargo Funds. Certain common risks are
identified in the Summary of Important Risks on page . Other risks of mutual
fund investing include the following:
. Unlike bank deposits such as CDs or savings accounts, mutual funds are
not insured by the FDIC.
. We cannot guarantee that we will meet our investment objectives.
. We do not guarantee the performance of a Fund, nor can we assure you that
the market value of your investment will not decline. We will not "make
good" any investment loss you may suffer, nor can anyone we contract with
to provide certain services, such as selling agents or investment
advisors, offer or promise to make good any such losses.
. Share prices--and therefore the value of your investment--will increase
and decrease with changes in the value of the underlying securities and
other investments.
. Investing in any mutual fund, including those deemed conservative,
involves risk, including the possible loss of any money you invest.
. An investment in a single Fund, by itself, does not constitute a complete
investment plan.
. The Funds may invest a portion of their assets in U.S. Government
obligations. It is important to recognize that the U.S. Government does
not guarantee the market value or current yield of those obligations. Not
all U.S. Government obligations are backed by the full faith and credit
of the U.S. Treasury, and the U.S. Government's guarantee does not extend
to the Funds themselves.
. The Funds may use certain derivative instruments, such as options or
futures contracts. The term "derivatives" covers a wide number of
investments, but in general it refers to any financial instrument whose
value is derived, at least in part, from the price of another security or
a specified index, asset or rate. Some derivatives may be more sensitive
to interest rate changes or market moves, and some may be susceptible to
changes in yields or values due to their structure or contract terms.
. The Funds may temporarily hold assets in cash or in money market
instruments, including U.S. Government obligations, shares of other
mutual funds and repurchase agreements, or make other short-term
investments, either to maintain liquidity or for short-term defensive
purposes when we believe it is in the best interests of shareholders to
do so. Except with respect to the money market Funds, to the extent a
Fund's assets are so invested, they may cause a Fund not to achieve its
investment objective. This practice is expected to have limited, if any,
effect on the Funds' pursuit of their objectives over the long term.
. The Asset Allocation Fund and the taxable income funds invest a portion
of their assets in U.S. Government obligations, such as securities issued
or guaranteed by the Government National Mortgage Association ("GNMAs"),
the Federal National Mortgage Association ("FNMAs") and the Federal Home
Loan Mortgage Corporation ("FHLMCs"). Each are mortgage-backed securities
representing partial ownership of a pool of residential mortgage loans. A
"pool" or group of such mortgages is assembled and, after being approved
by the issuing or guaranteeing entity, is offered to investors through
securities dealers. Mortgage-backed securities are subject to prepayment
acceleration and extension risk, either of which can alter the maturity
of the securities and also reduce the rate of return on the portfolio.
Collateralized mortgage obligations ("CMOs") typically represent
principal-only and interest-only portions of such securities that are
subject to increased interest-rate and credit risk.
. The market value of lower-rated debt securities and unrated securities of
comparable quality that the Income Fund may invest in tends to reflect
individual developments affecting the issuer to a greater extent than the
market value of higher-rated securities,
22
<PAGE>
which react primarily to fluctuations in the general level of interest
rates. Lower-rated securities also tend to be more sensitive to economic
conditions than higher-rated securities. These lower-rated debt securities
are considered by the rating agencies, on balance, to be predominantly
speculative with respect to the issuer's capacity to pay interest and
repay principal. These securities generally involve more credit risk than
securities in higher-rating categories. Even securities rated "BBB" by S&P
or by Moody's ratings which are considered investment-grade, possess some
speculative characteristics.
Investment practices and risk levels are carefully monitored. Every attempt
is made to ensure that the risk exposure for each Fund remains within the
parameters of its objective.
What follows is a general list of the types of risks (some of which are
described above) that may apply to a given Fund and a table showing some of
the additional investment practices that each Fund may use and the risks
associated with them. Additional information about these practices is
available in the Statement of Additional Information.
Counter-Party Risk--The risk that the other party in a repurchase agreement
or other transaction will not fulfill its contract obligation.
Credit Risk--The risk that the issuer of a debt security will be unable to
make interest payments or repay principal on schedule. If an issuer does
default, the affected security could lose all of its value, or be renegotiated
at a lower interest rate or principal amount. Affected securities might also
lose liquidity. Credit risk also includes the risk that a party in a
transaction may not be able to complete the transaction as agreed.
Currency Risk--The risk that a change in the exchange rate between U.S.
dollars and a foreign currency may reduce the value of an investment made in a
security denominated in that foreign currency.
Diplomatic Risk--The risk that an adverse change in the diplomatic relations
between the United States and another country might reduce the value or
liquidity of investments in either country.
Experience Risk--The risk presented by a new or innovative security. The
risk is that insufficient experience exists to forecast how the security's
value might be affected by various economic conditions.
Information Risk--The risk that information about a security is either
unavailable, incomplete or is inaccurate.
Interest Rate Risk--The risk that changes in interest rates can reduce the
value of an existing security. Generally, when interest rates increase, the
value of a debt security decreases. The effect is usually more pronounced for
securities with longer maturities.
Leverage Risk--The risk that an investment practice, such as lending
portfolio securities or engaging in forward commitment or when-issued
securities transactions, may increase a Fund's exposure to market risk,
interest rate risk or other risks by, in effect, increasing assets available
for investment.
Liquidity Risk--The risk that a security cannot be sold, or cannot be sold
without adversely affecting the price.
Market Risk--The risk that the value of a stock, bond or other security will
be reduced by market activity. This is a basic risk associated with all
securities.
23
<PAGE>
Political Risk--The risk that political actions, events or instability may
be unfavorable for investments made in a particular nation's or region's
industry, government or markets.
Prepayment Risk--The risk that consumers will accelerate or extend their
prepayment of mortgage loans or other receivables, which can shorten or
lengthen the maturity of a mortgage-backed or other asset-backed security, and
reduce a portfolio's return.
Regulatory Risk--The risk that changes in government regulations will
adversely affect the value of a security. Also the risk that an insufficiently
regulated market might permit inappropriate trading practices.
Year 2000 Risk--The Funds' principal service providers have advised the
Funds that they are working on the necessary changes to their computer systems
to avoid any system failure based on an inability to distinguish the year 2000
from the year 1900, and that they expect their systems to be adapted in time.
There can, of course, be no assurance of success. In addition, the companies
or entities in which the Funds invest also could be adversely impacted by the
Year 2000 issue, especially foreign entities, which may be less prepared for
Year 2000. The extent of such impact cannot be predicted.
24
<PAGE>
Investment Practice/Risk
The following tables list some of the additional investment practices of the
Funds, including some not disclosed in the Investment Objective and Investment
Policies sections of the Prospectus. The risks indicated after the description
of the practice are NOT the only potential risks associated with that
practice, but are among the more prominent. Market risk is assumed for each.
See the Investment Objective and Investment Policies for each Fund or the
Statement of Additional Information for more information on these practices.
These Investment Practices and Risks are Common to all the Funds:
<TABLE>
<CAPTION>
Investment Practice Risk ALL FUNDS
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Floating and Variable Rate Debt
Instruments with interest rates that are adjusted Interest Rate and .
either on a schedule or when an index or benchmark Credit Risk
changes.
- --------------------------------------------------------------------------------------------
Repurchase Agreements
A transaction in which the seller of a security agrees Credit and .
to buy back a security at an agreed upon time and Counter-Party Risk
price, usually with interest.
- --------------------------------------------------------------------------------------------
Other Mutual Funds
The temporary investment in shares of another mutual Market Risk .
fund. A pro rata portion of the other fund's expenses,
in addition to the expenses paid by the Funds, will be
borne by Fund shareholders.
- --------------------------------------------------------------------------------------------
Foreign Obligations
Dollar-denominated debt obligations of foreign Information, Political, .
branches of U.S. banks or U.S. branches of foreign Regulatory, Diplomatic,
banks and Liquidity Risk
- --------------------------------------------------------------------------------------------
Privately Issued Securities
Securities that are not publicly traded but which may Liquidity Risk .
or may not be resold in accordance with Rule 144A of
the Securities Act of 1933.
- --------------------------------------------------------------------------------------------
Loans of Portfolio Securities
The practice of loaning securities to brokers, dealers Credit, Counter-Party .
and financial institutions to increase return on those and Leverage Risk
securities. Loans may be made up to 1940 Act limits
(currently 33 1/3% of total assets).
- --------------------------------------------------------------------------------------------
Borrowing Policies
The ability to borrow from banks for temporary Leverage Risk .
purposes to meet shareholder redemptions.
- --------------------------------------------------------------------------------------------
Illiquid Securities
A security that cannot be readily sold, or cannot be Liquidity Risk .
readily sold without negatively affecting its fair
price. Limited to 15% of total assets (10% for money
market funds).
</TABLE>
25
<PAGE>
These Investment Practices and Risks are Common to the Equity and Allocation
Funds:
<TABLE>
<CAPTION>
Asset Income Small
Allocation Growth Equity Cap
Investment Practice Risk Fund Fund Fund Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Foreign Securities
Securities issued by a Information, . . . .
non-U.S. company or debt Political,
of a foreign government Regulatory,
in the form of an Diplomatic,
American Depositary Liquidity and
Receipt or similar Currency Risk
instrument.
- --------------------------------------------------------------------------------
Options
The right or obligation Credit, Information . . . .
to receive or deliver a and Liquidity Risk
security or cash payment
depending on the
security's price or the
performance of an index
or benchmark. Types of
options used may
include: options on
securities, options on a
stock index, stock index
futures and options on
stock index futures to
protect liquidity and
portfolio value.
These Investment Practices and Risks are Common to the Income Funds:
<CAPTION>
Ltd.
Int. Term Tax-
Gov't Gov't Free
Income Income Income Income
Investment Practice Risk Fund Fund Fund Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Foreign Securities
Securities issued by a Information, . . . .
non-U.S. company or debt Political,
of a foreign government Regulatory,
in the form of an Diplomatic,
American Depositary Liquidity and
Receipt or similar Currency Risk
instrument.
- --------------------------------------------------------------------------------
Forward Commitments,
When-Issued Securities
Delayed Delivery
Transactions
Securities bought or Interest Rate, . . . .
sold for delivery at a Leverage, Credit and
later date or bought or Experience Risk
sold for a fixed price
at a fixed date.
- --------------------------------------------------------------------------------
Mortgage- and Asset-
Backed Securities
Securities consisting of Interest Rate, . . . .
an undivided fractional Credit, Prepayment
interests in pools of and Experience Risk
consumer loans, such as
mortgage loans, car
loans, credit card debt,
or receivables held in
trust.
- --------------------------------------------------------------------------------
High Yield Securities
Debt securities of lower Interest Rate and .
quality that produce Credit Risk
generally higher rates
of return. These
securities, also known
as "junk bonds," tend to
be more sensitive to
economic conditions and
during sustained periods
of rising interest
rates, may experience
interest and/or
principal defaults.
- --------------------------------------------------------------------------------
Stripped Obligations
Securities that give Interest Rate Risk .
ownership to either
future payments of
interest or a future
payment of principal,
but not both. These
securities tend to have
greater interest rate
sensitivity than
conventional debt
obligations.
- --------------------------------------------------------------------------------
Loan Participations
Debt obligations that Credit Risk . . . .
represent a portion of a
larger loan made by a
bank. Generally sold
without guarantee or
recourse, some
participations sell at a
discount because of the
borrower's credit
problems.
</TABLE>
26
<PAGE>
ORGANIZATION AND MANAGEMENT OF THE FUNDS
A number of different entities provide services to the Funds. This section
shows how the Funds are organized, lists the entities that perform different
services, and explains how these service providers are compensated. Further
information is available in the Statement of Additional Information for the
Funds.
About Wells Fargo Funds Trust
Wells Fargo Funds Trust (the "Trust") was organized as a Delaware business
trust on March 10, 1999. The Board of Trustees of the Trust supervises each
Fund's activities, monitors its contractual arrangements with various service
providers and decides upon matters of general policy.
The Trust was created to succeed to the assets and operations of the various
mutual funds in the Stagecoach Family of Funds and the Norwest Advantage
Family of Funds. The holding company of Wells Fargo Bank, the investment
advisor to the Stagecoach Family of Funds, and the holding company of Norwest
Investment Management, Inc., the investment advisor to the Norwest Advantage
Family of Funds, merged in November 1998. Each of the Funds described in this
prospectus is intended to succeed to the assets and operations of one or more
Stagecoach and/or Norwest Advantage Funds. One of these predecessor funds is
expected to be the "accounting survivor," which means that its performance and
financial statement history will be assumed by the Wells Fargo Funds Trust
Fund. The succession transactions are conditioned on shareholder approval by
the shareholders of the various Stagecoach and Norwest Advantage Funds. The
Table on page 33 identifies the expected accounting survivors.
In the following sections, the percentages shown are the percentages of the
average daily net assets of each Fund class paid on an annual basis for the
services described.
<TABLE>
<CAPTION>
BOARD OF TRUSTEES
-----------------
<S> <C>
Supervises the Funds' activities
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT ADVISOR CUSTODIANS
------------------ ----------
<C> <S>
Wells Fargo Bank, N.A. Norwest Bank Minnesota, N.A.
6th St. & Marquette, Minneapolis,
525 Market St., San Francisco, CA MN
(All Funds except Asset Allocation
Fund)
Barclays Global Investors, N.A.
45 Fremont St., San Francisco, CA
(Asset Allocation Fund only)
Provide safekeeping for the Funds'
Manages the Funds' investment activities assets
<CAPTION>
INVESTMENT SUB-ADVISORS
-----------------------
<C> <S>
Wells Capital Management, Inc. Barclays Global Fund Advisors
525 Market Street 45 Fremont Street
San Francisco, CA San Francisco, CA
(All Funds except Asset Allocation Fund) (Asset Allocation Fund only)
Manages the Fund's investment
Manages the Funds' investment activities activities
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDER
DISTRIBUTOR ADMINISTRATOR FOR TRANSFER AGENT SERVICING AGENTS
- ----------- ----------------- -------------- ----------------
<S> <C> <C> <C>
Stephens Inc. Wells Fargo Bank, N.A. BFDS Various Agents
111 Center St. 525 Market St. Two Heritage Drive
Little Rock, AR San Francisco, CA Quincy, MA
Markets the Funds and Manages the Funds' Maintains records of Provide services to
distributes shares business activities shares and supervises customers
the paying of
dividends
</TABLE>
FINANCIAL SERVICES FIRMS AND SELLING AGENTS
-------------------------------------------
Advise current and prospective shareholders on their Fund investments
SHAREHOLDERS
- ------------
27
<PAGE>
The Investment Advisor
Wells Fargo Bank provides portfolio management and fundamental security
analysis services as the advisor for each of the Funds. Wells Fargo Bank,
founded in 1852, is the oldest bank in the western United States and is one of
the largest banks in the United States. Wells Fargo Bank is a wholly owned
subsidiary of Wells Fargo & Company, a national bank holding company. As of
December 31, 1998, Wells Fargo Bank and its affiliates provided advisory
services for over $202 billion in assets.
For providing these services, Wells Fargo Bank is entitled to receive the
following fees:
<TABLE>
<CAPTION>
Equity and Allocation Funds
---------------------------
<S> <C>
Asset Allocation Fund.................................................... .80
Growth Fund.............................................................. .75
Income Equity Fund....................................................... .75
Small Cap Fund........................................................... .90
Income Funds
------------
Income Fund.............................................................. .50
Intermediate Government Income Fund...................................... .50
Limited Term Government Income Fund...................................... .50
Tax-Free Income Fund..................................................... .40
Money Market Funds
------------------
Cash Investment Money Market Fund........................................ .10
National Tax-Free Institutional Money Market Fund........................ .10
Treasury Plus Institutional Money Market Fund............................ .10
Government Money Market Fund............................................. .35
</TABLE>
The Sub-Advisors
Wells Capital Management ("WCM"), a wholly owned subsidiary of Wells Fargo
Bank N.A., is the sub-advisor for all of the Funds except the Asset Allocation
Fund. In this capacity, it is responsible for the day-to-day investment
management activities of the Funds. As of December 31, 1998, WCM provided
advisory services for over $39 billion in assets.
Barclays Global Fund Advisors ("BGFA"), a wholly owned subsidiary of
Barclays Global Investors, N.A. and an indirect subsidiary of Barclays Bank
PLC, is the sub-advisor for the Asset Allocation Fund. In this capacity, it is
responsible for the model that is used to manage the investment portfolio and
the selection of securities for the portfolio. BGFA was created from the
reorganization of Wells Fargo Nikko Investment Advisors, a former affiliate of
Wells Fargo Bank, and is one of the largest providers of index portfolio
management services. As of December 31, 1998, BGFA provided investment
advisory services for $619 billion in assets.
The Administrator
Wells Fargo Bank provides the Funds with administrative services, including
general supervision of each Fund's operation, coordination of the other
services provided to each Fund, compilation of information for reports to the
SEC and state securities commissions, preparation of proxy statements and
shareholder reports, and general supervision of data compilation in connection
with preparing periodic reports to the Trust's Trustees and officers. Wells
Fargo Bank also furnishes office space and certain facilities to conduct each
Fund's business. For providing
28
<PAGE>
these services, Wells Fargo Bank is entitled to receive a fee of .15% of the
average annual net assets of each Fund.
Shareholder Servicing Plan
We have a shareholder servicing plan for the Service Class and Institutional
Class shares of certain Funds as shown in the chart below. Under this plan, we
have engaged various shareholder servicing agents to process purchase and
redemption requests, to service shareholder accounts, and to provide other
related services.
For these services relevant Classes pay shareholder servicing agents as
follows:
<TABLE>
<CAPTION>
Service Inst.
Fund Class Class
---- ------- -----
<S> <C> <C>
Small Cap Fund................................................. N/A .10%
Cash Investment Money Market Fund.............................. .25% N/A
National Tax-Free Institutional Money Market Fund.............. .25% N/A
Treasury Plus Institutional Money Market Fund.................. .25% N/A
</TABLE>
YOUR ACCOUNT
This section tells you how Fund shares are priced, how to open an account
and how to buy and sell Fund shares once your account is open.
Pricing Fund Shares:
. As with all mutual fund investments, the price you pay to purchase shares
or the price you receive when you redeem shares is not determined until
after a request has been received in proper form.
. We determine the Net Asset Value ("NAV") of each class of the Funds'
shares each business day as of the close of regular trading on the NYSE.
We determine the NAV by subtracting the Fund class's liabilities from its
total assets, and then dividing the result by the total number of
outstanding shares of that class. Each non-money market Fund's assets are
generally valued at current market prices. Each money market Fund uses
the amortized cost method to value portfolio securities pursuant to Rule
2a-7 under the 1940 Act. See the Statement of Additional Information for
further disclosure.
. We process requests to buy or sell shares of the non-money market funds
each business day as of the close of regular trading on the New York
Stock Exchange ("NYSE"), which is usually 1:00 p.m. (Pacific time)/3:00
p.m. (Central time). The money market funds calculate NAV at 2:00 p.m.
(Pacific time)/4:00 p.m. (Central time). If the markets close early, the
Funds may close early and may value their shares at earlier times under
these circumstances. Any request we receive in proper form before the
close of regular trading on the NYSE is processed the same day. Requests
we receive after the cut off are processed the next business day.
. The non-money market Funds are open for business on each day the NYSE is
open for business. NYSE holidays include New Year's Day, Martin Luther
King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. When any holiday
falls on a weekend, the NYSE typically is closed on the weekday
immediately before or after such holiday.
29
<PAGE>
. The money market funds are open for business each day Wells Fargo Bank is
open for business and are closed generally on federal bank holidays.
Typically, Institutional Class shares are bought and held on your behalf by
the Institution through which you are investing. Check with your customer
account representative or your Customer Account Agreement for the rules
governing your investment.
Minimum Investments:
. Minimum, initial and subsequent investment amounts are determined by your
Customer Account Agreement with your Institution, and are generally:
. Institutional Class--$2,000,000 per Fund minimum initial investment.
. Service Class--$100,000 per Fund minimum initial investment.
. All Classes--$25,000 per Fund for all investments after your first.
How to Buy Shares
You can open a Fund account and buy Fund shares through an Institution
through which you have established a Customer Account. Investors interested in
purchasing Institutional shares of the Funds should contact an account
representative at their Institution and should understand the following:
. Share purchases are made through a Customer Account at an Institution in
accordance with the terms of the Customer Account involved;
. Institutions are usually the holders of record of Institutional shares
held through Customer Accounts and maintain records reflecting their
customers' beneficial ownership of the shares;
. Institutions are responsible for transmitting their customers' purchase
and redemption orders to the Funds and for delivering required payment on
a timely basis;
. The exercise of voting rights and the delivery of shareholder
communications from the Funds is governed by the terms of the Customer
Account involved; and
. Institutions may charge their customers account fees and may receive fees
from us with respect to investments their customers have made with the
Funds. See "Organization and Management of the Funds" for further details
about these fees.
How to Sell Shares
Institutional shares must be redeemed in accordance with the account
agreement governing your Customer Account at the Institution. Please read the
Customer Account agreement with your Institution for rules governing selling
shares.
General Notes for Selling Shares
. We process requests we receive from an Institution in proper form before
the close of the NYSE, usually 1:00 P.M. Pacific time, at the NAV
determined on the same business day. Requests we receive after this time
are processed on the next business day.
. Redemption proceeds are usually wired to the redeeming Institution the
following business day.
. We reserve the right to delay payment of a redemption for up to 15 days
so that we may be reasonably certain that investments made by check have
been collected. Payments of
30
<PAGE>
redemptions also may be delayed under extraordinary circumstances or as
permitted by the SEC in order to protect remaining shareholders. Payments
of redemptions also may be delayed up to seven days under normal
circumstances, although it is not our policy to delay such payments.
. Generally, we pay redemption requests in cash, unless the redemption
requests is for more than $250,000 or 1% of the net assets of the Fund by
a single shareholder over a ninety-day period. If a request for a
redemption is over these limits it may be to the detriment of existing
shareholders. Therefore, we may pay the redemption in part on in whole in
securities of equal value.
Exchanges
Exchanges between Wells Fargo Funds are two transactions: a sale of one Fund
and the purchase of another. In general, the same rules and procedures that
apply to sales and purchases apply to exchanges. There are, however,
additional factors you should keep in mind while making or considering an
exchange:
. You should carefully read the Prospectus for the Fund into which you wish
to exchange.
. Every exchange involves selling Fund shares and that sale may produce a
capital gain or loss for federal income tax purposes.
. If you are making an initial investment into a new Fund through an
exchange, you must exchange at least the minimum first purchase amount of
the Fund you are redeeming, unless your balance has fallen below that
amount due to market conditions.
. Any exchange between Funds you already own must meet the minimum
redemption and subsequent purchase amounts for the Funds involved.
. In order to discourage excessive Fund transaction expenses that must be
borne by other shareholders, we reserve the right to limit or reject
exchange orders. Generally, we will notify you 60 days in advance of any
changes in your exchange privileges.
. You may make exchanges only between like share classes.
31
<PAGE>
OTHER INFORMATION
Dividend and Capital Gain Distributions
The Funds in this Prospectus pay dividends periodically and make capital
gains distributions annually. The equity funds, except the Small Cap Fund, pay
any dividends quarterly. The Small Cap Fund pays any dividends annually. The
income and money market funds pay any dividends monthly.
Distributions paid by a Fund are automatically reinvested to purchase new
shares of the Funds. The new shares are purchased at NAV, generally on the day
distributions are paid.
Taxes
The following discussion regarding taxes is based on laws that were in
effect as of the date of this Prospectus. The discussion summarizes only some
of the important tax considerations that affect the Funds and you as a
shareholder. It is not intended as a substitute for careful tax planning. You
should consult your tax advisor about your specific tax situation. Federal
income tax considerations are discussed further in the Statement of Additional
Information.
Dividends distributed from the Tax-Free Income Fund and Municipal Money
Market Fund attributable to their net interest income from tax-exempt
securities will not be subject to federal income tax. Dividends distributed
from these and the other Funds attributable to their income from other
investments and net short-term capital gain (generally, the excess of net
short-term capital gains over net long-term capital losses) will be taxable to
you as ordinary income. Corporate shareholders may be able to deduct a portion
of their dividends when determining their taxable income.
We will pass on to you any net capital gain (generally the excess of net
long-term capital gains over net short-term capital losses) earned by a Fund
as a capital gain distribution. In general, these distributions will be
taxable to you as long-term capital gains which may qualify for taxation at
preferential rates in the hands of non-corporate shareholders.
In general, all distributions will be taxable to you when paid even if they
are paid in additional Fund shares. However, distributions declared in
October, November and December are distributed by the following January will
be taxable as if they were paid on December 31 of the year in which they were
declared. We will notify you annually as to the status of your Fund
distributions.
If you buy shares of a Fund shortly before it makes a distribution, your
distribution from the Fund will, in effect, be a taxable return of part of
your investment. Similarly, if you buy shares of a Fund that holds appreciated
securities in its portfolio, you will receive a taxable return of part of your
investment if and when the Fund sells the appreciated securities and realizes
the gain. Some of the Funds have built up, or have the potential to build up,
high levels of unrealized appreciation.
Except in the case of Money Market Funds, your redemptions (including
redemptions in-kind) and exchanges of Fund shares will ordinarily result in a
taxable capital gain or loss, depending on the amount you receive for your
shares (or are deemed to have paid) for them. As long as a money market fund
continually maintains a $1.00 NAV, you ordinarily will not recognize taxable
gain or loss on the redemption or exchange of such Fund shares.
Foreign shareholders may be subject to different tax treatment, including
withholding taxes. In certain circumstances, U.S. residents may also be
subject to backup withholding at a 31% rate on distributions from and
redemption proceeds paid by a Fund.
32
<PAGE>
TABLE OF PREDECESSORS
The Funds described in this Prospectus were created as part of the
reorganization of the Stagecoach Family of Funds, advised by Wells Fargo Bank,
N.A., and the Norwest Advantage Family of Funds, advised by Norwest Investment
Management, Inc., into a single mutual fund complex. The reorganization
followed the merger of the advisers' parent companies.
The chart below indicates the Stagecoach and Norwest Advantage portfolios
that are expected to be the accounting survivors.
<TABLE>
<CAPTION>
Wells Fargo Funds Trust Accounting Survivor
----------------------- -------------------
<C> <S>
Equity and Allocation Funds
Asset Allocation Fund Stagecoach Asset Allocation Fund
Growth Fund Stagecoach Growth Fund
Income Equity Fund Norwest Advantage Income Equity Fund
Small Cap Fund Stagecoach Small Cap Fund
Income Funds
Income Fund Norwest Advantage Income Fund
Intermediate Government Norwest Advantage Intermediate
Income Fund Government Income Fund
Limited Term Government Stagecoach Short-Intermediate U.S.
Income Fund Government Income Fund
Tax-Free Income Fund Norwest Advantage Tax-Free Income Fund
Money Market Funds
Cash Investment
Money Market Fund Norwest Advantage Cash Investment Fund
National Tax-Free Institutional Norwest Advantage Municipal
Money Market Fund Money Market Fund
Treasury Plus Institutional Stagecoach Treasury Plus Money Market
Money Market Fund Fund
Government Money Market Fund Norwest Advantage U.S. Government Fund
</TABLE>
33
<PAGE>
GLOSSARY
We provide the following definitions to assist you in reading this
prospectus. For a more complete understanding of these terms you should
consult your financial adviser.
ACH
Refers to the "Automated Clearing House" system maintained by the Federal
Reserve Bank which allows banks to process checks, transfer funds and perform
other tasks.
American Depositary Receipts ("ADRS")
Receipts for non-U.S. company stocks. The stocks underlying ADRs are
typically held in bank vaults. The ADR's owner is entitled to any capital
gains or dividends. ADRs are one way of owning an equity interest in foreign
companies.
Annual and Semi-Annual Report
A document that provides certain financial and other important information
for the most recent reporting period and each Fund's portfolio of investments.
Asset-Backed Securities
Securities consisting of an undivided fractional interest in pools of
consumer loans, such as car loans or credit card debt, or receivables held in
trust.
Below Investment-Grade
Securities rated BBB or lower by S&P or Baa or lower by Moody's Investor
Services, or that may be unrated securities or securities considered to be
"high risk."
Business Day
Any day the New York Stock Exchange is open is a business day for the Funds.
Capital Appreciation, Capital Growth
The increase in the value of a security. See also "total return."
Capitalization
When referring to the size of a company, capitalization means the total
number of a company's outstanding shares of stock multiplied by the price per
share. This is an accepted method of determining a company's size and is
sometimes referred to as "market capitalization."
Capital Structure
Refers to how a company has raised money to operate. Can include, for
example, borrowing or selling stock.
Collateralized Mortgage Obligation ("CMOs")
Securities collateralized by portfolios of mortgage pass-through securities.
CMOs are structured into multiple classes, and are paid according to class
maturity, shortest maturities paid first.
34
<PAGE>
Commercial Paper
Debt instruments issued by banks, corporations and other issuers to finance
short-term credit needs. Commercial paper typically is of high credit quality
and offers below market interest rates.
Convertible Debt Securities
Bonds or notes that are exchangeable for equity securities at a set price on
a set date or at the election of the holder.
Current Income
Earnings in the form of dividends or interest as opposed to capital growth.
See also "total return."
Debt Securities
Generally, a promise to pay interest and repay principal by an individual or
group of individuals sold as a security. The owner of the security is entitled
to receive any such payments. Examples include bonds and mortgage- and other
asset-backed securities and can include securities in which the right to
receive interest and principal repayment have been sold separately.
Derivatives
Securities whose values are derived in part from the value of another
security or index. An example is a stock option.
Distributions
Dividends and/or capital gains paid by a Fund on its shares.
Diversified
A diversified fund, as defined by the Investment Company Act of 1940, is one
that invests in cash, Government securities, other investment companies and no
more than 5% of its total assets in a single issuer. These policies must apply
to 75% of the Funds' total assets.
Dollar-Denominated
Securities issued by foreign banks, companies or governments in U.S.
dollars.
Dollar Rolls
Similar to a reverse Repurchase Agreement, dollar rolls are simultaneous
agreements to sell a security held in a portfolio and to purchase a similar
security at a future date at an agreed-upon price.
Duration
A measure of a security's or portfolio's sensitivity to changes in interest
rates. Duration is usually expressed in years, with longer durations typically
more sensitive to interest rate changes than shorter durations.
35
<PAGE>
FDIC
The Federal Deposit Insurance Corporation. This is the company that provides
federally sponsored insurance covering bank deposits such as savings accounts
and CDs. Mutual funds are not FDIC insured.
FHLMC
FHLMC securities are commonly known as "Freddie Mac" and are issued by the
Federal Home Loan Mortgage Corporation.
FNMA
FNMA securities are known as "Fannie Maes" are issued by the Federal
National Mortgage Association, and FHLMC securities as "Freddie Mac" and are
issued by the Federal Home Loan Mortgage Corporation.
GNMA
GNMA securities, commonly known as "Ginnie Maes," are mortgage pass-through
securities issued by the Government National Mortgage Association and
guaranteed by the U.S. Government.
Hedge
Strategy used to offset investment risk. A perfect hedge is one eliminating
the possibility of future gain or loss.
Illiquid Security
A security which cannot be readily sold, or cannot be readily sold without
negatively affecting its fair price.
Initial Public Offering
The first time a company's stock is offered for sale to the public.
Investment-Grade Debt
A type of bond rated in the top four investment categories by a nationally
recognized ratings organization. Generally these are bonds whose issuers are
considered to have a strong ability to pay interest and repay principal,
although some investment-grade bonds may have some speculative
characteristics.
Lehman Brothers 20+ Bond Index
An unmanaged index composed of U.S. Treasury bonds with 20 years or longer
dates-to-maturity.
Liquidity
The ability to readily sell a security at a fair price.
Money Market Instruments
High-quality short-term instruments meeting the requirements of Rule 2a-7 of
the 1940 Act, such as bankers' acceptances, commercial paper, repurchase
agreements and government obligations. In a money market fund, average
portfolio maturity does not exceed 90 days, and all investments have
maturities of 397 days or less at the time of purchase.
Moody's
A nationally recognized ratings organization.
36
<PAGE>
Nationally Recognized Rating Organization (NRRO)
A company that examines the ability of a bond issuer to meet its obligations
and which rates the bonds accordingly.
Net Asset Value (NAV)
The value of a single fund share. It is determined by adding together all of
a Fund's assets, subtracting accrued expenses and other liabilities, then
dividing by the total number of shares. The NAV is calculated separately for
each class of the Fund, and is determined as of the close of regular trading
on each business day the NYSE is open, typically 1:00 P.M. (Pacific time).
Options
An option is the right to buy or sell a security based on an agreed upon
price for at a specified time. For example, an option may give the holder of a
stock the right to sell the stock to another party, allowing the seller to
profit if the price has fallen below the agreed price. Options may also be
based on the movement of an index such as the S&P 500.
Preservation of Capital
The attempt by a fund's manager to reduce drops in the net asset value of
fund shares in order to preserve the initial investment.
Principal Stability
The degree to which share prices for a fund remain steady. Money market
funds attempt to achieve the highest degree of principal stability by
maintaining a $1.00 per share net asset value. More aggressive funds may not
consider principal stability an objective.
Public Offering Price (POP)
The NAV with the sales load added.
Price-to-Earnings Ratio
The ratio between a stock's price and its historical, current or anticipated
earnings. Low ratios typically indicate a high yield. High ratios are
characteristic of growth stocks which generally have low current yields.
Repurchase Agreement
An agreement between a buyer and seller of a security in which the seller
agrees to repurchase the security at an agreed upon price and time.
Russell 1000 Index
An index comprised of the 1000 largest firms listed on the Russell 3000
Index. The Russell 3000 Index is a listing of 3000 corporations maintained by
the Frank Russell Company that is intended to be representative of the U.S.
economy. The Russell 1000 is considered a "large cap" index.
Russell 2000 Index
An index comprised of the 2000 smallest firms listed on the Russell 3000
Index. The Russell 3000 Index is a listing of 3000 corporations maintained by
the Frank Russell Company that is intended to be representative of the U.S.
economy. The Russell 2000 is considered a "small cap" index.
37
<PAGE>
Selling Agent
A person who has an agreement with the Funds' distributors that allows them
to sell a Fund's shares.
Shareholder Servicing Agent
Anyone appointed by the Fund to maintain shareholder accounts and records,
assist and provide information to shareholders or perform similar functions.
Signature Guarantee
A guarantee given by a financial institution that has verified the identity
of the maker of the signature.
S&PTM, S&P 500 Index
Standard and Poors, a nationally recognized ratings organization. S&P's also
publishes various indexes or lists of companies representative of sectors of
the U.S. economy.
Statement of Additional Information
A document that supplements the disclosure made in the Prospectus.
Stripped Treasury Securities
Debt obligations in which the interest payments and the repayment of
principal are separated and sold as securities.
Taxpayer Identification Number
Usually the social security number for an individual or the Employer
Identification Number for a corporation.
Total Return
The total value of capital growth and the value of all distributions,
assuming that distributions were used to purchase additional shares of the
Funds.
Turnover Ratio
The percentage of the securities held in a Fund's portfolio, other than
short-term securities, that were bought or sold within a year.
Undervalued
Describes a stock that is believed to be worth more than its current price.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Value Strategy
A strategy of investing which tries to identify and buy undervalued stocks
under the assumption that the stock will eventually rise to its "fair market"
value.
38
<PAGE>
Warrants
The right to buy a stock at a set price for a set time.
Weighted-Average Maturity
The average maturity for the debt securities in a portfolio on a dollar-for-
dollar basis.
Zero Coupon Bonds
Bonds that make no periodic interest payments and which are usually sold at
a discount of their face value. Zero coupon bonds are subject to interest rate
and credit risk.
39
<PAGE>
WELLS FARGO FUNDS TRUST
You may wish to review the following document:
A Statement of Additional Information supplements the disclosures made by
this Prospectus. The Statement of Additional Information has been filed with
the SEC and is incorporated by reference into this Prospectus and is legally
part of this Prospectus.
This document is available free of charge:
Call 1-800-222-8222, or
Write to: Wells Fargo Funds Trust
PO Box 7066
San Francisco, CA 94120-7066
Visit the SEC'S web site: http://www.sec.gov, or
Request copies for a fee by writing to:
SEC Public Reference Room, Washington, DC 20549-6009
(call: 1-800-SEC-0330 for details)
40
<PAGE>
DRAFT
WELLS FARGO FUNDS TRUST
Telephone: 1-800-222-8222
STATEMENT OF ADDITIONAL INFORMATION
Dated June 1, 1999
ASSET ALLOCATION FUND
GROWTH FUND
INCOME EQUITY FUND
SMALL CAP FUND
CLASS A, CLASS B, CLASS C AND INSTITUTIONAL CLASS
Wells Fargo Funds Trust (the "Trust") is an open-end, management investment
company. This Statement of Additional Information ("SAI") contains additional
information about four funds in the Wells Fargo Funds Trust family of funds
(each, a "Fund" and collectively, the "Funds") -- the ASSET ALLOCATION, GROWTH,
INCOME EQUITY and SMALL CAP FUNDS. Each Fund offers Class A, Class B, Class C
and Institutional Class shares, except the Growth Fund, which does not offer
Class C shares. This SAI relates to all of the above-described classes of
shares.
This SAI is not a prospectus and should be read in conjunction with the
Funds' Prospectus, dated June 1, 1999. All terms used in this SAI that are
defined in the Prospectus have the meanings assigned in the Prospectus. A copy
of the Prospectus may be obtained without charge by calling 1-800-222-8222 or
writing to Wells Fargo Funds Trust, P.O. Box 7066, San Francisco, CA 94120-7066.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Historical Fund Information...................................... 1
Investment Restrictions.......................................... 2
Additional Permitted Investment Activities and Associated Risks.. 5
Management....................................................... 18
Performance Calculations......................................... 27
Determination of Net Asset Value................................. 31
Additional Purchase and Redemption Information................... 31
Portfolio Transactions........................................... 32
Fund Expenses.................................................... 33
Federal Income Taxes............................................. 34
Capital Stock.................................................... 39
Other............................................................ 42
Counsel.......................................................... 43
Independent Auditors............................................. 43
Appendix......................................................... A-1
</TABLE>
i
<PAGE>
HISTORICAL FUND INFORMATION
On March 25, 1999, the Board of Trustees of Norwest Advantage Funds
("Norwest"), the Board of Directors of Stagecoach Funds, Inc. ("Stagecoach") and
the Board of Trustees of the Trust approved an Agreement and Plan of
Reorganization providing for, among other things, the transfer of the assets and
stated liabilities of various predecessor Norwest and Stagecoach portfolios to
the Funds. Prior to September 17, 1999, the effective date of the consolidation
of the Funds and the predecessor Norwest and Stagecoach portfolios (the
"Consolidation"), the Funds had only nominal assets.
The ASSET ALLOCATION FUND will commence operations on September 17, 1999,
as successor to the Asset Allocation and Balanced Funds of Stagecoach Funds,
Inc. ("Stagecoach"). The predecessor Stagecoach Asset Allocation Fund commended
operations on January 2, 1992, as successor to the Asset Allocation Fund of the
Wells Fargo Investment Trust for Retirement Programs ("WFIT"), which commenced
operations on November 13, 1986. The predecessor Stagecoach Balanced Fund was
originally organized on July 1, 1990 as the Pacifica Balanced Fund, an
investment portfolio of Pacifica Funds Trust ("Pacifica"). On September 6,
1996, the Pacifica Balanced Fund was reorganized as the Stagecoach Balanced
Fund. For accounting purposes, the Stagecoach Asset Allocation predecessor
portfolio is considered the surviving entity, and the financial highlights shown
for periods prior to September 17, 1999 are the financial highlights of the
Stagecoach Asset Allocation Fund.
The GROWTH FUND will commence operations on September 17, 1999, as
successor to the Growth Fund of Stagecoach and the ValuGrowth Stock Fund of
Norwest Advantage Funds ("Norwest"). The predecessor Stagecoach Growth Fund
commenced operations on January 1, 1992, as the successor to the Select Stock
Fund of WFIT, which commenced operations on August 2, 1990. Prior to December
12, 1997, the Stagecoach Growth Fund was known as the "Growth and Income Fund."
The predecessor Norwest ValuGrowth Stock Fund commenced operations on January 8,
1999. For accounting purposes, the Stagecoach Growth predecessor portfolio is
considered the surviving entity, and the financial highlights shown for periods
prior to September 17, 1999 are the financial highlights of the Stagecoach
Growth Fund.
The INCOME EQUITY FUND will commence operations on September 17, 1999, as
successor to the Diversified Equity Income Fund of Stagecoach and the Income
Equity Fund of Norwest. The predecessor Stagecoach Diversified Equity Income
Fund commenced operations on November 18, 1992. Prior to December 12, 1997, the
Stagecoach predecessor Fund was known as the "Diversified Income Fund." The
predecessor Norwest Income Equity Fund commenced operations on November 11,
1994. For accounting purposes, the Norwest Income Equity predecessor portfolio
is considered the surviving entity, and the financial highlights shown for
periods prior to September 17, 1999 are the financial highlights of the Norwest
Income Equity Fund.
The SMALL CAP FUND will commence operations on September 17, 1999, as
successor to the Small Cap and Strategic Growth Funds of Stagecoach and the
Small Company Stock Fund of Norwest. The predecessor Stagecoach Small Cap Fund
commenced operations on September 16,
1
<PAGE>
1996, as the successor to the Small Capitalization Growth Fund For Employee
Retirement Plans, an unregistered bank collective investment fund which
commenced on November 1, 1994. The predecessor Stagecoach Strategic Growth Fund
commenced operations on March 5, 1996. Prior to December 12, 1997, the Strategic
Growth Fund was known as the "Aggressive Growth Fund." On December 12, 1997, the
Strategic Growth Fund of Overland Express Funds, Inc., an investment company
advised by Wells Fargo Bank, N.A., was reorganized with and into the Stagecoach
Strategic Growth Fund. The predecessor Norwest Small Company Stock Fund
commenced operations on December 31, 1993. For accounting purposes, the
Stagecoach Small Cap predecessor portfolio is considered the surviving entity,
and the financial highlights shown for periods prior to September 17, 1999 are
the financial highlights of the Stagecoach Small Cap Fund.
INVESTMENT RESTRICTIONS
Fundamental Investment Policies
-------------------------------
Each Fund has adopted the following investment restrictions, all of which
are fundamental policies; that is, they may not be changed, without approval by
the holders of a majority (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the outstanding voting securities of such Fund.
The Funds may not:
(1) purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of a Fund's investments in that industry would equal 25% of
the current value of the Fund's total assets, provided that there is no
limitation with respect to investment in (i) securities issued or guaranteed by
the United States Government, its agencies or instrumentalities, [(II) MUNICIPAL
SECURITIES, (III) IN THE CASE OF THE INCOME EQUITY FUND, MORTGAGE-RELATED OR
HOUSING RELATED SECURITIES AND FOREIGN GOVERNMENT SECURITIES, (IV) IN THE CASE
OF THE ASSET ALLOCATION FUND, ANY INDUSTRY IN WHICH THE S&P 500 INDEX BECOMES
CONCENTRATED TO THE SAME DEGREE DURING THE SAME PERIOD, AND (V) IN THE CASE OF
THE ASSET ALLOCATION FUND, MONEY MARKET INSTRUMENTS INVESTED IN THE BANKING
INDUSTRY (BUT THE FUND WILL NOT DO SO UNLESS THE U.S. SECURITIES AND EXCHANGE
COMMISSION ("SEC") STAFF CONFIRMS THAT IT DOES NOT OBJECT TO THE FUND RESERVING
FREEDOM OF ACTION TO CONCENTRATE INVESTMENTS IN THE BANKING INDUSTRY);]
(2) purchase securities of any issuer if, as a result, with respect to 75%
of a Fund's total assets, more than 5% of the value of its total assets would be
invested in the securities of any one issuer or, with respect to 100% of its
assets, the Fund's ownership would be more than 10% of the outstanding voting
securities of such issuer. This policy does not restrict a Fund's ability to
invest in securities issued or guaranteed by the U.S. Government, its agencies
and instrumentalities; or to invest substantially all of its assets in the
portfolio of one or more open-end management investment companies pursuant to
Section 12 of the 1940 Act and the rules thereunder.
2
<PAGE>
(3) borrow money except to the extent permitted by the 1940 Act, and the
rules, regulations and exemptions thereunder;
(4) issue senior securities except to the extent permitted by the 1940
Act, and the rules, regulations and exemptions thereunder;
(5) make loans to other parties if, as a result, the aggregate value of
such loans would exceed one-third of a Fund's total assets. For the purposes of
this limitation, entering into repurchase agreements, lending securities and
acquiring any debt securities are not deemed to be the making of loans;
(6) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with a Fund's investment program may be deemed to be an underwriting;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business); nor
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Funds from purchasing or selling options and futures contracts, or from
investing in securities or other instruments backed by physical commodities,
[(III) IN THE CASE OF THE ASSET ALLOCATION FUND, PARTICIPATING IN FORWARD
CONTRACTS AND INTEREST RATE AND INDEX SWAPS, AND (IV) IN THE CASE OF THE GROWTH
FUND PURCHASING SECURITIES OF AN ISSUER WHICH INVESTS OR DEALS IN COMMODITIES OR
COMMODITY CONTRACTS.]
Non-Fundamental Investment Policies
-----------------------------------
Each Fund has adopted the following non-fundamental policies which may be
changed by a vote of a majority of the Trustees of the Trust or at any time
without approval of such Fund's shareholders.
(1) Each Fund may invest in shares of other open-end management investment
companies, subject to the limitations of the 1940 Act, the rules thereunder, and
any orders obtained thereunder now or in the future. Funds in a master/feeder or
core/gateway structure, such as the Income Equity Fund, generally invest in the
securities of one or more open-end management investment companies pursuant to
various provisions of the 1940 Act. Other investment companies in which the
Funds invest can be expected to charge fees for operating expenses, such as
investment advisory and administration fees, that would be in addition to those
charged by a Fund.
3
<PAGE>
(2) Each Fund may not invest or hold more than 15% of the Fund's net
assets in illiquid securities. For this purpose, illiquid securities include,
among others, (a) securities that are illiquid by virtue of the absence of a
readily available market or legal or contractual restrictions on resale, (b)
fixed time deposits that are subject to withdrawal penalties and that have
maturities of more than seven days, and (c) repurchase agreements not terminable
within seven days.
(3) Each Fund may invest in futures or options contracts regulated by the
CFTC for (i) bona fide hedging purposes within the meaning of the rules of the
CFTC and (ii) for other purposes if, as a result, no more than 5% of the Fund's
net assets would be invested in initial margin and premiums (excluding amounts
"in-the-money") required to establish the contracts.
Each Fund (i) will not hedge more than [50%] of its total assets by
selling futures contracts, buying put options, and writing call options (so
called "short positions"), (ii) will not buy futures contracts or write put
options whose underlying value exceeds [25%] of the Fund's total assets, and
(iii) will not buy call options with a value exceeding [5%] of the Fund's total
assets.
(4) Each Fund may lend securities from its portfolio to brokers, dealers
and financial institutions, in amounts not to exceed (in the aggregate) up to
the limits established by and under the 1940 Act, including any exemptive relief
obtained thereunder, which limits are currently generally one-third of a Fund's
total assets. Any such loans of portfolio securities will be fully
collateralized based on values that are marked to market daily. [A FUND WILL NOT
ENTER INTO ANY PORTFOLIO SECURITY LENDING ARRANGEMENT HAVING A DURATION OF
LONGER THAN ONE YEAR.]
(5) Each Fund may not make investments for the purpose of exercising
control or management. (Investments by the Fund in entities created under the
laws of foreign countries solely to facilitate investment in securities in that
country will not be deemed the making of investments for the purpose of
exercising control.)
(6) Each Fund may not purchase securities on margin (except for short-term
credits necessary for the clearance of transactions).
(7) Each Fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short (short sales "against the box"), and provided that transactions in futures
contracts and options are not deemed to constitute selling securities short.
(8) Each Fund may not purchase interests, leases, or limited partnership
interests in oil, gas, or other mineral exploration or development programs.
4
<PAGE>
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES AND ASSOCIATED RISKS
Set forth below are descriptions of certain investments and additional
investment policies for the Funds.
Bank Obligations
----------------
The Funds may invest in bank obligations, including certificates of
deposit, time deposits, bankers' acceptances and other short-term obligations of
domestic banks, foreign subsidiaries of domestic banks, foreign branches of
domestic banks, and domestic and foreign branches of foreign banks, domestic
savings and loan associations and other banking institutions. With respect to
such securities issued by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, and domestic and foreign branches of foreign
banks, a Fund may be subject to additional investment risks that are different
in some respects from those incurred by a Fund which invests only in debt
obligations of U.S. domestic issuers. Such risks include possible future
political and economic developments, the possible imposition of foreign
withholding taxes on interest income payable on the securities, the possible
establishment of exchange controls or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and interest
on these securities and the possible seizure or nationalization of foreign
deposits. In addition, foreign branches of U.S. banks and foreign banks may be
subject to less stringent reserve requirements and to different accounting,
auditing, reporting and recordkeeping standards than those applicable to
domestic branches of U.S. banks.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by a Fund will not benefit from insurance from the
Bank Insurance Fund or the Savings Association Insurance Fund administered by
the Federal Deposit Insurance Corporation ("FDIC"). Bankers' acceptances are
credit instruments evidencing the obligation of a bank to pay a draft drawn on
it by a customer. These instruments reflect the obligation both of the bank and
of the drawer to pay the face amount of the instrument upon maturity. The other
short-term obligations may include uninsured, direct obligations, bearing fixed,
floating- or variable-interest rates.
Commercial Paper
----------------
The Funds may invest in commercial paper (including variable amount master
demand notes) which refers to short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Variable amount master demand notes are demand
obligations which permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the issuer and a commercial
bank acting as agent for the payee of such notes whereby both parties have the
right to vary the amount of the outstanding indebtedness on the notes.
Investments by the Funds in commercial paper (including variable rate demand
notes and variable rate master demand notes issued by domestic and foreign bank
holding companies,
5
<PAGE>
corporations and financial institutions, as well as similar instruments issued
by government agencies and instrumentalities) will consist of issues that are
rated in one of the two highest rating categories by a Nationally Recognized
Ratings Organization ("NRRO"). Commercial paper may include variable- and
floating-rate instruments.
Convertible Securities
----------------------
The Funds may invest in convertible securities that provide current income
and are issued by companies with the characteristics described above for each
Fund and that have a strong earnings and credit record. The Funds may purchase
convertible securities that are fixed-income debt securities or preferred
stocks, and which may be converted at a stated price within a specified period
of time into a certain quantity of the common stock of the same issuer.
Convertible securities, while usually subordinate to similar nonconvertible
securities, are senior to common stocks in an issuer's capital structure.
Convertible securities offer flexibility by providing the investor with a steady
income stream (which generally yield a lower amount than similar nonconvertible
securities and a higher amount than common stocks) as well as the opportunity to
take advantage of increases in the price of the issuer's common stock through
the conversion feature. Fluctuations in the convertible security's price can
reflect changes in the market value of the common stock or changes in market
interest rates. At most, 5% of each Fund's net assets will be invested, at the
time of purchase, in convertible securities that are not rated in the four
highest rating categories by one or more NRROs, such as Moodys Investors
Service, Inc. ("Moodys") or Standard & Poor's Ratings Group ("S&P"), or unrated
but determined by the Advisor to be of comparable quality.
Custodial Receipts for Treasury Securities
------------------------------------------
The Funds may purchase participations in trusts that hold U.S. Treasury
securities (such as TIGRs and CATS) or other obligations where the trust
participations evidence ownership in either the future interest payments or the
future principal payments on the obligations. These participations are normally
issued at a discount to their "face value," and can exhibit greater price
volatility than ordinary debt securities because of the way in which their
principal and interest are returned to investors. Investments by a Fund in such
participations will not exceed 5% of the value of that Fund's total assets.
Derivative Securities: Futures and Options Contracts
----------------------------------------------------
Futures and options contracts are types of "derivative securities" in which
the Funds may invest. Derivative securities are securities which derive their
value, at least in part, from the price of another security or asset, or the
level of an index or a rate. As is described in more detail below, a Fund often
invests in these securities as a "hedge" against fluctuations in the value of
the other securities in that Fund's portfolio, although a Fund may also invest
in certain derivative securities for investment purposes only.
While derivative securities are useful for hedging and investment, they
also carry additional risks. A hedging policy may fail if the correlation
between the value of the derivative securities and the other investments in a
Fund's portfolio does not follow the Advisor's expectations. If the
6
<PAGE>
Advisor's expectations are not met, it is possible that the hedging strategy
will not only fail to protect the value of the Fund's investments, but the Fund
may also lose money on the derivative security itself. Also, derivative
securities are more likely to experience periods when they will not be readily
tradable. If, as a result of such illiquidity, a Fund cannot settle a future or
option contract at the time the Advisor determines is optimal, the Fund may lose
money on the investment. Additional risks of derivative securities include: the
risk of the disruption of the Funds' ability to trade in derivative securities
because of regulatory compliance problems or regulatory changes; credit risk of
counterparties to derivative contracts; and market risk (i.e., exposure to
adverse price changes).
Each Fund has the following non-fundamental investment policies with regard
to investing in derivative securities:
. Each Fund may invest in futures or options contracts regulated by the
Commodities Futures Trading Commission ("CFTC") for (i) bona fide
hedging purposes within the meaning of the rules of the CFTC and (ii)
for other purposes if, as a result, no more than 5% of the Fund's net
assets would be invested in initial margin and premiums (excluding
amounts "in-the-money") required to establish the contracts.
. Each Fund (i) will not hedge more than [50%] of its total assets by
selling futures contracts, buying put options, and writing call options
(so called "short positions"), (ii) will not buy futures contracts or
write put options whose underlying value exceeds [25%] of the Fund's
total assets, and (iii) will not buy call options with a value exceeding
[5%] of the Fund's total assets.
The Advisor uses a variety of internal risk management procedures to ensure
that derivatives use is consistent with a Fund's investment objectives, does not
expose a Fund to undue risk and is closely monitored. These procedures include
providing periodic reports to the Board of Trustees concerning the use of
derivatives.
The use of derivatives by a Fund also is subject to broadly applicable
investment policies. For example, a Fund may not invest more than a specified
percentage of its assets in "illiquid securities," including those derivatives
that do not have active secondary markets. Nor may a Fund use certain
derivatives without establishing adequate "cover" in compliance with the U.S.
Securities and Exchange Commission ("SEC") rules limiting the use of leverage.
Futures Contracts. The Funds may trade futures contracts and options on
futures contracts. A futures transaction involves a firm agreement to buy or
sell a commodity or financial instrument at a particular price on a specified
future date. Futures contracts are standardized and exchange-traded, where the
exchange serves as the ultimate counterparty for all contracts. Consequently,
the only credit risk on futures contracts is the creditworthiness of the
exchange.
The purchaser or seller of a futures contract is not required to deliver or
pay for the underlying instrument unless the contract is held until the delivery
date. However, both the purchaser and seller are required to deposit "initial
margin" with a futures broker when the
7
<PAGE>
parties enter into the contract. Initial margin deposits are typically equal to
a percentage of the contract's value. If the value of either party's position
declines, that party will be required to make additional "variation margin"
payments to settle the change in value on a daily basis. The party that has a
gain may be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin for
purposes of a Fund's investment limitations. In the event of the bankruptcy of
the broker that holds the margin on behalf of a Fund, the Fund may not receive a
full refund of its margin.
Although the Funds intend to purchase or sell futures contracts only if
there is an active market for such contracts, a liquid market may not exist for
a particular contract at a particular time. Many futures exchanges and boards
of trade limit the amount of fluctuation permitted in futures contract prices
during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that limit
or trading may be suspended for specified periods during the trading day.
Futures contracts prices could move to the limit for several consecutive trading
days with little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subject a Fund to substantial losses. If it is not
possible, or a Fund determines not to close a futures position in anticipation
of adverse price movements, the Fund may be required to pay additional variation
margin until the position is closed.
The Funds may also purchase options on futures contracts. See "Options
Trading" below.
Foreign Currency Futures Contracts and Foreign Currency Transactions.
Foreign currency futures contracts and foreign currency transactions entail the
same risks as other futures contracts as described above, but have the
additional risks associated with international investing (see "Foreign
Obligations and Securities" below). Similar to other futures contracts, a
foreign currency futures contract is an agreement for the future delivery of a
specified currency at a specified time and at a specified price, will be secured
by margin deposits, are regulated by the CFTC and are traded on designated
exchanges. A Fund will incur brokerage fees when it purchases and sells futures
contracts.
Foreign currency transactions, such as forward foreign currency exchange
contracts, are also contracts for the future delivery of a specified currency at
a specified time and at a specified price. These transactions differ from
futures contracts in that they are usually conducted on a principal basis
instead of through an exchange, and therefore there are no brokerage fees,
margin deposits are negotiated between the parties, and the contracts are
settled through different procedures. The Advisor, considers on an ongoing
basis the creditworthiness of the institutions with which the Fund enters into
foreign currency transactions. Despite these differences, however, foreign
currency futures contracts and foreign currency transactions (together,
"Currency Futures") entail largely the same risks, and therefore the remainder
of this section will describe the two types of securities together.
Because the Funds may invest in securities denominated in currencies other
than the U.S. dollar and may temporarily hold funds in bank deposits or other
money market investments
8
<PAGE>
denominated in foreign currencies, they may be affected favorably or unfavorably
by exchange control regulations or changes in the exchange rate between such
currencies and the dollar. Changes in foreign currency exchange rates influence
values within the Fund from the perspective of U.S. investors. The rate of
exchange between the U.S. dollar and other currencies is determined by the
forces of supply and demand in the foreign exchange markets. The international
balance of payments and other economic and financial conditions, government
intervention, speculation and other factors affect these forces.
A Fund will purchase and sell Currency Futures in order to hedge its
portfolio and to protect it against possible variations in foreign exchange
rates pending the settlement of securities transactions. If a fall in exchange
rates for a particular currency is anticipated, a Fund may sell a Currency
Future as a hedge. If it is anticipated that exchange rates will rise, a Fund
may purchase a Currency Future to protect against an increase in the price of
securities denominated in a particular currency the Fund intends to purchase.
These Currency Futures will be used only as a hedge against anticipated currency
rate changes. Although such contracts are intended to minimize the risk of loss
due to a decline in the value of the hedged currency, at the same time, they
tend to limit any potential gain which might result should the value of such
currency increase.
The use of Currency Futures involves the risk of imperfect correlation
between movements in futures prices and movements in the price of currencies
which are the subject of the hedge. The successful use of Currency Futures
strategies also depends on the ability of the Advisor to correctly forecast
interest rate movements, currency rate movements and general stock market price
movements. There can be no assurance that the Advisor's judgment will be
accurate. The use of Currency Futures also exposes a Fund to the general risks
of investing in futures contracts: the risk of an illiquid market for the
Currency Futures, the risk of exchange-imposed trading limits, and the risk of
adverse regulatory actions. Any of these events may cause a Fund to be unable
to hedge its securities, and may cause a Fund to lose money on its Currency
Futures investments.
The Funds may also purchase options on Currency Futures. See "Options
Trading" below.
Options Trading. The Funds may purchase or sell options on individual
securities or options on indices of securities. The purchaser of an option
risks a total loss of the premium paid for the option if the price of the
underlying security does not increase or decrease sufficiently to justify the
exercise of such option. The seller of an option, on the other hand, will
recognize the premium as income if the option expires unrecognized but foregoes
any capital appreciation in excess of the exercise price in the case of a call
option and may be required to pay a price in excess of current market value in
the case of a put option.
A call option for a particular security gives the purchaser of the option
the right to buy, and a writer the obligation to sell, the underlying security
at the stated exercise price at any time prior to the expiration of the option,
regardless of the market price of the security. The premium paid to the writer
is in consideration for undertaking the obligation under the option contract. A
put option for
9
<PAGE>
a particular security gives the purchaser the right to sell, and the writer the
option to buy, the security at the stated exercise price at any time prior to
the expiration date of the option, regardless of the market price of the
security.
The Funds will write call options only if they are "covered." In the case
of a call option on a security or currency, the option is "covered" if a Fund
owns the instrument underlying the call or has an absolute and immediate right
to acquire that instrument without additional cash consideration (or, if
additional cash consideration is required, cash, U.S. Government securities or
other liquid high grade debt obligations, in such amount are held in a
segregated account by the Fund's custodian) upon conversion or exchange of other
securities held by it. For a call option on an index, the option is covered if
a Fund maintains with its custodian a diversified portfolio of securities
comprising the index or liquid assets equal to the contract value. A call
option is also covered if a Fund holds an offsetting call on the same instrument
or index as the call written. The Funds will write put options only if they are
"secured" by liquid assets maintained in a segregated account by the Funds'
custodian in an amount not less than the exercise price of the option at all
times during the option period.
Each Fund may buy put and call options and write covered call and secured
put options. Options trading is a highly specialized activity which entails
greater than ordinary investment risk. Options may be more volatile than the
underlying instruments, and therefore, on a percentage basis, an investment in
options may be subject to greater fluctuation than an investment in the
underlying instruments themselves. Purchasing options is a specialized
investment technique that entails a substantial risk of a complete loss of the
amounts paid as premiums to the writer of the option. If the Advisor is
incorrect in its forecast of market value or other factors when writing options,
the Fund would be in a worse position than it would have been had if it had not
written the option. If a Fund wishes to sell an underlying instrument (in the
case of a covered call option) or liquidate assets in a segregated account (in
the case of a secured put option), the Fund must purchase an offsetting option
if available, thereby incurring additional transactions costs.
Below is a description of some of the types of options in which the Funds
may invest.
A stock index option is an option contract whose value is based on the
value of a stock index at some future point in time. Stock indexes fluctuate
with changes in the market values of the stocks included in the index. The
effectiveness of purchasing or writing stock index options will depend upon the
extent to which price movements in a Fund's investment portfolio correlate with
price movements of the stock index selected. Accordingly, successful use by a
Fund of options on stock indexes will be subject to the Advisor's ability to
correctly analyze movements in the direction of the stock market generally or of
particular industry or market segments. When a Fund writes an option on a stock
index, the Fund will place in a segregated account with the Fund's custodian
cash or liquid securities in an amount at least equal to the market value of the
underlying stock index and will maintain the account while the option is open or
otherwise will cover the transaction.
10
<PAGE>
The Funds may invest in stock index futures contracts and options on stock
index futures contracts. A stock index futures contract is an agreement in
which one party agrees to deliver to the other an amount of cash equal to a
specific dollar amount multiplied by the difference between the value of a
specific stock index at the close of the last trading day of the contract and
the price at which the agreement is made. Stock index futures contracts may be
purchased to protect a Fund against an increase in the prices of stocks that
Fund intends to purchase. The purchase of options on stock index futures
contracts are similar to other options contracts as described above, where a
Fund pays a premium for the option to purchase or sell a stock index futures
contract for a specified price at a specified date. With options on stock index
futures contracts, a Fund risks the loss of the premium paid for the option.
The Funds may also invest in interest-rate futures contracts and options on
interest-rate futures contracts. These securities are similar to stock index
futures contracts and options on stock index futures contracts, except they
derive their price from an underlying interest rate rather than a stock index.
Interest-rate and index swaps involve the exchange by a Fund with another
party of their respective commitments to pay or receive interest (for example,
an exchange of floating-rate payments for fixed-rate payments). Index swaps
involve the exchange by a Fund with another party of cash flows based upon the
performance of an index of securities. Interest-rate swaps involve the exchange
by a Fund with another party of cash flows based upon the performance of a
specified interest rate. In each case, the exchange commitments can involve
payments to be made in the same currency or in different currencies. The Funds
will usually enter into swaps on a net basis. In so doing, the two payment
streams are netted out, with a Fund receiving or paying, as the case may be,
only the net amount of the two payments. If a Fund enters into a swap, it will
maintain a segregated account on a gross basis, unless the contract provides for
a segregated account on a net basis. The risk of loss with respect to swaps
generally is limited to the net amount of payments that a Fund is contractually
obligated to make. There is also a risk of a default by the other party to a
swap, in which case a Fund may not receive net amount of payments that the Fund
contractually is entitled to receive.
Future Developments. The Funds may take advantage of opportunities in the
areas of options and futures contracts and options on futures contracts and any
other derivative investments which are not presently contemplated for use by the
Funds or which are not currently available but which may be developed, to the
extent such opportunities are both consistent with the Funds' investment
objective and legally permissible for a Fund. Before entering into such
transactions or making any such investment, a Fund would provide appropriate
disclosure in its Prospectus or this SAI.
Floating- and Variable-Rate Obligations
---------------------------------------
The Funds may purchase floating- and variable-rate obligations such as
demand notes and bonds. Variable-rate demand notes include master demand notes
that are obligations that permit a Fund to invest fluctuating amounts, which may
change daily without penalty, pursuant to direct arrangements between the Fund,
as lender, and the borrower. The interest rate on a floating-rate demand
obligation is based on a known lending rate, such as a bank's prime rate, and is
adjusted automatically each time such rate is adjusted. The interest rate on a
variable-rate demand
11
<PAGE>
obligation is adjusted automatically at specified intervals. The issuer of such
obligations ordinarily has a right, after a given period, to prepay in its
discretion the outstanding principal amount of the obligations plus accrued
interest upon a specified number of days notice to the holders of such
obligations. Frequently, such obligations are secured by letters of credit or
other credit support arrangements provided by banks.
There generally is no established secondary market for these obligations
because they are direct lending arrangements between the lender and borrower.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, a Fund's right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. Such
obligations frequently are not rated by credit rating agencies and each Fund may
invest in obligations which are not so rated only if the Advisor determines that
at the time of investment the obligations are of comparable quality to the other
obligations in which such Fund may invest. The Advisor, on behalf of each Fund,
considers on an ongoing basis the creditworthiness of the issuers of the
floating- and variable-rate demand obligations in such Fund's portfolio. No
Fund will invest more than 15% of the value of its total net assets in floating-
or variable-rate demand obligations whose demand feature is not exercisable
within seven days. Such obligations may be treated as liquid, if an active
secondary market exists. Floating- and variable-rate instruments are subject to
interest-rate risk and credit risk.
The floating- and variable-rate instruments that the Funds may purchase
include certificates of participation in such instruments.
Foreign Obligations and Securities
----------------------------------
The Funds may invest in foreign securities through American Depositary
Receipts ("ADRs"), Canadian Depositary Receipts ("CDRs"), European Depositary
Receipts ("EDRs"), International Depositary Receipts ("IDRs") and Global
Depositary Receipts ("GDRs") or other similar securities convertible into
securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs (sponsored or unsponsored) are receipts typically issued by a
U.S. bank or trust company and traded on a U.S. stock exchange, and CDRs are
receipts typically issued by a Canadian bank or trust company that evidence
ownership of underlying foreign securities. Issuers of unsponsored ADRs are not
contractually obligated to disclose material information in the U.S. and,
therefore, such information may not correlate to the market value of the
unsponsored ADR. EDRs and IDRs are receipts typically issued by European banks
and trust companies, and GDRs are receipts issued by either a U.S. or non-U.S.
banking institution, that evidence ownership of the underlying foreign
securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets and EDRs and IDRs in bearer form are designed primarily for
use in Europe. Each Fund may not invest 25% or more of its assets in foreign
obligations.
For temporary defensive purposes, Funds may invest in fixed income
securities of non-U.S. governmental and private issuers. Such investments may
include bonds, notes, debentures and other similar debt securities, including
convertible securities.
12
<PAGE>
Investments in foreign obligations involve certain considerations that are
not typically associated with investing in domestic securities. There may be
less publicly available information about a foreign issuer than about a domestic
issuer. Foreign issuers also are not generally subject to the same accounting,
auditing and financial reporting standards or governmental supervision as
domestic issuers. In addition, with respect to certain foreign countries, taxes
may be withheld at the source under foreign tax laws, and there is a possibility
of expropriation or confiscatory taxation, political, social and monetary
instability or diplomatic developments that could adversely affect investments
in, the liquidity of, and the ability to enforce contractual obligations with
respect to, securities of issuers located in those countries.
Investment income on certain foreign securities in which a Fund may invest
may be subject to foreign withholding or other taxes that could reduce the
return on these securities. Tax treaties between the United States and foreign
countries, however, may reduce or eliminate the amount of foreign taxes to which
the Fund would be subject.
Forward Commitments, When-Issued Purchases and Delayed-Delivery
---------------------------------------------------------------
Transactions
- ------------
Each Fund may purchase or sell securities on a when-issued or delayed-
delivery basis and make contracts to purchase or sell securities for a fixed
price at a future date beyond customary settlement time. Securities purchased
or sold on a when-issued, delayed-delivery or forward commitment basis involve a
risk of loss if the value of the security to be purchased declines, or the value
of the security to be sold increases, before the settlement date.
Each Fund will segregate cash, U.S. Government obligations or other high-
quality debt instruments in an amount at least equal in value to the Fund's
commitments to purchase when-issued securities. If the value of these assets
declines, the Fund will segregate additional liquid assets on a daily basis so
that the value of the segregated assets is equal to the amount of such
commitments.
Illiquid Securities
-------------------
The Funds may invest in securities not registered under the 1933 Act and
other securities subject to legal or other restrictions on resale. Illiquid
securities may be difficult to sell promptly at an acceptable price. Delay or
difficulty in selling securities may result in a loss or be costly to a Fund.
Loans of Portfolio Securities
-----------------------------
Each Fund may lend its portfolio securities to brokers, dealers and
financial institutions, provided: (1) the loan is secured continuously by
collateral consisting of U.S. Government securities or cash or letters of credit
maintained on a daily marked-to-market basis in an amount at least equal to the
current market value of the securities loaned; (2) the Fund may at any time call
the loan and obtain the return of the securities loaned within five business
days; (3) the Fund will receive any interest or dividends paid on the loaned
securities; and (4) the aggregate market value of securities loaned will not at
any time exceed the limits established by the 1940 Act.
13
<PAGE>
A Fund will earn income for lending its securities because cash collateral
pursuant to these loans will be invested in short-term money market instruments.
In connection with lending securities, a Fund may pay reasonable finders,
administrative and custodial fees. A Fund will not enter into any security
lending arrangement having a duration longer than one year. Loans of securities
involve a risk that the borrower may fail to return the securities or may fail
to provide additional collateral. In either case, a Fund could experience
delays in recovering securities or collateral or could lose all or part of the
value of the loaned securities. Although voting rights, or rights to consent,
attendant to securities on loan pass to the borrower, such loans may be called
at any time and will be called so that the securities may be voted by a Fund if
a material event affecting the investment is to occur. A Fund may pay a portion
of the interest or fees earned from securities lending to a borrower or placing
broker. Borrowers and placing brokers may not be affiliated, directly or
indirectly, with Wells Fargo Bank, BGFA, Stephens Inc. or any of their
affiliates.
Money Market Instruments and Temporary Investments
--------------------------------------------------
The Funds may invest in the following types of high quality money market
instruments that have remaining maturities not exceeding one year: (i) U.S.
Government obligations; (ii) negotiable certificates of deposit, bankers'
acceptances and fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by the
FDIC; (iii) commercial paper rated at the date of purchase "Prime-1" by Moodys
or "A-1" or "A-1--" by S&P, or, if unrated, of comparable quality as determined
by the Advisor; and (iv) repurchase agreements. The Funds also may invest in
short-term U.S. dollar-denominated obligations of foreign banks (including U.S.
branches) that at the time of investment: (i) have more than $10 billion, or the
equivalent in other currencies, in total assets; (ii) are among the 75 largest
foreign banks in the world as determined on the basis of assets; (iii) have
branches or agencies in the United States; and (iv) in the opinion of the
Advisor, are of comparable quality to obligations of U.S. banks which may be
purchased by the Funds.
Letters of Credit. Certain of the debt obligations (including certificates
of participation, commercial paper and other short-term obligations) which the
Funds may purchase may be backed by an unconditional and irrevocable letter of
credit of a bank, savings and loan association or insurance company which
assumes the obligation for payment of principal and interest in the event of
default by the issuer. Only banks, savings and loan associations and insurance
companies which, in the opinion of the Advisor, are of comparable quality to
issuers of other permitted investments of the Fund may be used for letter of
credit-backed investments.
Repurchase Agreements. A Fund may enter into repurchase agreements,
wherein the seller of a security to the Fund agrees to repurchase that security
from the Fund at a mutually agreed upon time and price. A Fund may enter into
repurchase agreements only with respect to securities that could otherwise be
purchased by the Fund. All repurchase agreements will be fully collateralized
at 102% based on values that are marked to market daily. The maturities of the
underlying securities in a repurchase agreement transaction may be greater than
twelve months, although the maximum
14
<PAGE>
term of a repurchase agreement will always be less than twelve months. If the
seller defaults and the value of the underlying securities has declined, a Fund
may incur a loss. In addition, if bankruptcy proceedings are commenced with
respect to the seller of the security, the Fund's disposition of the security
may be delayed or limited.
The Funds may not enter into a repurchase agreement with a maturity of more
than seven days, if, as a result, more than 15% of a Fund's total net assets
would be invested in repurchase agreements with maturities of more than seven
days, restricted securities and illiquid securities. The Funds may not enter
into a repurchase agreement with a maturity of more than seven days, if, as a
result, more than 15% of the market value of a Fund's total net assets would be
invested in repurchase agreements with maturities of more than seven days,
restricted securities and illiquid securities. A Fund will only enter into
repurchase agreements with primary broker/dealers and commercial banks that meet
guidelines established by the Board of Trustees and that are not affiliated with
the investment Advisor. The Funds may participate in pooled repurchase
agreement transactions with other funds advised by the Advisor.
Mortgage-Related and Other Asset-Backed Securities
--------------------------------------------------
The Asset Allocation and Income Equity Funds may invest in mortgage-related
securities. Mortgage pass-through securities are securities representing
interests in "pools" of mortgages in which payments of both interest and
principal on the securities are made monthly, in effect "passing through"
monthly payments made by the individual borrowers on the residential mortgage
loans which underlie the securities (net of fees paid to the issuer or guarantor
of the securities). Early repayment of principal on mortgage pass-through
securities may expose a Fund to a lower rate of return upon reinvestment of
principal. Also, if a security subject to prepayment has been purchased at a
premium, in the event of prepayment the value of the premium would be lost.
Like other fixed-income securities, when interest rates rise, the value of a
mortgage-related security generally will decline; however, when interest rates
decline, the value of mortgage-related securities with prepayment features may
not increase as much as other fixed-income securities. Payment of principal and
interest on some mortgage pass-through securities (but not the market value of
the securities themselves) may be guaranteed by the full faith and credit of the
U.S. Government or its agencies or instrumentalities. Mortgage pass-through
securities created by non-government issuers (such as commercial banks, savings
and loan institutions, private mortgage insurance companies, mortgage bankers
and other secondary market issuers) may be supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance, and letters of credit, which may be issued by governmental entities,
private insurers or the mortgage poolers.
The Funds may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs"). CMOs may be collateralized by whole mortgage loans but
are more typically collateralized by portfolios of mortgage pass-through
securities guaranteed by the Government National Mortgage Association ("GNMA"),
the Federal Home Loan Mortgage Corporation ("FHLMC") or the Federal National
Mortgage Association (" FNMA"). CMOs are structured into multiple classes, with
each class bearing a different stated maturity. Payments of principal,
including prepayments, are first returned to investors holding the shortest
maturity class; investors holding the longer maturity classes receive principal
only after the first class has been retired. As
15
<PAGE>
new types of mortgage-related securities are developed and offered to investors,
the Advisor will, consistent with a Fund's investment objective, policies and
quality standards, consider making investments in such new types of mortgage-
related securities.
There are risks inherent in the purchase of mortgage-related securities.
For example, these securities are subject to a risk that default in payment will
occur on the underlying mortgages. In addition to default risk, these
securities are subject to the risk that prepayment on the underlying mortgages
will occur earlier or later or at a lessor or greater rate than expected. To
the extent that the Advisor's assumptions about prepayments are inaccurate,
these securities may expose the Funds to significantly greater market risks than
expected.
Other Asset-Backed Securities. The Funds may purchase asset-backed
securities unrelated to mortgage loans. These asset-backed securities may
consist of undivided fractional interests in pools of consumer loans or
receivables held in trust. Examples include certificates for automobile
receivables (CARS) and credit card receivables (CARDS). Asset-backed securities
are dependent upon payment of the consumer loans or receivables by individuals,
and the certificate holder frequently has no recourse to the entity that
originated the loans or receivables. The actual maturity and realized yield
will vary based upon the prepayment experience of the underlying asset pool and
prevailing interest rates at the time of prepayment. Asset-backed securities
are relatively new instruments and may be subject to greater risk of default
during periods of economic downturn than other instruments. Also, the secondary
market for certain asset-backed securities may not be as liquid as the market
for other types of securities, which could result in a Fund experiencing
difficulty in valuing or liquidating such securities.
Other Investment Companies
--------------------------
The Funds may invest in shares of other open-end management investment
companies, up to the limits prescribed in Section 12(d) of the 1940 Act. Under
the 1940 Act, a Fund's investment in such securities currently is limited to,
subject to certain exceptions, (i) 3% of the total voting stock of any one
investment company, (ii) 5% of such Fund's net assets with respect to any one
investment company and (iii) 10% of such Fund's net assets in aggregate. Other
investment companies in which the Funds invest can be expected to charge fees
for operating expenses such as investment Advisory and administration fees, that
would be in addition to those charged by the Funds.
Privately Issued Securities
---------------------------
The Funds may invest in privately issued securities, including those which
may be resold only in accordance with Rule 144A under the Securities Act of 1933
("Rule 144A Securities"). Rule 144A Securities are restricted securities that
are not publicly traded. Accordingly, the liquidity of the market for specific
Rule 144A Securities may vary. Delay or difficulty in selling such securities
may result in a loss to a Fund. Privately issued or Rule 144A securities that
are determined by the investment Advisor to be "illiquid" are subject to the
Funds' policy of not investing more than 15% of its net assets in illiquid
securities. The investment Advisor, under guidelines approved by Board of
Trustees of the Trust, will evaluate the liquidity characteristics of each Rule
144A Security proposed for purchase by a Fund on a case-by-case basis and will
16
<PAGE>
consider the following factors, among others, in their evaluation: (1) the
frequency of trades and quotes for the Rule 144A Security; (2) the number of
dealers willing to purchase or sell the Rule 144A Security and the number of
other potential purchasers; (3) dealer undertakings to make a market in the Rule
144A Security; and (4) the nature of the Rule 144A Security and the nature of
the marketplace trades (e.g., the time needed to dispose of the Rule 144A
Security, the method of soliciting offers and the mechanics of transfer).
Unrated Investments
-------------------
The Funds may purchase instruments that are not rated if, in the opinion of
the Advisor, such obligations are of investment quality comparable to other
rated investments that are permitted to be purchased by such Fund. After
purchase by a Fund, a security may cease to be rated or its rating may be
reduced below the minimum required for purchase by the Fund. Neither event will
require a sale of such security by the Fund. To the extent the ratings given by
Moodys or S&P may change as a result of changes in such organizations or their
rating systems, a Fund will attempt to use comparable ratings as standards for
investments in accordance with the investment policies contained in its
Prospectus and in this SAI. The ratings of Moodys and S&P are more fully
described in the SAI Appendix.
U.S. Government Obligations
---------------------------
The Funds may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government obligations").
Payment of principal and interest on U.S. Government obligations (i) may be
backed by the full faith and credit of the United States (as with U.S. Treasury
bills and GNMA certificates) or (ii) may be backed solely by the issuing or
guaranteeing agency or instrumentality itself (as with FNMA notes). In the
latter case investors must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment, which agency or
instrumentality may be privately owned. There can be no assurance that the U.S.
Government will provide financial support to its agencies or instrumentalities
where it is not obligated to do so. In addition, U.S. Government obligations
are subject to fluctuations in market value due to fluctuations in market
interest rates. As a general matter, the value of debt instruments, including
U.S. Government obligations, declines when market interest rates increase and
rises when market interest rates decrease. Certain types of U.S. Government
obligations are subject to fluctuations in yield or value due to their structure
or contract terms.
Warrants
--------
The Funds may each invest up to 5% of its net assets at the time of
purchase in warrants (other than those that have been acquired in units or
attached to other securities), and not more than 2% of its net assets in
warrants which are not listed on the New York or American Stock Exchange.
Warrants represent rights to purchase securities at a specific price valid for a
specific period of time. The prices of warrants do not necessarily correlate
with the prices of the underlying securities. A Fund may only purchase warrants
on securities in which the Fund may invest directly.
17
<PAGE>
Nationally Recognized Statistical Ratings Organizations
-------------------------------------------------------
The ratings of Moodys Investors Service, Inc., Standard & Poor's Ratings
Group, Division of McGraw Hill, Duff & Phelps Credit Rating Co., Fitch Investors
Service, Inc. Thomson Bank Watch and IBCA Inc. represent their opinions as to
the quality of debt securities. It should be emphasized, however, that ratings
are general and not absolute standards of quality, and debt securities with the
same maturity, interest rate and rating may have different yields while debt
securities of the same maturity and interest rate with different ratings may
have the same yield. Subsequent to purchase by a Fund, an issue of debt
securities may cease to be rated or its rating may be reduced below the minimum
rating required for purchase by a Fund. The Advisor will consider such an event
in determining whether the Fund involved should continue to hold the obligation.
MANAGEMENT
The following information supplements, and should be read in conjunction
with, the section in the Prospectus entitled "Organization and Management of the
Funds." The principal occupations during the past five years of the Trustees
and principal executive Officer of the Trust are listed below. The address of
each, unless otherwise indicated, is 111 Center Street, Little Rock, Arkansas
72201. Trustees deemed to be "interested persons" of the Trust for purposes of
the 1940 Act are indicated by an asterisk.
<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- -----------------------------------------------
<S> <C> <C>
*Robert C. Brown, 65 Trustee Director, Federal Farm Credit Banks Funding
1431 Landings Place Corporation and Farm Credit System Financial
Sarasota, FL 34231 Assistance Corporation since February 1993.
Donald H. Burkhardt, 70 Trustee Principal of the Burkhardt Law Firm.
777 South Steele Street
Denver, CO 80209
Jack S. Euphrat, 77 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.
Thomas S. Goho, 56 Trustee Business Associate Professor, Wake Forest
321 Beechcliff Court University, Calloway School of Business and
Winston-Salem, NC 27104 Accountancy since 1994; previously Associate
Professor of Finance.
Peter G. Gordon, 56 Trustee Chairman and Co-Founder of Crystal Geyser
Crystal Geyser Water Co. Water Company and President of Crystal Geyser
55 Francisco Street, Suite 410 Roxane Water Company since 1977.
San Francisco, CA 94133
</TABLE>
18
<PAGE>
<TABLE>
<S> <C> <C>
*W. Rodney Hughes, 72 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Richard M. Leach, 63 Trustee President of Richard M. Leach Associates (a
P.O. Box 1888 financial consulting firm) since 1992.
New London, NH 03257
*J. Tucker Morse, 54 Trustee Private Investor/Real Estate Developer;
Four Beaufain Street Chairman of Vault Holdings, LLC.
Charleston, SC 29401
Timothy J. Penny, 45 Trustee Senior Counselor to the public relations firm
500 North State Street of Himle-Horner since January 1995 and Senior
Waseca, MN 56095 Fellow at the Humphrey Institute, Minneapolis,
Minnesota (a public policy organization) since
January 1995.
Richard H. Blank, Jr., 42 Chief Operating Vice President of Stephens Inc.; Director of
Officer, Stephens Sports Management Inc.; and Director
Secretary and of Capo Inc.
Treasurer
</TABLE>
Compensation Table
------------------
<TABLE>
<CAPTION>
Aggregate Total Compensation
Compensation from Registrant and
Name and Position from Registrant Fund Complex
- ------------------ ----------------- ----------------------
<S> <C> <C>
Robert C. Brown
Trustee
Donald H. Burkhardt
Trustee
Jack S. Euphrat
Trustee
Thomas S. Goho
Trustee
Peter G. Gordon
</TABLE>
19
<PAGE>
<TABLE>
<S> <C> <C>
Trustee
W. Rodney Hughes
Trustee
Richard M. Leach
Trustee
J. Tucker Morse
Trustee
Timothy J. Penny
Trustee
</TABLE>
Each of the Trustees and Officers listed above, act in the identical
capacities for Wells Fargo Variable Trust and Wells Fargo Core Trust
(collectively the "Fund Complex"). Trustees are compensated annually by the
Trust and by all the registrants in each fund complex they serve beginning
September 17, 1999, and beginning March 26, 1999, receive a per-meeting fee of
$250. Trustees also are reimbursed for all out-of-pocket expenses relating to
attendance at board meetings. Each of the Trustees and Officers of the Trust
serves in the identical capacity as trustees and/or officers of each registered
open-end management investment company in the Fund Complex. The Trustees are
compensated by other companies and trusts within a fund complex for their
services as directors/trustees to such companies and trusts. Currently the
Trustees do not receive any retirement benefits or deferred compensation from
the Trust or any other member of each fund complex.
As of the date of this SAI, Trustees and officers of the Trust, as a group,
beneficially owned less than 1% of the outstanding shares of the Trust.
INVESTMENT ADVISOR. Wells Fargo Bank provides investment Advisory services
------------------
to the Funds. As investment Advisor, Wells Fargo Bank furnishes investment
guidance and policy direction in connection with the daily portfolio management
of the Funds. Wells Fargo Bank furnishes to the Trust's Board of Trustees
periodic reports on the investment strategy and performance of each Fund. Wells
Fargo Bank provides the Funds with, among other things, money market security
and fixed-income research, analysis and statistical and economic data and
information concerning interest rate and securities markets trends, portfolio
composition, and credit conditions.
As compensation for its Advisory services, Wells Fargo Bank is entitled to
receive a monthly fee at the annual rates indicated below of each Fund's average
daily net assets:
20
<PAGE>
<TABLE>
<CAPTION>
Annual Rate
Fund (as percentage of net assets)
---- -----------------------------
<S> <C>
Asset Allocation 0.80%
Growth 0.75%
Income Equity 0.75%
Small Cap 0.90%
</TABLE>
INVESTMENT SUB-ADVISORS. Wells Fargo Bank has engaged Wells Capital
-----------------------
Management ("WCM") to serve as Investment Sub-Advisor to all of the Funds except
the Asset Allocation Fund. Subject to the direction of the Trust's Board of
Trustees and the overall supervision and control of Wells Fargo Bank and the
Trust, WCM makes recommendations regarding the investment and reinvestment of
the Funds' assets. WCM furnishes to Wells Fargo Bank periodic reports on the
investment activity and performance of the Funds. WCM and also furnishes such
additional reports and information as Wells Fargo Bank and the Trust's Board of
Trustees and officers may reasonably request.
As compensation for its sub-advisory services, WCM is entitled to receive a
monthly fee equal to an annual rate of [0.25% OF THE FIRST $200 MILLION OF THE
FUNDS' AVERAGE DAILY NET ASSETS, 0.20% OF THE NEXT $200 MILLION OF THE FUNDS'
NET ASSETS, AND 0.15% OF NET ASSETS OVER $400 MILLION. WCM RECEIVES A MINIMUM
ANNUAL SUB-ADVISORY FEE OF $120,000 FROM THE FUND. THIS MINIMUM ANNUAL FEE
PAYABLE TO WCM DOES NOT INCREASE THE ADVISORY FEE PAID BY EACH FUND TO WELLS
FARGO BANK. THIS MINIMUM ANNUAL FEE PAYABLE TO WCM DOES NOT INCREASE THE
ADVISORY FEE PAID BY EACH FUND TO WELLS FARGO BANK. THESE FEES MAY BE PAID BY
WELLS FARGO BANK OR DIRECTLY BY THE FUNDS. IF THE SUB-ADVISORY FEE IS PAID
DIRECTLY BY A FUND, THE COMPENSATION PAID TO WELLS FARGO BANK FOR ADVISORY FEES
WILL BE REDUCED ACCORDINGLY.]
Wells Fargo Bank has engaged Barclays Global Fund Advisors ("BGFA") to
serve as Investment Sub-Advisor to the Asset Allocation Fund. Subject to the
direction of the Trust's Board of Trustees and the overall supervision and
control of Wells Fargo Bank and the Trust, BGFA makes recommendations regarding
the investment and reinvestment of the Fund's assets. BGFA is responsible for
implementing and monitors the performance of the proprietary investment models
employed with respect to the Fund. BGFA furnishes to Wells Fargo Bank periodic
reports on the investment activity and performance of the Fund. BGFA and also
furnishes such additional reports
21
<PAGE>
and information as Wells Fargo Bank and the Trust's Board of Trustees and
officers may reasonably request.
As compensation for its sub-advisory services, BGFA is entitled to receive
a monthly fee equal to an annual rate of [0.20% OF THE FIRST $500 MILLION OF THE
FUND'S AVERAGE DAILY NET ASSETS, 0.15% OF THE NEXT $500 MILLION OF THE FUNDS'
NET ASSETS, AND 0.10% OF NET ASSETS OVER $1 BILLION.] These fees may be paid by
Wells Fargo Bank or directly by the Fund. If the sub-advisory fee is paid
directly by the Fund, the compensation paid to Wells Fargo Bank for advisory
fees will be reduced accordingly.
22
<PAGE>
PORTFOLIO MANAGERS
------------------
GARY J. DUNN
Mr. Dunn will co-manage the Income Equity Fund upon inception. He joins WCM from
Norwest Investment Management, Inc. ("NIM"), where he was Director of
Institutional Investments. He managed portfolios for NIM or its affiliates since
1979. He has over twenty years of investment management experience. Mr. Dunn
received his B.A. in Economics from Carroll College in Helena, Montana, and he
is a graduate of the New York Institute of Finance in Securities Analysis. Mr.
Dunn is a member of the Twin Cities Society of Securities Analysts and the
Association for Investment Management and Research ("AIMR").
KELLI K. HILL
PRINCIPAL, CORE EQUITY TEAM LEADER
Ms. Hill will manage the Growth Fund upon inception. She is the lead portfolio
manager for the core growth equity team and manages institutional portfolios,
including a publicly traded mutual fund, and conducts fundamental security
analysis for the team. In her research capacity, she specializes in the capital
goods and technology sectors. Previously, Ms. Hill managed individual high net-
worth clients. Her 13 years of investment experience includes 10 years with this
firm. Ms. Hill began her career as an institutional trader at E.F. Hutton. She
holds a B.A. in Economics and International Relations for the University of
Southern California and is a currently a Chartered Financial Analyst Level II
candidate. Ms. Hill is also the Treasurer for the San Francisco Ballet
Association Encore!, and a board member for Las Casa de les Madres, the largest
women's shelter in the San Francisco area.
KENNETH LEE
PRINCIPAL
Mr. Lee will be responsible as portfolio manager of the Small Cap Fund upon
inception. He is also generally responsible for portfolio management and
fundamental security analysis on the small and mid cap growth equity team. Prior
to his current position, he worked as an associate in the high-net-worth
portfolio management group. He has 7 years of investment experience, including 5
years at this firm. Mr. Lee holds a B.A. in Economics and a B.A. in
Organizational Studies from the University of California at Davis and is
currently a Chartered Financial Analyst Level III candidate.
DAVID L. ROBERTS, CFA
Mr. Roberts will be responsible as portfolio manager of the Income Equity Fund
upon inception. He joins WCM from NIM, where he was Managing Director of
Equities. He managed portfolios with NIM or its affiliates since 1972. Mr.
Roberts received his B.A. in Mathematics from Carroll College in Helena,
Montana, and is a graduate of the New York Institute of Finance in Securities
Analysis and of the National Graduate Trust School. He is a member of the Twin
Cities Society of Securities Analysts and the Association for Investment
Management and Research ("AIMR").
THOMAS M. ZEIFANG, CFA
Mr. Zeifang will be responsible as co-manager of the Small Cap Fund upon
inception. He is also responsible for fundamental security analysis on the small
and mid cap growth equity team. Prior to joining the firm in 1995, he spent 3
years as an analyst at Fleet Investment Advisors and 3 years as an assistant
portfolio manager at Marine Midland Bank. Mr. Zeifang holds an M.B.A. in Finance
and Business Policy from the William E. Simon School of Business Administration
and
23
<PAGE>
a B.B.A. in Finance from Saint Bonaventure University. Mr. Zeifang is a
Chartered Financial Analyst and a member of AIMR.
ADMINISTRATOR. The Trust has retained Wells Fargo Bank as Administrator on
-------------
behalf of each Fund. Under the Administration Agreement between Wells Fargo Bank
and the Trust, Wells Fargo Bank shall provide as administration services, among
other things: (i) general supervision of the Funds' operations, including
coordination of the services performed by each Fund's investment Advisor,
transfer agent, custodian, shareholder servicing agent(s), independent auditors
and legal counsel, regulatory compliance, including the compilation of
information for documents such as reports to, and filings with, the SEC and
state securities commissions; and preparation of proxy statements and
shareholder reports for each Fund; and (ii) general supervision relative to the
compilation of data required for the preparation of periodic reports distributed
to the Trust's officers and Board of Trustees. Wells Fargo Bank also furnish
office space and certain facilities required for conducting the Funds' business
together with ordinary clerical and bookkeeping services. The Administrator is
entitled to receive a fee of 0.15%, of the average daily net assets on an annual
basis of each Fund.
DISTRIBUTOR. Stephens Inc. ("Stephens," the "Distributor"), located at 111
-----------
Center Street, Little Rock, Arkansas 72201, serves as Distributor for the Funds.
The Funds have adopted a distribution plan (a "Plan") under Section 12(b) of the
1940 Act and Rule 12b-1 thereunder (the "Rule") for their Class B and Class C
shares. The Plan was adopted by the Trust's Board of Trustees, including a
majority of the Trustees who were not "interested persons" (as defined in the
1940 Act) of the Funds and who had no direct or indirect financial interest in
the operation of the Plan or in any agreement related to the Plan (the "Non-
Interested Trustees").
Under the Plan and pursuant to the related Distribution Agreement, the
Class B and Class C shares of the Funds pay Stephens up to 0.75% of the average
daily net assets attributable to each Class as compensation for distribution-
related services or as reimbursement for distribution-related expenses.
The actual fee payable to the Distributor by the above-indicated Funds and
Classes is determined, within such limits, from time to time by mutual agreement
between the Trust and the Distributor and will not exceed the maximum sales
charges payable by mutual funds sold by members of the National Association of
Securities Dealers, Inc. ("NASD") under the Conduct Rules of the NASD. The
Distributor may enter into selling agreements with one or more selling agents
(which may include Wells Fargo Bank and its affiliates) under which such agents
may receive compensation for distribution-related services from the Distributor,
including, but not limited to, commissions or other payments to such agents
based on the average daily net assets of Fund shares attributable to their
customers. The Distributor may retain any portion of the total distribution fee
payable thereunder to compensate it for distribution-related services provided
by it or to reimburse it for other distribution-related expenses.
General. The Plan will continue in effect from year to year if such
-------
continuance is approved by a majority vote of both the Trustees of the Trust and
the Non-Interested Trustees. Any Distribution Agreement related to the Plan also
must be approved by such vote of the
24
<PAGE>
Trustees and the Non-Interested Trustees. Such Agreement will terminate
automatically if assigned, and may be terminated at any time, without payment of
any penalty, by a vote of a majority of the outstanding voting securities of the
relevant class of the Fund or by vote of a majority of the Non-Interested
Trustees on not more than 60 days' written notice. The Plan may not be amended
to increase materially the amounts payable thereunder without the approval of a
majority of the outstanding voting securities of the Fund, and no material
amendment to the Plan may be made except by a majority of both the Trustees of
the Trust and the Non-Interested Trustees.
The Plan requires that the Treasurer of Trust shall provide to the
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Plan. The Rule also
requires that the selection and nomination of Trustees who are not "interested
persons" of the Trust be made by such disinterested Trustees.
Wells Fargo Bank, an interested person (as that term is defined in Section
2(a)(19) of the 1940 Act) of the Trust, acts as a selling agent for the Funds'
shares pursuant to selling agreements with Stephens authorized under the Plan.
As a selling agent, Wells Fargo Bank has an indirect financial interest in the
operation of the Plan. The Board of Trustees has concluded that the Plan is
reasonably likely to benefit the Funds and their shareholders because the Plan
authorizes the relationships with selling agents, including Wells Fargo Bank,
that have previously developed distribution channels and relationships with the
retail customers that the Funds are designed to serve. These relationships and
distribution channels are believed by the Board to provide potential for
increased Fund assets and ultimately corresponding economic efficiencies (i.e.,
lower per-share transaction costs and fixed expenses) that are generated by
increased assets under management.
SHAREHOLDER SERVICING AGENT. The Funds have approved a Servicing Plan and
---------------------------
have entered into related Shareholder Servicing Agreements with financial
institutions, including Wells Fargo Bank. Under the agreements, Shareholder
Servicing Agents (including Wells Fargo Bank) agree to perform, as agents for
their customers, administrative services, with respect to Fund shares, which
include aggregating and transmitting shareholder orders for purchases, exchanges
and redemptions; maintaining shareholder accounts and records; and providing
such other related services as the Trust or a shareholder may reasonably
request. For providing shareholder services, a Servicing Agent is entitled to a
fee from the applicable Fund of up to 0.25% on an annualized basis, of the
average daily net assets of the class of shares owned of record or beneficially
by the customers of the Servicing Agent during the period for which payment is
being made. The amounts payable under the Shareholder Servicing Plan and
Agreements are shown below. The Servicing Plan and related Shareholder Servicing
Agreements were approved by the Trust's Board of Trustees and provide that a
Fund shall not be obligated to make any payments under such Plan or related
Agreements that exceed the maximum amounts payable under the Conduct Rules of
the NASD.
25
<PAGE>
Fund Fee
---- ---
Asset Allocation
Class A 0.10%
Class B 0.25%
Class C 0.25%
Growth
Class A 0.25%
Class B 0.25%
Income Equity
Class A 0.25%
Class B 0.25%
Class C 0.25%
Small Cap
Class A 0.25%
Class B 0.25%
Class C 0.25%
Institutional Class 0.25%
General. The Servicing Plan will continue in effect from year to year if
-------
such continuance is approved by a majority vote of the Trustees of the Trust,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Funds ("Non-Interested Trustees"). Any form of
Servicing Agreement related to the Servicing Plan also must be approved by such
vote of the Trustees and the Non-Interested Trustees. Servicing Agreements may
be terminated at any time, without payment of any penalty, by a vote of a
majority of the Board of Trustees, including a majority of the Non-Interested
Trustees. No material amendment to the Servicing Plan or related Servicing
Agreements may be made except by a majority of both the Trustees of the Trust
and the Non-Interested Trustees.
The Servicing Plan requires that the Administrator of the Trust shall
provide to the Trustees, and the Trustees shall review, at least quarterly, a
written report of the amounts expended (and purposes therefor) under the
Servicing Plan.
CUSTODIAN. Norwest Bank Minnesota, N.A. ("Norwest Bank") acts as Custodian
---------
for each Fund. The Custodian, among other things, maintains a custody account
or accounts in the name of each Fund, receives and delivers all assets for each
Fund upon purchase and upon sale or maturity, collects and receives all income
and other payments and distributions on account of the assets of each Fund and
pays all expenses of each Fund. For its services as Custodian, Norwest Bank is
entitled to receive fees as follows: 0.02% of the average daily net assets of
each Fund.
26
<PAGE>
FUND ACCOUNTANT. Forum Financial Services, Inc. acts as Fund Accountant
---------------
for the Funds. The Fund Accountant, among other things, computes net asset
values on a daily basis and performance calculations on a regular basis and as
requested by the Funds. For providing such services, Forum is entitled to
receive a fee of [___.]
TRANSFER AND DIVIDEND DISBURSING AGENT. State Street Bank, acting through
--------------------------------------
its affiliate Boston Financial Data Services ("BFDS"), acts as Transfer and
Dividend Disbursing Agent for the Funds. For providing such services, BFDS is
entitled to receive a per-account fee of [0.04% OF THE AVERAGE DAILY NET ASSETS
OF EACH SUCH ACCOUNT ON AN ANNUAL BASIS].
PERFORMANCE CALCULATIONS
The Funds may advertise certain yield and total return information.
Quotations of yield and total return reflect only the performance of a
hypothetical investment in a Fund or class of shares during the particular time
period shown. Yield and total return vary based on changes in the market
conditions and the level of a Fund's expenses, and no reported performance
figure should be considered an indication of performance which may be expected
in the future.
In connection with communicating its performance to current or prospective
shareholders, these figures may also be compared to the performance of other
mutual funds tracked by mutual fund rating services or to unmanaged indices
which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
Performance information for a Fund or Class of shares in a Fund may be
useful in reviewing the performance of such Fund or Class of shares and for
providing a basis for comparison with investment alternatives. The performance
of a Fund and the performance of a Class of shares in a Fund, however, may not
be comparable to the performance from investment alternatives because of
differences in the foregoing variables and differences in the methods used to
value portfolio securities, compute expenses and calculate performance.
Performance information may be advertised for non-standardized periods,
including year-to-date and other periods less than a year for the Funds.
AVERAGE ANNUAL TOTAL RETURN: The Funds may advertise certain total return
---------------------------
information. As and to the extent required by the SEC, an average annual
compound rate of return ("T") is computed by using the redeemable value at the
end of a specified period ("ERV") of a hypothetical initial investment ("P")
over a period of years ("n") according to the following formula: P(1+T)n=ERV.
CUMULATIVE TOTAL RETURN: In addition to the above performance information,
-----------------------
each Fund may also advertise the cumulative total return of the Fund.
Cumulative total return is based on the overall percentage change in value of a
hypothetical investment in the Fund, assuming all Fund dividends and capital
gain distributions are reinvested, without reflecting the effect of any sales
charge that would be paid by an investor, and is not annualized.
27
<PAGE>
From time to time and only to the extent the comparison is appropriate for
a Fund or a Class of shares, the Trust may quote the performance or price-
earning ratio of a Fund or Class in advertising and other types of literature as
compared to the performance of the S&P Index, the Dow Jones Industrial Average,
the Lehman Brothers 20+ Treasury Index, the Lehman Brothers 5-7 Year Treasury
Index, Donoghue's Money Fund Averages, Real Estate Investment Averages (as
reported by the National Association of Real Estate Investment Trusts), Gold
Investment Averages (provided by World Gold Council), Bank Averages (which are
calculated from figures supplied by the U.S. League of Savings Institutions
based on effective annual rates of interest on both passbook and certificate
accounts), average annualized certificate of deposit rates (from the Federal
Reserve G-13 Statistical Releases or the Bank Rate Monitor), the Salomon One
Year Treasury Benchmark Index, the Consumer Price Index (as published by the
U.S. Bureau of Labor Statistics), other managed or unmanaged indices or
performance data of bonds, municipal securities, stocks or government securities
(including data provided by Ibbotson Associates), or by other services,
companies, publications or persons who monitor mutual funds on overall
performance or other criteria. The S&P Index and the Dow Jones Industrial
Average are unmanaged indices of selected common stock prices. The performance
of the Funds or a Class also may be compared to that of other mutual funds
having similar objectives. This comparative performance could be expressed as a
ranking prepared by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Bloomberg Financial Markets or Morningstar, Inc.,
independent services which monitor the performance of mutual funds. The Funds'
performance will be calculated by relating net asset value per share at the
beginning of a stated period to the net asset value of the investment, assuming
reinvestment of all gains distributions and dividends paid, at the end of the
period. The Funds' comparative performance will be based on a comparison of
yields, as described above, or total return, as reported by Lipper, Survey
Publications, Donoghue or Morningstar, Inc.
Any such comparisons may be useful to investors who wish to compare past
performance of the Funds or a Class with that of competitors. Of course, past
performance cannot be a guarantee of future results. The Trust also may include,
from time to time, a reference to certain marketing approaches of the
Distributor, including, for example, a reference to a potential shareholder
being contacted by a selected broker or dealer. General mutual fund statistics
provided by the Investment Company Institute may also be used.
The Trust also may use the following information in advertisements and
other types of literature, only to the extent the information is appropriate for
the Fund: (i) the Consumer Price Index may be used to assess the real rate of
return from an investment in a Fund; (ii) other government statistics,
including, but not limited to, The Survey of Current Business, may be used to
illustrate investment attributes of a Fund or the general economic, business,
investment, or financial environment in which a Fund operates; (iii) the effect
of tax-deferred compounding on the investment returns of a Fund, or on returns
in general, may be illustrated by graphs, charts, etc., where such graphs or
charts would compare, at various points in time, the return from an investment
in a Fund (or returns in general) on a tax-deferred basis (assuming reinvestment
of capital gains and dividends and assuming one or more tax rates) with the
return on a taxable basis; and (iv) the sectors or industries in which a Fund
invests may be compared to relevant
28
<PAGE>
indices of stocks or surveys (e.g., S&P Industry Surveys) to evaluate a Fund's
historical performance or current or potential value with respect to the
particular industry or sector.
In addition, the Trust also may use, in advertisements and other types of
literature, information and statements: (1) showing that bank savings accounts
offer a guaranteed return of principal and a fixed rate of interest, but no
opportunity for capital growth; and (2) describing Wells Fargo Bank, and its
affiliates and predecessors, as one of the first investment managers to advise
investment accounts using asset allocation and index strategies. The Trust also
may include in advertising and other types of literature information and other
data from reports and studies prepared by the Tax Foundation, including
information regarding federal and state tax levels and the related "Tax Freedom
Day."
The Trust also may discuss in advertising and other types of literature
that a Fund has been assigned a rating by an NRSRO, such as Standard & Poor's
Corporation. Such rating would assess the creditworthiness of the investments
held by the Fund. The assigned rating would not be a recommendation to purchase,
sell or hold the Fund's shares since the rating would not comment on the market
price of the Fund's shares or the suitability of the Fund for a particular
investor. In addition, the assigned rating would be subject to change,
suspension or withdrawal as a result of changes in, or unavailability of,
information relating to the Fund or its investments. The Trust may compare the
Fund's performance with other investments which are assigned ratings by NRSROs.
Any such comparisons may be useful to investors who wish to compare the Fund's
past performance with other rated investments.
From time to time, the Funds may use the following statements, or
variations thereof, in advertisements and other promotional materials: "Wells
Fargo Bank, as a Shareholder Servicing Agent for the Wells Fargo Funds Trust
Funds, provides various services to its customers that are also shareholders of
the Funds. These services may include access to Wells Fargo Funds Trust Funds'
account information through Automated Teller Machines (ATMs), the placement of
purchase and redemption requests for shares of the Funds through ATMs and the
availability of combined Wells Fargo Bank and Stagecoach Funds account
statements."
The Trust also may disclose, in advertising and other types of literature,
information and statements that Wells Capital Management (formerly "Wells Fargo
Investment Management"), a division of Wells Fargo Bank, is listed in the top
100 by Institutional Investor magazine in its July 1997 survey "America's Top
300 Money Managers." This survey ranks money managers in several asset
categories. The Trust may also disclose in advertising and other types of sales
literature the assets and categories of assets under management by the Trust's
investment advisor. The Trust may also disclose in advertising and other types
of sales literature the assets and categories of assets under management by a
fund's investment advisor or sub-advisor and the total amount of assets and
mutual fund assets managed by Wells Fargo Bank. As of April 1, 1999, Wells Fargo
Bank and its affiliates provided investment Advisory services for approximately
[$__BILLION] of assets of individual, trusts, estates and institutions and [$__
BILLION] of mutual fund assets.
29
<PAGE>
The Trust also may discuss in advertising and other types of literature the
features, terms and conditions of Wells Fargo Bank accounts through which
investments in the Funds may be made via a "sweep" arrangement, including,
without limitation, the Managed Sweep Account, Money Market Checking Account,
California Tax-Free Money Market Checking Account, Money Market Access Account
and California Tax-Free Money Market Access Account (collectively, the "Sweep
Accounts"). Such advertisements and other literature may include, without
limitation, discussions of such terms and conditions as the minimum deposit
required to open a Sweep Account, a description of the yield earned on shares of
the Funds through a Sweep Account, a description of any monthly or other service
charge on a Sweep Account and any minimum required balance to waive such service
charges, any overdraft protection plan offered in connection with a Sweep
Account, a description of any ATM or check privileges offered in connection with
a Sweep Account and any other terms, conditions, features or plans offered in
connection with a Sweep Account. Such advertising or other literature may also
include a discussion of the advantages of establishing and maintaining a Sweep
Account, and may include statements from customers as to the reasons why such
customers have established and maintained a Sweep Account.
The Trust may disclose in advertising and other types of literature that
investors can open and maintain Sweep Accounts over the Internet or through
other electronic channels (collectively, "Electronic Channels"). Such
advertising and other literature may discuss the investment options available to
investors, including the types of accounts and any applicable fees. Such
advertising and other literature may disclose that Wells Fargo Bank is the first
major bank to offer an on-line application for a mutual fund account that can be
filled out completely through Electronic Channels. Advertising and other
literature may disclose that Wells Fargo Bank may maintain Web sites, pages or
other information sites accessible through Electronic Channels (an "Information
Site") and may describe the contents and features of the Information Site and
instruct investors on how to access the Information Site and open a Sweep
Account. Advertising and other literature may also disclose the procedures
employed by Wells Fargo Bank to secure information provided by investors,
including disclosure and discussion of the tools and services for accessing
Electronic Channels. Such advertising or other literature may include
discussions of the advantages of establishing and maintaining a Sweep Account
through Electronic Channels and testimonials from Wells Fargo Bank customers or
employees and may also include descriptions of locations where product
demonstrations may occur. The Trust may also disclose the ranking of Wells Fargo
Bank as one of the largest money managers in the United States.
The Trust also may disclose in sales literature the distribution rate on
the shares of a Fund. Distribution rate, which may be annualized, is the amount
determined by dividing the dollar amount per share of the most recent dividend
by the most recent NAV or maximum offering price per share as of a date
specified in the sales literature. Distribution rate will be accompanied by the
standard 30-day yield as required by the SEC.
30
<PAGE>
DETERMINATION OF NET ASSET VALUE
Net asset value per share for each class of the Funds is determined as of
the close of regular trading (currently 1:00 p.m., Pacific time/3:00 p.m.
Central time) on each day the New York Stock Exchange ("NYSE") is open for
business. Expenses and fees, including Advisory fees, are accrued daily and are
taken into account for the purpose of determining the net asset value of the
Funds' shares.
Securities of a Fund for which market quotations are available are valued
at latest prices. Any security for which the primary market is an exchange is
valued at the last sale price on such exchange on the day of valuation or, if
there was no sale on such day, the latest bid price quoted on such day. In the
case of other securities, including U.S. Government securities but excluding
money market instruments maturing in 60 days or less, the valuations are based
on latest quoted bid prices. Money market instruments and debt securities
maturing in 60 days or less are valued at amortized cost. The assets of a Fund,
other than money market instruments or debt securities maturing in 60 days or
less, are valued at latest quoted bid prices. Futures contracts will be marked
to market daily at their respective settlement prices determined by the relevant
exchange. Prices may be furnished by a reputable independent pricing service
approved by the Trust's Board of Trustees. Prices provided by an independent
pricing service may be determined without exclusive reliance on quoted prices
and may take into account appropriate factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data. All other securities and
other assets of a Fund for which current market quotations are not readily
available are valued at fair value as determined in good faith by the Trust's
Board of Trustees and in accordance with procedures adopted by the Trustees.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares may be purchased on any day a Fund is open for business. Each Fund
is open for business each day the NYSE is open for trading (a "Business Day").
Currently, the NYSE is closed on New Year's Day, Martin Luther King Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day (each a "Holiday"). When any Holiday falls on
a weekend, the NYSE typically is closed on the weekday immediately before or
after such Holiday.
Payment for shares may, in the discretion of the Advisor, be made in the
form of securities that are permissible investments for the Fund. For further
information about this form of payment please contact Stephens. In connection
with an in-kind securities payment, the Funds will require, among other things,
that the securities be valued on the day of purchase in accordance with the
pricing methods used by a Fund and that a Fund receives satisfactory assurances
that (i) it will have good and marketable title to the securities received by
it; (ii) that the securities are in proper form for transfer to the Fund; and
(iii) adequate information will be provided concerning the basis and other
matters relating to the securities.
Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
NYSE is closed (other than
31
<PAGE>
customary weekend and holiday closings, or during which trading is restricted,
or during which as determined by the SEC by rule or regulation) an emergency
exists as a result of which disposal or valuation of portfolio securities is not
reasonably practicable, or for such periods as the SEC may permit. The Trust may
suspend redemption rights or postpone redemption payments for such periods as
are permitted under the 1940 Act. The Trust may also redeem shares involuntarily
or make payment for redemption in securities or other property if it appears
appropriate to do so in light of the Trust's responsibilities under the 1940
Act. In addition, the Trust may redeem shares involuntarily to reimburse the
Fund for any losses sustained by reason of the failure of a shareholders to make
full payment for shares purchased or to collect any charge relating to a
transaction effected for the benefit of a shareholder which is applicable to
shares of the Fund as provided from time to time in the Prospectus.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trust's Board of Trustees, Wells Fargo Bank is responsible
for each Fund's portfolio decisions and the placing of portfolio transactions.
In placing orders, it is the policy of the Trust to obtain the best results
taking into account the dealer's general execution and operational facilities,
the type of transaction involved and other factors such as the dealer's risk in
positioning the securities involved. While Wells Fargo Bank generally seeks
reasonably competitive spreads or commissions, the Funds will not necessarily be
paying the lowest spread or commission available.
Purchases and sales of equity securities on a securities exchange are
effected through brokers who charge a negotiated commission for their services.
Orders may be directed to any broker including, to the extent and in the manner
permitted by applicable law, Stephens or Wells Fargo Securities Inc. In the
over-the-counter market, securities are generally traded on a "net" basis with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price that includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount.
In placing orders for portfolio securities of a Fund, Wells Fargo Bank is
required to give primary consideration to obtaining the most favorable price and
efficient execution. This means that Wells Fargo Bank will seek to execute each
transaction at a price and commission, if any, that provide the most favorable
total cost or proceeds reasonably attainable in the circumstances. Commission
rates are established pursuant to negotiations with the broker based on the
quality and quantity of execution services provided by the broker in the light
of generally prevailing rates. The allocation of orders among brokers and the
commission rates paid are reviewed periodically by the Board of Trustees.
Wells Fargo Bank, as the Investment Advisor of each of the Funds, may, in
circumstances in which two or more dealers are in a position to offer comparable
results for a Fund portfolio transaction, give preference to a dealer that has
provided statistical or other
32
<PAGE>
research services to Wells Fargo Bank. By allocating transactions in this
manner, Wells Fargo Bank is able to supplement its research and analysis with
the views and information of securities firms. Information so received will be
in addition to, and not in lieu of, the services required to be performed by
Wells Fargo Bank under the Advisory Contracts, and the expenses of Wells Fargo
Bank will not necessarily be reduced as a result of the receipt of this
supplemental research information. Furthermore, research services furnished by
dealers through which Wells Fargo Bank places securities transactions for a Fund
may be used by Wells Fargo Bank in servicing its other accounts, and not all of
these services may be used by Wells Fargo Bank in connection with advising the
Funds.
Portfolio Turnover. The portfolio turnover rate is not a limiting factor
------------------
when Wells Fargo Bank deems portfolio changes appropriate. Changes may be made
in the portfolios consistent with the investment objectives and policies of the
Funds whenever such changes are believed to be in the best interests of the
Funds and their shareholders. The portfolio turnover rate is calculated by
dividing the lesser of purchases or sales of portfolio securities by the average
monthly value of the Fund's portfolio securities. For purposes of this
calculation, portfolio securities exclude all securities having a maturity when
purchased of one year or less. Portfolio turnover generally involves some
expenses to the Funds, including brokerage commissions or dealer mark-ups and
other transaction costs on the sale of securities and the reinvestment in other
securities. Portfolio turnover also can generate short-term capital gain tax
consequences. Portfolio turnover rate is not a limiting factor when Wells Fargo
Bank deems portfolio changes appropriate.
From time to time, Wells Fargo Bank and Stephens may waive fees from the
Fund in whole or in part. Any such waiver will reduce expenses and, accordingly,
have a favorable impact on the Fund's performance.
FUND EXPENSES
Except for the expenses borne by Wells Fargo Bank and Stephens, the Trust
bears all costs of its operations, including the compensation of its Trustees
who are not affiliated with Stephens or Wells Fargo Bank or any of their
affiliates; Advisory, shareholder servicing and administration fees; payments
pursuant to any Plan; interest charges; taxes; fees and expenses of its
independent auditors, legal counsel, transfer agent and dividend disbursing
agent; expenses of redeeming shares; expenses of preparing and printing
prospectuses (except the expense of printing and mailing prospectuses used for
promotional purposes, unless otherwise payable pursuant to a Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues; brokerage and other expenses
connected with the execution of portfolio transactions; fees and expenses of its
custodian, including those for keeping books and accounts and calculating the
NAV per share of the Fund; expenses of shareholders' meetings; expenses relating
to the issuance, registration and qualification of the Fund's shares; pricing
services, and any extraordinary expenses. Expenses attributable to the Fund are
charged against Fund assets. General expenses of the Trust are allocated among
all of the funds of the Trust, including the Funds, in a manner proportionate to
the net assets of a Funds, on a transactional basis, or on such other basis as
the Trust's Board of Trustees deems equitable.
33
<PAGE>
FEDERAL INCOME TAXES
The following information supplements and should be read in conjunction
with the Prospectus section entitled "Taxes." The Prospectuses of each Fund
describe generally the tax treatment of distributions by the Funds. This section
of the SAI includes additional information concerning Federal income taxes.
General. The Trust intends to qualify each Fund as a regulated investment
-------
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), as long as such qualification is in the best interest of the Fund's
shareholders. Each Fund will be treated as a separate entity for Federal income
tax purposes. Thus, the provisions of the Code applicable to regulated
investment companies generally will be applied to each Fund, rather than to the
Trust as a whole. In addition, net capital gains, net investment income, and
operating expenses will be determined separately for each Fund. As a regulated
investment company, each Fund will not be taxed on its net investment income and
capital gains distributed to its shareholders.
Qualification as a regulated investment company under the Code requires,
among other things, that each Fund (a) derive at least 90% of its annual gross
income from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other income (including, but not limited to, gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; and (b) diversify its holdings so that,
at the end of each quarter of the taxable year, (i) at least 50% of the market
value of the Fund's assets is represented by cash, government securities and
other securities limited with respect to any one issuer to an amount not greater
than 5% of the Fund's assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its assets is invested
in the securities of any one issuer (other than U.S. Government obligations and
the securities of other regulated investment companies), or in two or more
issuers which the Fund controls and which are determined to be engaged in the
same or similar trades or businesses.
The Funds also must distribute or be deemed to distribute to their
shareholders at least 90% of their net investment income (which, for this
purpose, includes net short-term capital gains) earned in each taxable year. In
general, these distributions must actually or be deemed to be made in the
taxable year. However, in certain circumstances, such distributions may be made
in the 12 months following the taxable year. Furthermore, distributions declared
in October, November or December of one taxable year and paid by January 31 of
the following taxable year will be treated as paid by December 31 of the first
taxable year. The Funds intend to pay out substantially all of their net
investment income and net realized capital gains (if any) for each year.
In addition, a regulated investment company must, in general, derive less
than 30% of its gross income from the sale or other disposition of securities or
options thereon held for less than
34
<PAGE>
three months. However, this restriction has been repealed with respect to a
regulated investment company's taxable years beginning after August 5, 1997.
Excise Tax. A 4% nondeductible excise tax will be imposed on each Fund
----------
(other than to the extent of its tax-exempt interest income) to the extent it
does not meet certain minimum distribution requirements by the end of each
calendar year. Each Fund intends to actually or be deemed to distribute
substantially all of its net investment income and net capital gains by the end
of each calendar year and, thus, expects not to be subject to the excise tax.
Taxation of Fund Investments. Except as provided herein, gains and losses
----------------------------
on the sale of portfolio securities by a Fund will generally be capital gains
and losses. Such gains and losses will ordinarily be long-term capital gains
and losses if the securities have been held by the Fund for more than one year
at the time of disposition of the securities.
Gains recognized on the disposition of a debt obligation (including tax-
exempt obligations purchased after April 30, 1993) purchased by a Fund at a
market discount (generally at a price less than its principal amount) will be
treated as ordinary income to the extent of the portion of market discount which
accrued, but was not previously recognized pursuant to an available election,
during the term the Fund held the debt obligation.
If an option granted by a Fund lapses or is terminated through a closing
transaction, such as a repurchase by the Fund of the option from its holder, the
Fund will realize a short-term capital gain or loss, depending on whether the
premium income is greater or less than the amount paid by the Fund in the
closing transaction. Some realized capital losses may be deferred if they result
from a position which is part of a "straddle," discussed below. If securities
are sold by the Fund pursuant to the exercise of a call option written by it,
the Fund will add the premium received to the sale price of the securities
delivered in determining the amount of gain or loss on the sale. If securities
are purchased by a Fund pursuant to the exercise of a put option written by it,
such Fund will subtract the premium received from its cost basis in the
securities purchased.
The amount of any gain or loss realized by a Fund on closing out a
regulated futures contract will generally result in a realized capital gain or
loss for Federal income tax purposes. Regulated futures contracts held at the
end of each fiscal year will be required to be "marked to market" for Federal
income tax purposes pursuant to Section 1256 of the Code. In this regard, they
will be deemed to have been sold at market value. Sixty percent (60%) of any net
gain or loss recognized on these deemed sales, and sixty percent (60%) of any
net realized gain or loss from any actual sales, will generally be treated as
long-term capital gain or loss, and the remainder will be treated as short-term
capital gain or loss. Transactions that qualify as designated hedges are
excepted from the "mark-to-market" rule and the "60%/40%" rule.
Under Section 988 of the Code, a Fund generally will recognize ordinary
income or loss to the extent that gain or loss realized on the disposition of
portfolio securities is attributable to changes in foreign currency exchange
rates. In addition, gain or loss realized on the disposition of a foreign
currency forward contract, futures contract, option or similar financial
instrument, or of foreign currency itself, will generally be treated as ordinary
income or loss. The Funds will
35
<PAGE>
attempt to monitor Section 988 transactions, where applicable, to avoid adverse
Federal income tax impact.
Offsetting positions held by a Fund involving certain financial forward,
futures or options contracts may be considered, for tax purposes, to constitute
"straddles." "Straddles" are defined to include "offsetting positions" in
actively traded personal property. The tax treatment of "straddles" is governed
by Section 1092 of the Code which, in certain circumstances, overrides or
modifies the provisions of Section 1256. If a Fund were treated as entering into
"straddles" by engaging in certain financial forward, futures or option
contracts, such straddles could be characterized as "mixed straddles" if the
futures, forwards, or options comprising a part of such straddles were governed
by Section 1256 of the Code. The Fund may make one or more elections with
respect to "mixed straddles." Depending upon which election is made, if any, the
results with respect to the Fund may differ. Generally, to the extent the
straddle rules apply to positions established by the Fund, losses realized by
the Fund may be deferred to the extent of unrealized gain in any offsetting
positions. Moreover, as a result of the straddle and the conversion transaction
rules, short-term capital loss on straddle positions may be recharacterized as
long-term capital loss, and long-term capital gain may be characterized as
short-term capital gain or ordinary income.
If a Fund enters into a "constructive sale" of any appreciated position in
stock, a partnership interest, or certain debt instruments, the Fund must
recognize gain (but not loss) with respect to that position. For this purpose, a
constructive sale occurs when the Fund enters into one of the following
transactions with respect to the same or substantially identical property: (i) a
short sale; (ii) an offsetting notional principal contract; or (iii) a futures
or forward contract.
If a Fund purchases shares in a "passive foreign investment company"
("PFIC"), the Fund may be subject to Federal income tax and an interest charge
imposed by the IRS upon certain distributions from the PFIC or the Fund's
disposition of its PFIC shares. If a Fund invests in a PFIC, the Fund intends to
make an available election to mark-to-market its interest in PFIC shares. Under
the election, the Fund will be treated as recognizing at the end of each taxable
year the difference, if any, between the fair market value of its interest in
the PFIC shares and its basis in such shares. In some circumstances, the
recognition of loss may be suspended. The Fund will adjust its basis in the PFIC
shares by the amount of income (or loss) recognized. Although such income (or
loss) will be taxable to the Fund as ordinary income (or loss) notwithstanding
any distributions by the PFIC, the Fund will not be subject to Federal income
tax or the interest charge with respect to its interest in the PFIC under the
election.
Income and dividends received by the Funds from sources within foreign
countries may be subject to withholding and other taxes imposed by such
countries.
Capital Gain Distributions. Distributions which are designated by a Fund
--------------------------
as capital gain distributions will be taxed to shareholders as long-term term
capital gain (to the extent such dividends do exceed the Fund's actual net
capital gains for the taxable year), regardless of how long a shareholder has
held Fund shares. Such distributions will be designated as capital gain
36
<PAGE>
distributions in a written notice mailed by the Fund to its shareholders not
later than 60 days after the close of the Fund's taxable year.
Disposition of Fund Shares. A disposition of Fund shares pursuant to a
--------------------------
redemption (including a redemption in-kind) or an exchange will ordinarily
result in a taxable capital gain or loss, depending on the amount received for
the shares (or are deemed to be received in the case of an exchange) and the
cost of the shares.
If a shareholder exchanges or otherwise disposes of Fund shares within 90
days of having acquired such shares and if, as a result of having acquired those
shares, the shareholder subsequently pays a reduced sales charge on a new
purchase of shares of the Fund or a different regulated investment company, the
sales charge previously incurred in acquiring the Fund's shares shall not be
taken into account (to the extent such previous sales charges do not exceed the
reduction in sales charges on the new purchase) for the purpose of determining
the amount of gain or loss on the disposition, but will be treated as having
been incurred in the acquisition of such other shares. Also, any loss realized
on a redemption or exchange of shares of the Fund will be disallowed to the
extent that substantially identical shares are acquired within the 61-day period
beginning 30 days before and ending 30 days after the shares are disposed of.
If a shareholder receives a designated capital gain distribution (to be
treated by the shareholder as a long-term capital gain) with respect to any Fund
share and such Fund share is held for six months or less, then (unless otherwise
disallowed) any loss on the sale or exchange of that Fund share will be treated
as a long-term capital loss to the extent of the designated capital gain
distribution. In addition, if a shareholder holds Fund shares for six months or
less, any loss on the sale or exchange of those shares will be disallowed to the
extent of the amount of exempt-interest dividends received with respect to the
shares. The Treasury Department is authorized to issue regulations reducing the
six months holding requirement to a period of not less than the greater of 31
days or the period between regular dividend distributions where a Fund regularly
distributes at least 90% of its net tax-exempt interest, if any. No such
regulations have been issued as of the date of this SAI. The loss disallowance
rules described in this paragraph do not apply to losses realized under a
periodic redemption plan.
Federal Income Tax Rates. As of the printing of this SAI, the maximum
------------------------
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gain is 20%; and the maximum corporate tax rate applicable to
ordinary income and net capital gain is 35% (marginal tax rates may be higher
for some corporations to reduce or eliminate the benefit of lower marginal
income tax rates). Naturally, the amount of tax payable by an individual or
corporation will be affected by a combination of tax laws covering, for example,
deductions, credits, deferrals, exemptions, sources of income and other matters.
Backup Withholding. The Trust may be required to withhold, subject to
------------------
certain exemptions, at a rate of 31% ("backup withholding") on dividends,
capital gain distributions, and redemption proceeds (including proceeds from
exchanges and redemptions in-kind) paid or
37
<PAGE>
credited to an individual Fund shareholder, if the shareholder fails to certify
that the Taxpayer Identification Number ("TIN") provided is correct and that the
shareholder is not subject to backup withholding, or if the IRS notifies the
Trust that the shareholder's TIN is incorrect or that the shareholder is subject
to backup withholding. Such tax withheld does not constitute any additional tax
imposed on the shareholder, and may be claimed as a tax payment on the
shareholder's Federal income tax return. An investor must provide a valid TIN
upon opening or reopening an account. Failure to furnish a valid TIN to the
Trust could also subject the investor to penalties imposed by the IRS.
Corporate Shareholders. Corporate shareholders of the Funds may be
----------------------
eligible for the dividends-received deduction on dividends distributed out of a
Fund's net investment income attributable to dividends received from domestic
corporations, which, if received directly by the corporate shareholder, would
qualify for such deduction. A distribution by a Fund attributable to dividends
of a domestic corporation will only qualify for the dividends-received deduction
if (i) the corporate shareholder generally holds the Fund shares upon which the
distribution is made for at least 46 days during the 90 day period beginning 45
days prior to the date upon which the shareholder becomes entitled to the
distribution; and (ii) the Fund generally holds the shares of the domestic
corporation producing the dividend income for at least 46 days during the 90 day
period beginning 45 days prior to the date upon which the Fund becomes entitled
to such dividend income.
Foreign Shareholders. Under the Code, distributions of net investment
--------------------
income by the Funds to a nonresident alien individual, foreign trust (i.e.,
trust which a U.S. court is able to exercise primary supervision over
administration of that trust and one or more U.S. persons have authority to
control substantial decisions of that trust), foreign estate (i.e., the income
of which is not subject to U.S. tax regardless of source), foreign corporation,
or foreign partnership (a "foreign shareholder") will be subject to U.S.
withholding tax (at a rate of 30% or a lower treaty rate, if applicable).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected" with a U.S. trade or business (or, if an
income tax treaty applies, is attributable to a U.S. permanent establishment of
the foreign shareholder), in which case the reporting and withholding
requirements applicable to U.S. persons will apply. Distributions of capital
gains are generally not subject to tax withholding.
New Regulations. On October 6, 1997, the Treasury Department issued new
---------------
regulations (the "New Regulations") which make certain modifications to the
backup withholding, U.S. income tax withholding and information reporting rules
applicable to foreign shareholders. The New Regulations will generally be
effective for payments made after December 31, 1999, subject to certain
transition rules. Among other things, the New Regulations will permit the Funds
to estimate the portion of their distributions qualifying as capital gain
distributions for purposes of determining the portion of such distributions paid
to foreign shareholders that will be subject to U.S. income tax withholding.
Prospective investors are urged to consult their own tax Advisors regarding the
New Regulations.
Tax-Deferred Plans. The shares of the Funds are available for a variety of
------------------
tax-deferred retirement and other plans, including Individual Retirement
Accounts ("IRA"), Simplified
38
<PAGE>
Employee Pension Plans ("SEP-IRA"), Savings Incentive Match Plans for Employees
("SIMPLE plans"), Roth IRAs, and Education IRAs, which permit investors to defer
some of their income from taxes. Investors should contact their selling agents
for details concerning retirement plans.
Foreign Taxes. Income and dividends received by the Fund from sources
-------------
within foreign countries may be subject to withholding and other taxes imposed
by such countries. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. If more than 50% in value of a
regulated investment company's total assets at the close of its taxable year
consist of securities of non-U.S. corporations, the regulated investment company
will be eligible to file an election with the IRS pursuant to which the
regulated investment company may pass-through to its shareholders foreign taxes
paid by the regulated investment company, which may be claimed either as a
credit or deduction by the shareholders. None of the Funds expects to qualify
for the election.
For tax years beginning after December 31, 1997, an individual with $300 or
less of creditable foreign taxes generally is exempt from foreign source income
and certain other limitations imposed by the Code on claiming a credit for such
taxes. The $300 amount is increased to $600 for joint filers.
Other Matters. Investors should be aware that the investments to be made
-------------
by the Funds may involve sophisticated tax rules that may result in income or
gain recognition by the Funds without corresponding current cash receipts.
Although the Funds will seek to avoid significant noncash income, such noncash
income could be recognized by the Funds, in which case the Funds may distribute
cash derived from other sources in order to meet the minimum distribution
requirements described above.
The foregoing discussion and the discussions in the Prospectus applicable
to each shareholder address only some of the Federal tax considerations
generally affecting investments in the Funds. Each investor is urged to consult
his or her tax Advisor regarding specific questions as to Federal, state, local
or foreign taxes.
CAPITAL STOCK
The Funds are four of the Funds of the Wells Fargo Funds Trust family of
funds. The Trust was organized as a Delaware business trust on March 10, 1999.
Most of the Trust's funds are authorized to issue multiple classes of
shares, one class generally subject to a front-end sales charge and, in some
cases, classes subject to a contingent-
39
<PAGE>
deferred sales charge, that are offered to retail investors. Certain of the
Trust's funds also are authorized to issue other classes of shares, which are
sold primarily to institutional investors. Each class of shares in a fund
represents an equal, proportionate interest in a fund with other shares of the
same class. Shareholders of each class bear their pro rata portion of the fund's
operating expenses, except for certain class-specific expenses (e.g., any state
securities registration fees, shareholder servicing fees or distribution fees
that may be paid under Rule 12b-1) that are allocated to a particular class.
Please contact Investor Services at 1-800-222-8222 if you would like additional
information about other funds or classes of shares offered.
With respect to matters that affect one class but not another, shareholders
vote as a class; for example, the approval of a Plan. Subject to the foregoing,
all shares of a Fund have equal voting rights and will be voted in the
aggregate, and not by Series, except where voting by a Series is required by law
or where the matter involved only affects one Series. For example, a change in a
Funds' fundamental investment policy affects only one Series and would be voted
upon only by shareholders of the Fund involved. Additionally, approval of an
Advisory contract, since it only affects one Fund, is a matter to be determined
separately by each Series. Approval by the shareholders of one Series is
effective as to that Series whether or not sufficient votes are received from
the shareholders of the other series to approve the proposal as to those Series.
As used in the Prospectus and in this SAI, the term "majority" when
referring to approvals to be obtained from shareholders of a Class of the Fund,
means the vote of the lesser of (i) 67% of the shares of such class the Fund
represented at a meeting if the holders of more than 50% of the outstanding
shares such class of the Fund are present in person or by proxy, or (ii) more
than 50% of the outstanding shares of such class the Fund. The term "majority,"
when referring to the approvals to be obtained from shareholders of the Trust as
a whole, means the vote of the lesser of (i) 67% of the Trust's shares
represented at a meeting if the holders of more than 50% of the Trust's
outstanding shares are present in person or by proxy, or (ii) more than 50% of
the Trust's outstanding shares. Shareholders are entitled to one vote for each
full share held and fractional votes for fractional shares held.
Shareholders are not entitled to any preemptive rights. All shares, when
issued for the consideration described in the Prospectus, will be fully paid and
non-assessable by the Trust. The Trust may dispense with an annual meeting of
shareholders in any year in which it is not required to elect directors under
the 1940 Act.
Each share of a class of a Fund represents an equal proportional interest
in a Fund with each other share in the same class and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
a Fund as are declared in the discretion of the Trustees. In the event of the
liquidation or dissolution of the Trust, shareholders of a Fund are entitled to
receive the assets attributable to the relevant class of shares of the Fund that
are available for distribution, and a distribution of any general assets not
attributable to a particular investment portfolio that are available for
distribution in such manner and on such basis as the Trustees in their sole
discretion may determine.
40
<PAGE>
Set forth below as of May 25, 1999 is the name, address and share ownership
of each person known by the Trust to have beneficial or record ownership of 5%
or more of a class of a Fund or 5% or more of the voting securities of the Fund
as a whole. The term "N/A" is used where a shareholder holds 5% or more of a
class, but less than 5% of a Fund as a whole.
5% OWNERSHIP AS OF MAY 25, 1999
-------------------------------
<TABLE>
<CAPTION>
NAME AND CLASS; TYPE PERCENTAGE PERCENTAGE
FUND ADDRESS OF OWNERSHIP OF CLASS OF FUND
---- ------- ------------ -------- -------
<S> <C> <C> <C> <C>
ASSET
ALLOCATION
Class A Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class B Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class C Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Institutional Class Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
GROWTH
Class A Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class B Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Institutional C Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
INCOME EQUITY
Class A Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
NAME AND CLASS; TYPE PERCENTAGE PERCENTAGE
FUND ADDRESS OF OWNERSHIP OF CLASS OF FUND
---- ------- ------------ -------- -------
<S> <C> <C> <C> <C>
Class B Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class C Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Institutional Class Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
SMALL CAP
Class A Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class B Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class C Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Institutional Class Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class (or Fund), or is identified as the holder of
record of more than 25% of a class (or Fund) and has voting and/or investment
powers, it may be presumed to control such class (or Fund).
OTHER
The Trust's Registration Statement, including the Prospectus and SAI for
the Funds and the exhibits filed therewith, may be examined at the office of the
Securities and Exchange Commission in Washington, D.C. Statements contained in
the Prospectus or the SAI as to the contents of any contract or other document
referred to herein or in the Prospectus are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
42
<PAGE>
COUNSEL
Morrison & Forester LLP, 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C. 20006, as counsel for the Trust, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance of the
shares of beneficial interest being sold pursuant to the Funds' Prospectus.
INDEPENDENT AUDITORS
KPMG LLP has been selected as the independent auditors for the Trust. KPMG
LLP provides audit services, tax return preparation and assistance and
consultation in connection with review of certain SEC filings. KPMG LLP's
address is Three Embarcadero Center, San Francisco, California 94111.
43
<PAGE>
APPENDIX
The following is a description of the ratings given by Moody's and S&P to
corporate bonds and commercial paper.
Corporate Bonds
- ---------------
Moody's: The four highest ratings for corporate bonds are "Aaa," "Aa," "A"
-------
and "Baa." Bonds rated "Aaa" are judged to be of the "best quality" and carry
the smallest amount of investment risk. Bonds rated "Aa" are of "high quality
by all standards," but margins of protection or other elements make long-term
risks appear somewhat greater than "Aaa" rated bonds. Bonds rated "A" possess
many favorable investment attributes and are considered to be upper medium grade
obligations. Bonds rated "Baa" are considered to be medium grade obligations;
interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds have speculative
characteristics as well. Moody's applies numerical modifiers: 1, 2 and 3 in
each rating category from "Aa" through "Baa" in its rating system. The modifier
1 indicates that the security ranks in the higher end of its category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end.
S&P: The four highest ratings for corporate bonds are "AAA," "AA," "A" and
---
"BBB." Bonds rated "AAA" have the highest ratings assigned by S&P and have an
extremely strong capacity to pay interest and repay principal. Bonds rated "AA"
have a "very strong capacity to pay interest and repay principal" and differ
"from the highest rated issued only in small degree." Bonds rated "A" have a
"strong capacity" to pay interest and repay principal, but are "somewhat more
susceptible" to adverse effects of changes in economic conditions or other
circumstances than bonds in higher rated categories. Bonds rated "BBB" are
regarded as having an "adequate capacity" to pay interest and repay principal,
but changes in economic conditions or other circumstances are more likely to
lead to a "weakened capacity" to make such repayments. The ratings from "AA" to
"BBB" may be modified by the addition of a plus or minus sign to show relative
standing within the category.
Corporate Commercial Paper
- --------------------------
Moody's: The highest rating for corporate commercial paper is "P-1"
-------
(Prime-1). Issuers rated "P-1" have a "superior capacity for repayment of
short-term promissory obligations." Issuers rated "P-2" (Prime-2) "have a
strong capacity for repayment of short-term promissory obligations," but
earnings trends, while sound, will be subject to more variation.
S&P: The "A-1" rating for corporate commercial paper indicates that the
---
"degree of safety regarding timely payment is either overwhelming or very
strong." Commercial paper with "overwhelming safety characteristics" will be
rated "A-1+." Commercial paper with a strong capacity for timely payments on
issues will be rated "A-2."
A-1
<PAGE>
WELLS FARGO FUNDS TRUST
Telephone: 1-800-222-8222
STATEMENT OF ADDITIONAL INFORMATION
Dated June 1, 1999
CASH INVESTMENT MONEY MARKET FUND
MONEY MARKET FUND
NATIONAL TAX-FREE MONEY MARKET FUND
NATIONAL TAX-FREE INSTITUTIONAL MONEY MARKET FUND
TREASURY PLUS INSTITUTIONAL MONEY MARKET FUND
GOVERNMENT MONEY MARKET FUND
CLASS A, CLASS B, SERVICE CLASS AND INSTITUTIONAL CLASS
Wells Fargo Funds Trust (the "Trust") is an open-end, management
investment company. This Statement of Additional Information ("SAI") contains
additional information about six funds in the Wells Fargo Funds Trust family of
funds (each, a "Fund" and collectively, the "Funds") -- the CASH INVESTMENT
MONEY MARKET, MONEY MARKET, NATIONAL TAX-FREE MONEY MARKET, NATIONAL TAX-FREE
INSTITUTIONAL MONEY MARKET, TREASURY PLUS INSTITUTIONAL MONEY MARKET and
GOVERNMENT MONEY MARKET FUNDS. The Money Market, National Tax-Free Money Market,
and Government Money Market Funds each offer Class A shares. The Cash Investment
Money Market, National Tax-Free Institutional Money Market, and Treasury Plus
Institutional Money Market Funds offer Service Class and Institutional Class
shares. The Government Money Market Fund also offers Service Class shares. The
Money Market Fund also offers Class B shares. This SAI relates to all such
classes of shares.
This SAI is not a prospectus and should be read in conjunction with the
Funds' Prospectus, dated June 1, 1999. All terms used in this SAI that are
defined in the Prospectus have the meanings assigned in the Prospectus. A copy
of the Prospectus may be obtained without charge by calling 1-800-222-8222 or
writing to Wells Fargo Funds Trust, P.O. Box 7066, San Francisco, CA 94120-7066.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Historical Fund Information........................................................... 1
Investment Restrictions............................................................... 3
Additional Permitted Investment Activities and Associated Risks....................... 5
Management............................................................................ 11
Performance Calculations.............................................................. 18
Determination of Net Asset Value...................................................... 22
Additional Purchase and Redemption Information........................................ 24
Portfolio Transactions................................................................ 25
Fund Expenses......................................................................... 26
Federal Income Taxes.................................................................. 26
Capital Stock......................................................................... 30
Other................................................................................. 33
Counsel............................................................................... 33
Independent Auditors.................................................................. 33
Appendix.............................................................................. A-1
</TABLE>
i
<PAGE>
HISTORICAL FUND INFORMATION
On March 25, 1999, the Board of Trustees of Norwest Advantage Funds
("Norwest"), the Board of Directors of Stagecoach Funds, Inc. ("Stagecoach") and
the Board of Trustees of the Trust approved an Agreement and Plan of
Reorganization providing for, among other things, the transfer of the assets and
stated liabilities of various predecessor Norwest and Stagecoach portfolios to
the Funds. Prior to September 17, 1999, the effective date of the consolidation
of the Funds and the predecessor Norwest and Stagecoach portfolios (the
"Consolidation"), the Funds had only nominal assets.
The CASH INVESTMENT MONEY MARKET FUND will commence operations on September
17, 1999, as successor to the Prime Money Market Fund of Stagecoach and the Cash
Investment Fund of Norwest. The predecessor Stagecoach Prime Money Market Fund
commenced operations on April 30, 1981, as Pacific American Liquid Assets, Inc.
that was reorganized as the Pacific American Money Market Portfolio on October
1, 1985. The predecessor Stagecoach Fund operated as a portfolio of Pacific
American Funds through October 1, 1994, when it was reorganized as the Pacific
American Money Market Portfolio, a portfolio of Pacifica Funds Trust
("Pacifica"). In July 1995, the predecessor Stagecoach Fund was renamed the
Pacifica Prime Money Market Fund. On September 6, 1996, the Pacifica Prime Money
Market Fund was reorganized as the Stagecoach Prime Money Market Fund. The
predecessor Norwest Cash Investment Fund commenced operations on January 2,
1990. For accounting purposes, the Stagecoach Growth predecessor portfolio is
considered the surviving entity, and the financial highlights shown for periods
prior to September 17, 1999 are the financial highlights of the Stagecoach
Growth Fund.
The MONEY MARKET FUND will commence operations on September 17, 1999, as
successor to the Prime Money Market (Class A) and Money Market Funds of
Stagecoach and the Ready Cash Investment Fund (Class A and Class B) of Norwest.
The predecessor Stagecoach Money Market Fund commenced operations on July 1,
1992. The predecessor Norwest Ready Cash Investment Fund commenced operations
on January 20, 1988. For accounting purposes, the Stagecoach Money Market
predecessor portfolio is considered the surviving entity, and the financial
highlights shown for periods prior to September 17, 1999 are the financial
highlights of the Stagecoach Money Market Fund.
The NATIONAL TAX-FREE MONEY MARKET FUND will commence operations on
September 17, 1999, as successor to the National Tax-Free Money Market Fund
(Class A) of Stagecoach and the Municipal Money Market Fund (Class A) of
Norwest. The predecessor Stagecoach National Tax-Free Money Market Fund
commenced operations on April 2, 1996. The predecessor Norwest Municipal Money
Market Fund commenced operations on January 2, 1990. For accounting purposes,
the Norwest Municipal Money Market predecessor portfolio is considered the
surviving
1
<PAGE>
entity, and the financial highlights shown for periods prior to September 17,
1999 are the financial highlights of the Norwest Municipal Money Market Fund.
The NATIONAL TAX-FREE INSTITUTIONAL MONEY MARKET FUND will commence
operations on September 17, 1999, as successor to the National Tax-Free Money
Market Fund (Institutional Class) of Stagecoach and the Municipal Money Market
Fund (Service Class) of Norwest. The predecessor Stagecoach National Tax-Free
Money Market Fund commenced operations on April 2, 1996. The predecessor Norwest
Municipal Money Market Fund commenced operations on January 2, 1990. For
accounting purposes, the Norwest Municipal Money Market predecessor portfolio is
considered the surviving entity, and the financial highlights shown for periods
prior to September 17, 1999 are the financial highlights of the Norwest
Municipal Money Market Fund.
The TREASURY PLUS INSTITUTIONAL MONEY MARKET FUND will commence operations
on September 1, 1999, as successor to the Treasury Plus Money Market Fund
(Administrative, Service and Institutional Classes)of Stagecoach and the
Treasury Plus Fund of Norwest. The predecessor Stagecoach Treasury Plus Money
Market Fund commenced operations on October 1, 1985, as the Short-Term
Government Fund of the Pacifica American Funds. The predecessor Stagecoach Fund
operated as a portfolio of Pacific American Fund through October 1, 1994, when
it was reorganized as the Pacific American U.S. Treasury Portfolio, a portfolio
of Pacifica Funds Trust. In July 1995, the Fund was renamed the Pacifica
Treasury Money Market Fund. On September 6, 1996, the Pacifica Treasury Money
Market Fund was reorganized as the Stagecoach Treasury Money Market Fund. The
name was changed to Treasury Plus Money Market Fund on August 1, 1998. The
predecessor Norwest Treasury Plus Fund commenced operations on October 1, 1998.
For accounting purposes, the Norwest Treasury Plus predecessor portfolio is
considered the surviving entity, and the financial highlights shown for periods
prior to September 17, 1999 are the financial highlights of the Norwest Treasury
Plus Fund.
The GOVERNMENT MONEY MARKET FUND will commence operations on September 17,
1999, as successor to the Government Money Market Fund of Stagecoach and the
U.S. Government Money Market Fund of Norwest. The Stagecoach predecessor
Government Money Market Fund was originally organized as the Pacifica Government
Money Market Fund on April 26, 1988, as an investment portfolio of Pacifica. On
September 6, 1996, the Pacifica Government Money Market Fund was reorganized as
the Stagecoach Government Money Market Fund. The predecessor Norwest U.S.
Government Fund commenced operations on January 2, 1990. For accounting
purposes, the Norwest U.S. Government predecessor portfolio is considered the
surviving entity, and the financial highlights shown for periods prior to
September 17, 1999 are the financial highlights of the Norwest U.S. Government
Fund.
2
<PAGE>
INVESTMENT RESTRICTIONS
Fundamental Investment Policies
-------------------------------
Each Fund has adopted the following investment restrictions, all of which
are fundamental policies; that is, they may not be changed without approval by
the vote of the holders of a majority (as defined in the Investment Company Act
of 1940, as amended (the "1940 Act")) of the outstanding voting securities of
such Fund.
The Funds may not:
(1) purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of a Fund's investments in that industry would equal 25% of
the current value of the Fund's total assets, [PROVIDED THAT THERE IS NO
LIMITATION WITH RESPECT TO INVESTMENT IN (I) SECURITIES ISSUED OR GUARANTEED BY
THE UNITED STATES GOVERNMENT, ITS AGENCIES OR INSTRUMENTALITIES, (II) MUNICIPAL
SECURITIES, (III) FOREIGN GOVERNMENT SECURITIES, AND (IV) OBLIGATIONS OF
DOMESTIC OR FOREIGN BANKS. FOR PURPOSES OF THIS POLICY (I) "MORTGAGE RELATED
SECURITIES," AS THEY ARE DEFINED IN THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE "1934 ACT") ARE TREATED AS SECURITIES OF AN ISSUER IN THE INDUSTRY
OF THE PRIMARY TYPE OF ASSET BACKING THE SECURITY; (II) FINANCIAL SERVICES
COMPANIES ARE CLASSIFIED ACCORDING TO THE END USERS OF THEIR SERVICES (FOR
EXAMPLE, AUTOMOBILE FINANCE, BANK FINANCE, AND DIVERSIFIED FINANCE), (III)
UTILITY COMPANIES ARE CLASSIFIED ACCORDING TO THEIR SERVICES (FOR EXAMPLE, GAS,
GAS TRANSMISSION, ELECTRIC AND GAS, ELECTRIC AND TELEPHONE), (IV) IN THE CASE OF
THE MUNICIPAL MONEY MARKET FUND AND THE [SERVICE] MUNICIPAL MONEY MARKET FUND, A
SECURITY IS CONSIDERED TO BE ISSUED BY THE GOVERNMENTAL ENTITY (OR ENTITIES)
WHOSE ASSETS AND REVENUES BACK THE SECURITY, OR, WITH RESPECT TO A PRIVATE
ACTIVITY BOND THAT IS BACKED ONLY BY THE ASSETS AND REVENUES OF A
NONGOVERNMENTAL USER, SUCH NONGOVERNMENTAL USER. IN CERTAIN CIRCUMSTANCES, THE
GUARANTOR OF A GUARANTEED SECURITY MAY ALSO BE CONSIDERED TO BE AN ISSUER IN
CONNECTION WITH SUCH GUARANTEE, EXCEPT THAT A GUARANTEE OF A SECURITY SHALL NOT
BE DEEMED TO BE A SECURITY ISSUED BY THE GUARANTOR WHEN THE VALUE OF ALL
SECURITIES ISSUED AND GUARANTEED BY THE GUARANTOR, AND OWNED BY A FUND, DOES NOT
EXCEED 10% OF THE VALUE OF THE FUND'S TOTAL ASSETS;]
(2) purchase securities of any issuer if, as a result, with respect to 75%
of a Fund's total assets, more than 5% of the value of its total assets would be
invested in the securities of any one issuer or, with respect to 100% of its
assets, the Fund's ownership would be more than 10% of the outstanding voting
securities of such issuer. This policy does not restrict a Fund's ability to
invest in securities issued or guaranteed by the U.S. Government, its agencies
and instrumentalities;
(3) borrow money except to the extent permitted by the 1940 Act, and the
rules, regulations and exemptions thereunder;
3
<PAGE>
(4) issue senior securities except to the extent permitted by the 1940
Act, and the rules, regulations and exemptions thereunder;
(5) make loans to other parties if, as a result, the aggregate value of
such loans would exceed one-third of a Fund's total assets. For the purposes of
this limitation, entering into repurchase agreements, lending securities and
acquiring any debt securities are not deemed to be the making of loans;
(6) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with a Fund's investment program may be deemed to be an underwriting;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business); nor
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Funds from purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities).
Non-Fundamental Investment Policies
-----------------------------------
Each Fund has adopted the following non-fundamental policies which may be
changed by a majority vote of the Board of Trustees of the Trust at any time and
without approval of such Fund's shareholders.
(1) Each Fund may invest in shares of other open-end management investment
companies, subject to the limitations of the 1940 Act, the rules thereunder, and
any orders obtained thereunder now or in the future. Other investment companies
in which the Funds invest can be expected to charge fees for operating expenses,
such as investment advisory and administration fees, that would be in addition
to those charged by a Fund.
(2) Each Fund may not invest or hold more than 10% of the Fund's net assets
in illiquid securities. For this purpose, illiquid securities include, among
others, (a) securities that are illiquid by virtue of the absence of a readily
available market or legal or contractual restrictions on resale, (b) fixed time
deposits that are subject to withdrawal penalties and that have maturities of
more than seven days, and (c) repurchase agreements not terminable within seven
days.
(3) Each Fund (all non-money market funds) may invest in futures or options
contracts regulated by the CFTC for (i) bona fide hedging purposes within the
meaning of the rules of the CFTC and (ii) for other purposes if, as a result, no
more than 5% of the Fund's net
4
<PAGE>
assets would be invested in initial margin and premiums (excluding amounts "in-
the-money") required to establish the contracts.
The Fund (i) will not hedge more than 50% of its total assets by
selling futures contracts, buying put options, and writing call options (so
called "short positions"), (ii) will not buy futures contracts or write put
options whose underlying value exceeds 25% of the Fund's total assets, and (iii)
will not buy call options with a value exceeding 5% of the Fund's total assets.
(4) Each Fund may lend securities from its portfolio to brokers, dealers
and financial institutions, in amounts not to exceed (in the aggregate) one-
third of the Fund's total assets. Any such loans of portfolio securities will be
fully collateralized based on values that are marked to market daily. The Fund
will not enter into any portfolio security lending arrangement having a duration
of longer than one year.
(5) Each Fund may not make investments for the purpose of exercising
control or management. (Investments by the Fund in entities created under the
laws of foreign countries solely to facilitate investment in securities in that
country will not be deemed the making of investments for the purpose of
exercising control.)
(6) Each Fund may not purchase securities on margin (except for short-term
credits necessary for the clearance of transactions).
(7) Each Fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short (short sales "against the box"), and provided that transactions in futures
contracts and options are not deemed to constitute selling securities short.
(8) Each Fund may not purchase interests, leases, or limited partnership
interests in oil, gas, or other mineral exploration or development programs.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES AND ASSOCIATED RISKS
Set forth below are descriptions of certain investments and additional
investment policies for the Funds.
ASSET-BACKED SECURITIES. The Funds may purchase asset-backed securities
unrelated to mortgage loans. These asset-backed securities may consist of
undivided fractional interests in pools of consumer loans or receivables held in
trust. Examples include certificates for automobile receivables (CARS) and
credit card receivables (CARDS). Payments of principal and interest on these
asset-backed securities are "passed through" on a monthly or other periodic
basis to certificate holders and are typically supported by some form of credit
enhancement, such as a letter of credit, surety bond, limited guaranty, or
subordination. The extent of credit enhancement varies, but usually amounts to
only a fraction of the asset-backed security's par value until exhausted.
Ultimately, asset-backed securities are dependent upon payment of the consumer
loans or receivables by individuals, and the certificate holder frequently has
no recourse to the entity that originated the loans or receivables. The actual
maturity and realized yield will vary based upon the prepayment experience of
the underlying asset pool and prevailing interest rates at the time of
prepayment.
Bank Obligations
----------------
The Funds, except the Treasury Plus Institutional Money Market Fund, may
invest in bank obligations, including certificates of deposit, time deposits,
bankers' acceptances and other short-term obligations of domestic and foreign
banks, foreign subsidiaries of domestic banks, foreign branches of domestic and
foreign banks, and domestic and foreign branches of foreign banks, domestic
savings banks and associations and other banking institutions. With respect to
such securities issued by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, and domestic and foreign branches of foreign
banks, a Fund may be subject to additional investment risks that are different
in some respects from those incurred by a fund which invests only in debt
obligations of U.S.
5
<PAGE>
domestic issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding taxes on interest
income payable on the securities, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on these securities and
the possible seizure or nationalization of foreign deposits. In addition,
foreign branches of U.S. banks and foreign banks may be subject to less
stringent reserve requirements and to different accounting, auditing, reporting
and recordkeeping standards than those applicable to domestic branches of U.S.
banks.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by a Fund will not benefit from insurance from the
Bank Insurance Fund or the Savings Association Insurance Fund administered by
the Federal Deposit Insurance Corporation ("FDIC"). Bankers' acceptances are
credit instruments evidencing the obligation of a bank to pay a draft drawn on
it by a customer. These instruments reflect the obligation both of the bank and
of the drawer to pay the face amount of the instrument upon maturity. The other
short-term obligations may include uninsured, direct obligations, bearing fixed,
floating- or variable-interest rates.
Commercial Paper
----------------
The Funds, except the Treasury Plus Institutional Money Market Fund, may
invest in commercial paper. Commercial paper includes short-term unsecured
promissory notes, variable rate demand notes and variable rate master demand
notes issued by domestic and foreign bank holding companies, corporations and
financial institutions as well as similar taxable instruments issued by
government agencies and instrumentalities.
Derivative Securities
---------------------
The internal investment policies of the Advisor prohibit the Funds'
purchase of many types of floating-rate derivative securities that are
considered potentially volatile. The following types of derivative securities
ARE NOT permitted investments for the Funds:
. capped floaters (on which interest is not paid when market rates
move above a certain level);
. leveraged floaters (whose interest rate reset provisions are based
on a formula that magnifies changes in interest rates);
. range floaters (which do not pay any interest if market interest
rates move outside of a specified range);
. dual index floaters (whose interest rate reset provisions are tied
to more than one index so that a change in the relationship
6
<PAGE>
between these indices may result in the value of the instrument
falling below face value); and
. inverse floaters (which reset in the opposite direction of their
index).
Floating- and Variable-Rate Obligations
---------------------------------------
The Funds may purchase floating- and variable-rate obligations such as
demand notes and bonds. These obligations may have stated maturities in excess
of thirteen months, but they permit the holder to demand payment of principal at
any time, or at specified intervals not exceeding thirteen months. Variable-
rate demand notes include master demand notes that are obligations that permit a
Fund to invest fluctuating amounts, which may change daily without penalty,
pursuant to direct arrangements between the Fund, as lender, and the borrower.
The interest rates on these notes fluctuates from time to time, but the Funds
may only invest in floating- or variable-rate securities that bear interest at a
rate that resets quarterly or more frequently and that resets based on standard
money market rate indices. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon a
specified number of days' notice to the holders of such obligations.
Because these obligations are direct lending arrangements between the
lender and borrower, it is not contemplated that such instruments generally will
be traded, and there generally is no established secondary market for these
obligations, although they are redeemable at face value. Accordingly, where
these obligations are not secured by letters of credit or other credit support
arrangements, a Fund's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. Such obligations frequently
are not rated by credit rating agencies and each Fund may invest in obligations
which are not so rated only if the Advisor determines that at the time of
investment the obligations are of comparable quality to the other obligations in
which such Fund may invest. The Advisor, on behalf of each Fund, considers on
an ongoing basis the creditworthiness of the issuers of the floating- and
variable-rate demand obligations in such Fund's portfolio. No Fund will invest
more than 10% of the value of its total net assets in floating- or variable-rate
demand obligations whose demand feature is not exercisable within seven days.
Such obligations may be treated as liquid, provided that an active secondary
market exists.
Foreign Obligations
-------------------
Each Fund, except the Treasury Plus Institutional Money Market Fund, may
invest up to 25% of its assets in high-quality, short-term (thirteen months or
less) debt obligations of foreign branches of U.S. banks or U.S. branches of
foreign banks that are denominated in and pay interest in U.S. dollars.
Investments in foreign obligations involve certain considerations that are not
typically associated with investing in domestic obligations. There may be less
publicly available information about a foreign issuer than about a domestic
issuer. Foreign issuers also are not subject to the same uniform accounting,
auditing and financial reporting standards or
7
<PAGE>
governmental supervision as domestic issuers. In addition, with respect to
certain foreign countries, taxes may be withheld at the source under foreign
income tax laws and there is a possibility of expropriation or confiscatory
taxation, political or social instability, or diplomatic developments that could
affect adversely investments in, the liquidity of, and the ability to enforce
contractual obligations with respect to, securities of issuers located in those
countries.
Forward Commitments, When-Issued Purchases and Delayed-Delivery Transactions
----------------------------------------------------------------------------
Each Fund may purchase or sell securities on a when-issued or delayed-
delivery basis and make contracts to purchase or sell securities for a fixed
price at a future date beyond customary settlement time. Securities purchased or
sold on a when-issued, delayed-delivery or forward commitment basis involve a
risk of loss if the value of the security to be purchased declines, or the value
of the security to be sold increases, before the settlement date.
Each Fund will segregate cash, U.S. Government obligations or other high-
quality debt instruments in an amount at least equal in value to the Fund's
commitments to purchase when-issued securities. If the value of these assets
declines, the Fund will segregate additional liquid assets on a daily basis so
that the value of the segregated assets is equal to the amount of such
commitments.
Illiquid Securities
-------------------
The Funds may invest in securities not registered under the 1933 Act and
other securities subject to legal or other restrictions on resale. Because such
securities may be less liquid than other investments, they may be difficult to
sell promptly at an acceptable price. Delay or difficulty in selling securities
may result in a loss or be costly to a Fund. Each Fund may invest up to 10% of
its assets in illiquid securities.
Letters of Credit
-----------------
Certain of the debt obligations (including certificates of participation,
commercial paper and other short-term obligations) which the Funds, except the
Treasury Plus Money Market Fund, may purchase may be backed by an unconditional
and irrevocable letter of credit of a bank, savings and loan association or
insurance company which assumes the obligation for payment of principal and
interest in the event of default by the issuer. Only banks, savings and loan
associations and insurance companies which, in the opinion of Wells Fargo Bank,
are of comparable quality to issuers of other permitted investments of each such
Fund may be used for letter of credit-backed investments.
8
<PAGE>
Other Investment Companies
--------------------------
9
<PAGE>
The Funds may invest in shares of other open-end management investment
companies, up to the limits prescribed in Section 12(d) of the 1940 Act. Under
the 1940 Act, a Fund's investment in such securities currently is limited to,
subject to certain exceptions, (i) 3% of the total voting stock of any one
investment company, (ii) 5% of such Fund's net assets with respect to any one
investment company and (iii) 10% of such Fund's net assets in aggregate. Other
investment companies in which the Funds invest can be expected to charge fees
for operating expenses such as investment advisory and administration fees, that
would be in addition to those charged by the Funds.
Ratings of Securities
---------------------
Any security that a Fund purchases must present minimal credit risks and be
of "high quality," or in the case of the Treasury Plus Institutional Money
Market Fund, be of the "highest quality." "High quality" means to be rated in
the top two rating categories and "highest quality" means to be rated only in
the top rating category, by the requisite Nationally Recognized Ratings
Organization ("NRRO") or, if unrated, determined to be of comparable quality to
such rated securities by the Advisor, under guidelines adopted by the Board of
Trustees.
The ratings of Moody's, S&P, Duff & Phelps Credit Rating Co., Fitch
Investors Service, Inc., Thomson Bank Watch and IBCA Inc. represent their
opinions as to the quality of debt securities. It should be emphasized, however,
that ratings are general and not absolute standards of quality, and debt
securities with the same maturity, interest rate and rating may have different
yields while debt securities of the same maturity and interest rate with
different ratings may have the same yield. Subsequent to purchase by a Fund, an
issue of debt securities may cease to be rated or its rating may be reduced
below the minimum rating required for purchase by a Fund. The Advisor will
consider such an event in determining whether the Fund involved should continue
to hold the obligation.
Repurchase Agreements
---------------------
Each Fund may enter into repurchase agreements wherein the seller of a
security to the Fund agrees to repurchase that security from the Fund at a
mutually agreed upon time and price. A Fund may enter into repurchase agreements
only with respect to securities that could otherwise be purchased by the Fund.
All repurchase agreements will be fully collateralized at least 102% based on
values that are marked to market daily. The maturities of the underlying
securities in a repurchase agreement transaction may be greater than twelve
months, although the maximum term of a repurchase agreement will always be less
than twelve months. If the seller defaults and the value of the underlying
securities has declined, a Fund may incur a loss. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security, the Fund's
disposition of the security may be delayed or limited.
Each Fund may not enter into a repurchase agreement with a maturity of more
than seven days, if, as a result, more than 10% of the market value of such
Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. A Fund will only enter into repurchase agreements with primary
broker/dealers and commercial banks that meet guidelines established by the
Board of Trustees and that are not
10
<PAGE>
affiliated with the investment advisor. The Funds may participate in pooled
repurchase agreement transactions with other funds advised by Wells Fargo Bank.
Unrated and Downgraded Investments
----------------------------------
The Funds may purchase instruments that are not rated if, in the opinion
of the Advisor, such obligations are of comparable quality to other rated
investments that are permitted to be purchased by the Funds. The Funds may
purchase unrated instruments only if they are purchased in accordance with the
Funds' procedures adopted by Trust's Board of Trustees in accordance with Rule
2a-7 under the 1940 Act. After purchase by a Fund, a security may cease to be
rated or its rating may be reduced below the minimum required for purchase by
the Fund. In the event that a portfolio security ceases to be an "Eligible
Security" or no longer "presents minimal credit risks," immediate sale of such
security is not required, provided that the Board of Trustees has determined
that disposal of the portfolio security would not be in the best interests of
the Fund.
U.S. Government and U.S. Treasury Obligations
---------------------------------------------
The Funds may invest in obligations of agencies and instrumentalities of
the U.S. Government ("U.S. Government obligations"). The Treasury Plus
Institutional Money Market Fund may invest only in U.S. Government obligations
issued or guaranteed by the U.S. Treasury and in repurchase agreements
collateralized by U.S. Treasury Securities. Payment of principal and interest on
U.S. Government obligations (i) may be backed by the full faith and credit of
the United States (as with U.S. Treasury bills and GNMA certificates) or (ii)
may be backed solely by the issuing or guaranteeing agency or instrumentality
itself (as with FNMA notes). In the latter case investors must look principally
to the agency or instrumentality issuing or guaranteeing the obligation for
ultimate repayment, which agency or instrumentality may be privately owned.
There can be no assurance that the U.S. Government will provide financial
support to its agencies or instrumentalities where it is not obligated to do so.
In addition, U.S. Government obligations are subject to fluctuations in market
value due to fluctuations in market interest rates. As a general matter, the
value of debt instruments, including U.S. Government obligations, declines when
market interest rates increase and rises when market interest rates decrease.
Certain types of U.S. Government obligations are subject to fluctuations in
yield or value due to their structure or contract terms.
MANAGEMENT
The following information supplements, and should be read in conjunction
with, the section in the Prospectus entitled "Organization and Management of the
Funds." The principal occupations during the past five years of the Trustees and
principal executive Officer of the Trust are listed below. The address of each,
unless otherwise indicated, is 111 Center Street, Little Rock, Arkansas 72201.
Trustees deemed to be "interested persons" of the Trust for purposes of the 1940
Act are indicated by an asterisk.
11
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- ---------------------
<S> <C> <C>
*Robert C. Brown, 65 Trustee Director, Federal Farm Credit Banks Funding
1431 Landings Place Corporation and Farm Credit System Financial
Sarasota, FL 34231 Assistance Corporation since February 1993.
Donald H. Burkhardt, 70 Trustee Principal of the Burkhardt Law Firm.
777 South Steele Street
Denver, CO 80209
Jack S. Euphrat, 77 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.
Thomas S. Goho, 56 Trustee Business Associate Professor, Wake Forest
321 Beechcliff Court University, Calloway School of Business and
Winston-Salem, NC 27104 Accountancy since 1994; previously Associate
Professor of Finance.
Peter G. Gordon, 56 Trustee Chairman and Co-Founder of Crystal Geyser
Crystal Geyser Water Co. Water Company and President of Crystal Geyser
55 Francisco Street, Suite 410 Roxane Water Company since 1977.
San Francisco, CA 94133
*W. Rodney Hughes, 72 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Richard M. Leach, 63 Trustee President of Richard M. Leach Associates (a
P.O. Box 1888 financial consulting firm) since 1992.
New London, NH 03257
*J. Tucker Morse, 54 Trustee Private Investor/Real Estate Developer;
Four Beaufain Street Chairman of Vault Holdings, LLC.
Charleston, SC 29401
Timothy J. Penny, 45 Trustee Senior Counselor to the public relations firm
500 North State Street of Himle-Horner since January 1995 and Senior
Waseca, MN 56095 Fellow at the Humphrey Institute, Minneapolis,
Minnesota (a public policy organization) since
January 1995.
Richard H. Blank, Jr., 42 Chief Operating Vice President of Stephens Inc.; Director of
Officer, Stephens Sports Management Inc.; and
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
Secretary and Director of Capo Inc.
Treasurer
</TABLE>
Compensation Table
------------------
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
----------------- --------------- ----------------
<S> <C> <C>
Robert C. Brown N/A N/A
Trustee
Donald H. Burkhardt N/A N/A
Trustee
Jack S. Euphrat N/A N/A
Trustee
Thomas S. Goho N/A N/A
Trustee
Peter G. Gordon N/A N/A
Trustee
W. Rodney Hughes N/A N/A
Trustee
Richard M. Leach N/A N/A
Trustee
J. Tucker Morse N/A N/A
Trustee
Timothy J. Penny N/A N/A
Trustee
</TABLE>
Each of the Trustees and officers listed above, act in the identical
capacities for Wells Fargo Variable Trust and Wells Fargo Core Trust
(collectively, the "Fund Complex"). Trustees of the Trust are compensated
annually by the Trust and by all the registrants in each fund complex they serve
beginning September 17, 1999, and beginning March 26, 1999, receive a per-
meeting fee of $250. Trustees also are reimbursed for all out-of-pocket expenses
relating to attendance at board meetings. The Trustees are compensated by other
companies and trusts within a fund complex for their services as
directors/trustees to such companies and trusts. Currently the Trustees do not
13
<PAGE>
receive any retirement benefits or deferred compensation from the Trust or any
other member of each fund complex.
As of the date of this SAI, Trustees and Officers of the Trust as a group
beneficially owned less than 1% of the outstanding shares of the Company.
INVESTMENT ADVISOR. Wells Fargo Bank provides investment advisory services
------------------
to the Funds. As investment Advisor, Wells Fargo Bank furnishes investment
guidance and policy direction in connection with the daily portfolio management
of the Funds. Wells Fargo Bank furnishes to the Trust's Board of Trustees
periodic reports on the investment strategy and performance of each Fund. Wells
Fargo Bank provides the Funds with, among other things, money market security
and fixed-income research, analysis and statistical and economic data and
information concerning interest rate and securities markets trends, portfolio
composition, and credit conditions.
As compensation for its advisory services, Wells Fargo Bank is entitled to
receive a monthly fee at the annual rates indicated below of each Fund's average
daily net assets:
<TABLE>
<CAPTION>
Annual Rate
Fund (as percentage of net assets)
---- -----------------------------
<S> <C>
Cash Investment Money Market 0.25%
Money Market 0.40%
National Tax-Free Money Market 0.25%
National Tax-Free Institutional Money Market 0.25%
Treasury Plus Institutional Money Market 0.35%
Government Money Market 0.35%
</TABLE>
General. Each Fund's Advisory Contract will continue in effect for more
-------
than two years from the effective date provided the continuance is approved
annually (i) by the holders of a majority of the respective Fund's outstanding
voting securities or by the Trust's Board of Trustees and (ii) by a majority of
the Trustees of the Trust who are not parties to the Advisory Contract or
"interested persons" (as defined in the 1940 Act) of any such party. A Fund's
Advisory Contract may be terminated on 60 days written notice by either party
and will terminate automatically if assigned.
INVESTMENT SUB-ADVISORS. Wells Fargo Bank has engaged Wells Capital
-----------------------
Management ("WCM") to serve as Investment Sub-Advisor to the Funds. Subject to
the direction of the Trust's Board of Trustees and the overall supervision and
control of Wells Fargo Bank and the Trust, WCM makes recommendations regarding
the investment and reinvestment of the Funds' assets. WCM furnishes to Wells
Fargo Bank periodic reports on the investment activity and performance of the
Funds. WCM and also furnishes such additional reports and information as Wells
Fargo Bank and the Trust's Board of Trustees and officers may reasonably
request.
14
<PAGE>
As compensation for its sub-advisory services, WCM is entitled to receive a
monthly fee equal to an annual rate of 0.05% of the first $1 billion of the
Funds' average daily net assets and 0.04% of net assets over $1 billion. WCM
receives a minimum annual sub-advisory fee of $120,000 from each Fund. This
minimum annual fee payable to WCM does not increase the advisory fee paid by
each Fund to Wells Fargo Bank. These fees may be paid by Wells Fargo Bank or
directly by the Funds. If the sub-advisory fee is paid directly by the Fund, the
compensation paid to Wells Fargo Bank for advisory fees will be reduced
accordingly.
ADMINISTRATOR. The Trust has retained Wells Fargo Bank as Administrator on
-------------
behalf of each Fund. Under the Administration Agreement between Wells Fargo
Bank and the Trust, Wells Fargo Bank shall provide as administration services,
among other things: (i) general supervision of the Funds' operations, including
coordination of the services performed by each Fund's investment Advisor,
transfer agent, custodian, shareholder servicing agent(s), independent auditors
and legal counsel, regulatory compliance, including the compilation of
information for documents such as reports to, and filings with, the SEC and
state securities commissions; and preparation of proxy statements and
shareholder reports for each Fund; and (ii) general supervision relative to the
compilation of data required for the preparation of periodic reports distributed
to the Trust's officers and Board of Trustees. Wells Fargo Bank also furnishes
office space and certain facilities required for conducting the Funds' business
together with ordinary clerical and bookkeeping services. The Administrator is
entitled to receive a fee of 0.15% of the average daily net assets on an annual
basis of each Fund.
DISTRIBUTOR. Stephens (the "Distributor"), located at 111 Center Street,
-----------
Little Rock, Arkansas 72201, serves as Distributor for the Funds. The Money
Market Fund has adopted a distribution plan (a "Plan") under Section 12(b) of
the 1940 Act and Rule 12b-1 thereunder (the "Rule") for its Class B shares. The
Plan was adopted by the Trust's Board of Trustees, including a majority of the
Trustees who were not "interested persons" (as defined in the 1940 Act) of the
Funds and who had no direct or indirect financial interest in the operation of
the Plan or in any agreement related to the Plan (the "Non-Interested
Trustees").
Under the Plan and pursuant to the related Distribution Agreement, the
Class B shares of the Money Market Fund pay Stephens up to 0.75% of the average
daily net assets attributable to such Class as compensation for distribution-
related services or as reimbursement for distribution-related expenses.
15
<PAGE>
The actual fee payable to the Distributor is determined, within such
limits, from time to time by mutual agreement between the Trust and the
Distributor and will not exceed the maximum sales charges payable by mutual
funds sold by members of the National Association of Securities Dealers, Inc.
("NASD") under the Conduct Rules of the NASD. The Distributor may enter into
selling agreements with one or more selling agents (which may include Wells
Fargo Bank and its affiliates) under which such agents may receive compensation
for distribution-related services from the Distributor, including, but not
limited to, commissions or other payments to such agents based on the average
daily net assets of Fund shares attributable to their customers. The
Distributor may retain any portion of the total distribution fee payable
thereunder to compensate it for distribution-related services provided by it or
to reimburse it for other distribution-related expenses.
General. The Plan will continue in effect from year to year if such
-------
continuance is approved by a majority vote of both the Trustees of the Trust and
the Non-Interested Trustees. Any Distribution Agreement related to the Plan
also must be approved by such vote of the Trustees and the Non-Interested
Trustees. Such Agreement will terminate automatically if assigned, and may be
terminated at any time, without payment of any penalty, by a vote of a majority
of the outstanding voting securities of the Class B shares of the Money Market
Fund or by vote of a majority of the Non-Interested Trustees on not more than 60
days' written notice. The Plan may not be amended to increase materially the
amounts payable thereunder without the approval of a majority of the outstanding
voting securities of the Money Market Fund, and no material amendment to the
Plan may be made except by a majority of both the Trustees of the Trust and the
Non-Interested Trustees.
The Plan requires that the Treasurer of Trust shall provide to the
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Plan. The Rule also
requires that the selection and nomination of Trustees who are not "interested
persons" of the Trust be made by such disinterested Trustees.
Wells Fargo Bank, an interested person (as that term is defined in Section
2(a)(19) of the 1940 Act) of the Trust, acts as a selling agent for the Money
Market Fund's Class B shares pursuant to selling agreements with Stephens
authorized under the Plan. As a selling agent, Wells Fargo Bank has an indirect
financial interest in the operation of the Plan. The Board of Trustees has
concluded that the Plan is reasonably likely to benefit the Money Market Fund
and its Class B shareholders because the Plan authorizes the relationships with
selling agents, including Wells Fargo Bank, that have previously developed
distribution channels and relationships with the retail customers that the Money
Market Fund Class B is designed to serve. These relationships and distribution
channels are believed by the Board to provide potential for increased Money
Market Fund assets and ultimately corresponding economic efficiencies (i.e.,
lower per-share transaction costs and fixed expenses) that are generated by
increased assets under management.
16
<PAGE>
SHAREHOLDER SERVICING AGENT. The Funds have approved a Shareholder
---------------------------
Servicing Plan and have entered into related Shareholder Servicing Agreements
with financial institutions, including Wells Fargo Bank, on behalf of the Class
A, Class B and Service Class shares. Under the agreements, Shareholder
Servicing Agents (including Wells Fargo Bank) agree to perform, as agents for
their customers, administrative services, with respect to Fund shares, which
include aggregating and transmitting shareholder orders for purchases, exchanges
and redemptions; maintaining shareholder accounts and records; and providing
such other related services as the Trust or a shareholder may reasonably
request. For providing shareholder services, a Servicing Agent is entitled to a
fee from the applicable Fund, on an annualized basis, of the average daily net
assets of the class of shares owned of record or beneficially by the customers
of the Servicing Agent during the period for which payment is being made. The
amounts payable under the Shareholder Servicing Plan and Agreements are shown
below. The Servicing Plan and related Shareholder Servicing Agreements were
approved by the Trust's Board of Trustees and provide that a Fund shall not be
obligated to make any payments under such Plan or related Agreements that exceed
the maximum amounts payable under the Conduct Rules of the NASD.
<TABLE>
<CAPTION>
Service
Fund Class A Class B Class
---- ------- ------ -----
<S> <C> <C> <C>
Cash Investment Money Market 0.25% N/A 0.25%
Money Market 0.25% 0.25% N/A
National Tax-Free Money Market 0.25% N/A N/A
National Tax-Free Institutional
Money Market N/A N/A 0.25%
Treasury Plus Institutional Money
Market N/A N/A 0.25%
Government Money Market 0.25% N/A N/A
</TABLE>
General. The Servicing Plan will continue in effect from year to year if
-------
such continuance is approved by a majority vote of the Trustees of the Trust,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Funds ("Non-Interested Trustees"). Any form of
Servicing Agreement related to the Servicing Plan also must be approved by such
vote of the Trustees and the Non-Interested Trustees. Servicing Agreements may
be terminated at any time, without payment of any penalty, by vote of a majority
of the Board of Trustees, including a majority of the Non-Interested Trustees.
No material amendment to the Servicing Plan or related Servicing Agreements may
be made except by a majority of both the Trustees of the Trust and the Non-
Interested Trustees.
The Servicing Plan requires that the Administrator shall provide to the
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Servicing Plan.
CUSTODIAN. Norwest Bank Minnesota, N.A. ("Norwest Bank") acts as Custodian
---------
for each Fund. The Custodian, among other things, maintains a custody account
or accounts in the name of each Fund, receives and delivers all assets for each
Fund upon purchase and upon sale or
17
<PAGE>
maturity, collects and receives all income and other payments and distributions
on account of the assets of each Fund and pays all expenses of each Fund. For
its services as Custodian, Norwest Bank is entitled to receive fees as follows:
0.02% of the average daily net assets of each Fund.
FUND ACCOUNTANT. Forum Financial Services, Inc. acts as Fund Accountant
---------------
for the Funds. The Fund Accountant, among other things, computes net asset
values on a daily basis and performance calculations on a regular basis and as
requested by the Funds. For providing such services, Forum is entitled to
receive a fee of [___.]
TRANSFER AND DIVIDEND DISBURSING aGENT. State Street Bank, acting through
--------------------------------------
its affiliate Boston Financial Data Services ("BFDS"), acts as Transfer and
Dividend Disbursing Agent for the Funds. For providing such services, BFDS is
entitled to receive a per-account fee of [0.04% OF THE AVERAGE DAILY NET ASSETS
OF EACH SUCH ACCOUNT ON AN ANNUAL BASIS].
PERFORMANCE CALCULATIONS
The Funds may advertise certain yield and total return information.
Quotations of yield and total return reflect only the performance of a
hypothetical investment in a Fund or class of shares during the particular time
period shown. Yield and total return vary based on changes in the market
conditions and the level of a Fund's expenses, and no reported performance
figure should be considered an indication of performance which may be expected
in the future.
In connection with communicating its performance to current or prospective
shareholders, these figures may also be compared to the performance of other
mutual funds tracked by mutual fund rating services or to unmanaged indices
which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
Performance information for a Fund or Class of shares in a Fund may be
useful in reviewing the performance of such Fund or Class of shares and for
providing a basis for comparison with investment alternatives. The performance
of a Fund and the performance of a Class of shares in a Fund, however, may not
be comparable to the performance from investment alternatives because of
differences in the foregoing variables and differences in the methods used to
value portfolio securities, compute expenses and calculate performance.
Performance information may be advertised for non-standardized periods,
including year-to-date and other periods less than a year.
AVERAGE ANNUAL TOTAL RETURN: The Funds may advertise certain total return
---------------------------
information. As and to the extent required by the SEC, an average annual
compound rate of return ("T") is computed by using the redeemable value at the
end of a specified period ("ERV") of a hypothetical initial investment ("P")
over a period of years ("n") according to the following formula: P(1+T)/n/=ERV.
CUMULATIVE TOTAL RETURN: In addition to the above performance information,
-----------------------
each Fund may also advertise the cumulative total return of the Fund.
Cumulative total return is based
18
<PAGE>
on the overall percentage change in value of a hypothetical investment in the
Fund, assuming all Fund dividends and capital gain distributions are reinvested,
without reflecting the effect of any sales charge that would be paid by an
investor, and is not annualized.
YIELD CALCULATIONS: The Funds may, from time to time, include their
------------------
yields, tax-equivalent yields (if applicable) and effective yields in
advertisements or reports to shareholders or prospective investors. Quotations
of yield for the Funds are based on the investment income per share earned
during a particular seven-day or thirty-day period, less expenses accrued during
a period ("net investment income") and are computed by dividing net investment
income by the offering price per share on the last date of the period, according
to the following formula:
YIELD = 2[(a - b + 1)/6/ -1]
-----
Cd
where a = dividends and interest earned during the period, b = expenses
accrued for the period (net of any reimbursements), c = the average daily number
of shares outstanding during the period that were entitled to receive dividends,
and d = the maximum offering price per share on the last day of the period.
TAX-EQUIVALENT YIELD: Quotations of tax-equivalent yield for a Tax-Free
--------------------
Fund are calculated according the following formula:
TAX EQUIVALENT YIELD = (E) + t
---
1 - p
E = Tax-exempt yield
p = stated income tax rate
t = taxable yield
EFFECTIVE YIELD: Effective yields for the Funds are based on the change in
---------------
the value of a hypothetical investment (exclusive of capital changes) over a
particular seven-day (or thirty-day) period, less a pro-rata share of each
Fund's expenses accrued over that period (the "base period"), and stated as a
percentage of the investment at the start of the base period (the "base period
return"). The base period return is then annualized multiplying by 365/7 (or
365/30 for thirty-day yield), with the resulting yield figure carried to at
least the nearest hundredth of one percent. "Effective yield" for the Funds
assumes that all dividends received during the period have been reinvested.
Calculation of "effective yield" begins with the same "base period return" used
in the calculation of yield, which is then annualized to reflect weekly
compounding pursuant to the following formula:
Effective Seven-Day Yield = [(Base Period Return +1)365/7]-1
From time to time and only to the extent the comparison is appropriate for
a Fund or a Class of shares, the Trust may quote the performance or price-
earning ratio of a Fund or Class in advertising and other types of literature as
compared to the performance of the S&P Index, the Dow Jones Industrial Average,
the Lehman Brothers 20+ Treasury Index, the Lehman Brothers
19
<PAGE>
5-7 Year Treasury Index, Donoghue's Money Fund Averages, Real Estate Investment
Averages (as reported by the National Association of Real Estate Investment
Trusts), Gold Investment Averages (provided by World Gold Council), Bank
Averages (which are calculated from figures supplied by the U.S. League of
Savings Institutions based on effective annual rates of interest on both
passbook and certificate accounts), average annualized certificate of deposit
rates (from the Federal Reserve G-13 Statistical Releases or the Bank Rate
Monitor), the Salomon One Year Treasury Benchmark Index, the Consumer Price
Index (as published by the U.S. Bureau of Labor Statistics), other managed or
unmanaged indices or performance data of bonds, municipal securities, stocks or
government securities (including data provided by Ibbotson Associates), or by
other services, companies, publications or persons who monitor mutual funds on
overall performance or other criteria. The S&P Index and the Dow Jones
Industrial Average are unmanaged indices of selected common stock prices. The
performance of the Funds or a Class also may be compared to that of other mutual
funds having similar objectives. This comparative performance could be expressed
as a ranking prepared by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Bloomberg Financial Markets or Morningstar, Inc.,
independent services which monitor the performance of mutual funds. The Funds'
performance will be calculated by relating net asset value per share at the
beginning of a stated period to the net asset value of the investment, assuming
reinvestment of all gains distributions and dividends paid, at the end of the
period. The Funds' comparative performance will be based on a comparison of
yields, as described above, or total return, as reported by Lipper, Survey
Publications, Donoghue or Morningstar, Inc.
Any such comparisons may be useful to investors who wish to compare past
performance of the Funds or a Class with that of competitors. Of course, past
performance cannot be a guarantee of future results. The Trust also may
include, from time to time, a reference to certain marketing approaches of the
Distributor, including, for example, a reference to a potential shareholder
being contacted by a selected broker or dealer. General mutual fund statistics
provided by the Investment Company Institute may also be used.
The Trust also may use the following information in advertisements and
other types of literature, only to the extent the information is appropriate for
the Fund: (i) the Consumer Price Index may be used to assess the real rate of
return from an investment in a Fund; (ii) other government statistics,
including, but not limited to, The Survey of Current Business, may be used to
illustrate investment attributes of a Fund or the general economic, business,
investment, or financial environment in which a Fund operates; (iii) the effect
of tax-deferred compounding on the investment returns of a Fund, or on returns
in general, may be illustrated by graphs, charts, etc., where such graphs or
charts would compare, at various points in time, the return from an investment
in a Fund (or returns in general) on a tax-deferred basis (assuming reinvestment
of capital gains and dividends and assuming one or more tax rates) with the
return on a taxable basis; and (iv) the sectors or industries in which a Fund
invests may be compared to relevant indices of stocks or surveys (e.g., S&P
Industry Surveys) to evaluate a Fund's historical performance or current or
potential value with respect to the particular industry or sector.
In addition, the Trust also may use, in advertisements and other types of
literature, information and statements: (1) showing that bank savings accounts
offer a guaranteed return of
20
<PAGE>
principal and a fixed rate of interest, but no opportunity for capital growth;
and (2) describing Wells Fargo Bank, and its affiliates and predecessors, as one
of the first investment managers to advise investment accounts using asset
allocation and index strategies. The Trust also may include in advertising and
other types of literature information and other data from reports and studies
prepared by the Tax Foundation, including information regarding federal and
state tax levels and the related "Tax Freedom Day."
The Trust also may discuss in advertising and other types of literature
that a Fund has been assigned a rating by an NRSRO, such as Standard & Poor's
Corporation. Such rating would assess the creditworthiness of the investments
held by the Fund. The assigned rating would not be a recommendation to
purchase, sell or hold the Fund's shares since the rating would not comment on
the market price of the Fund's shares or the suitability of the Fund for a
particular investor. In addition, the assigned rating would be subject to
change, suspension or withdrawal as a result of changes in, or unavailability
of, information relating to the Fund or its investments. The Trust may compare
the Fund's performance with other investments which are assigned ratings by
NRSROs. Any such comparisons may be useful to investors who wish to compare the
Fund's past performance with other rated investments.
From time to time, the Funds may use the following statements, or
variations thereof, in advertisements and other promotional materials: "Wells
Fargo Bank, as a Shareholder Servicing Agent for the Wells Fargo Funds Trust,
provides various services to its customers that are also shareholders of the
Funds. These services may include access to Wells Fargo Funds Trust account
information through Automated Teller Machines (ATMs), the placement of purchase
and redemption requests for shares of the Funds through ATMs and the
availability of combined Wells Fargo Bank and Wells Fargo Funds Trust account
statements."
The Trust also may disclose, in advertising and other types of literature,
information and statements that Wells Capital Management (formerly, Wells Fargo
Investment Management), a division of Wells Fargo Bank, is listed in the top 100
by Institutional Investor magazine in its July 1997 survey "America's Top 300
Money Managers." This survey ranks money managers in several asset categories.
The Trust may also disclose in advertising and other types of sales literature
the assets and categories of assets under management by the Trust's investment
advisor and the total amount of assets and mutual fund assets managed by Wells
Fargo Bank. As of August 1, 1998, Wells Fargo Bank and its affiliates provided
investment advisory services for approximately $63 billion of assets of
individual, trusts, estates and institutions and $32 billion of mutual fund
assets.
The Trust also may discuss in advertising and other types of literature the
features, terms and conditions of Wells Fargo Bank accounts through which
investments in the Funds may be made via a "sweep" arrangement, including,
without limitation, the Managed Sweep Account, Money Market Checking Account and
Money Market Access Account (collectively, the "Sweep Accounts"). Such
advertisements and other literature may include, without limitation, discussions
of such terms and conditions as the minimum deposit required to open a Sweep
Account, a description of the yield earned on shares of the Funds through a
Sweep Account, a description of any monthly or other service charge on a Sweep
Account and any minimum
21
<PAGE>
required balance to waive such service charges, any overdraft protection plan
offered in connection with a Sweep Account, a description of any ATM or check
privileges offered in connection with a Sweep Account and any other terms,
conditions, features or plans offered in connection with a Sweep Account. Such
advertising or other literature may also include a discussion of the advantages
of establishing and maintaining a Sweep Account, and may include statements from
customers as to the reasons why such customers have established and maintained a
Sweep Account.
The Trust may disclose in advertising and other types of literature that
investors can open and maintain Sweep Accounts over the Internet or through
other electronic channels (collectively, "Electronic Channels"). Such
advertising and other literature may discuss the investment options available to
investors, including the types of accounts and any applicable fees. Such
advertising and other literature may disclose that Wells Fargo Bank is the first
major bank to offer an on-line application for a mutual fund account that can be
filled out completely through Electronic Channels. Advertising and other
literature may disclose that Wells Fargo Bank may maintain Web sites, pages or
other information sites accessible through Electronic Channels (an "Information
Site") and may describe the contents and features of the Information Site and
instruct investors on how to access the Information Site and open a Sweep
Account. Advertising and other literature may also disclose the procedures
employed by Wells Fargo Bank to secure information provided by investors,
including disclosure and discussion of the tools and services for accessing
Electronic Channels. Such advertising or other literature may include
discussions of the advantages of establishing and maintaining a Sweep Account
through Electronic Channels and testimonials from Wells Fargo Bank customers or
employees and may also include descriptions of locations where product
demonstrations may occur. The Trust may also disclose the ranking of Wells
Fargo Bank as one of the largest money managers in the United States.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for the shares of the Money Market Fund is
determined as of 12:00 noon (Pacific time)/2:00 p.m. (Central time), and the
NAV of the other money market Funds is determined as of 2:00 p.m. (Pacific
time)/4:00 p.m. (Central time) on each day such Funds are open for business.
If the markets for the instruments and securities the Funds invest in close
early, the Funds may close early and may value their shares at earlier times
under these circumstances. Expenses and fees, including advisory fees, are
accrued daily and are taken into account for the purpose of determining the
net asset value of the Funds' shares.
Each Fund uses the amortized cost method to determine the value of its
portfolio securities pursuant to Rule 2a-7 under the 1940 Act. The amortized
cost method involves valuing a security at its cost and amortizing any discount
or premium over the period until maturity, regardless of the impact of
fluctuating interest rates on the market value of the security. While this
method provides certainty in valuation, it may result in periods during which
the value, as determined by amortized cost, is higher or lower than the price
that the Funds would receive if the security were sold. During these periods
the yield to a shareholder may differ somewhat from that which could be obtained
from a similar fund that uses a method of valuation
22
<PAGE>
based upon market prices. Thus, during periods of declining interest rates, if
the use of the amortized cost method resulted in a lower value of the Funds'
portfolio on a particular day, a prospective investor in the Funds would be able
to obtain a somewhat higher yield than would result from investment in a fund
using solely market values, and existing Fund shareholders would receive
correspondingly less income. The converse would apply during periods of rising
interest rates.
Rule 2a-7 provides that in order to value its portfolio using the amortized
cost method, a Fund must maintain a dollar-weighted average portfolio maturity
of 90 days or less, purchase securities having remaining maturities (as defined
in Rule 2a-7) of thirteen months or less and invest only in those high-quality
securities that are determined by the Board of Trustees to present minimal
credit risks. The maturity of an instrument is generally deemed to be the
period remaining until the date when the principal amount thereof is due or the
date on which the instrument is to be redeemed. However, Rule 2a-7 provides
that the maturity of an instrument may be deemed shorter in the case of certain
instruments, including certain variable and floating rate instruments subject to
demand features. Pursuant to Rule 2a-7, the Board is required to establish
procedures designed to stabilize, to the extent reasonably possible, a Fund's
price per share as computed for the purpose of sales and redemptions at $1.00.
Such procedures include review of the Fund's portfolio holdings by the Board of
Trustees, at such intervals as it may deem appropriate, to determine whether the
Fund's net asset value calculated by using available market quotations deviates
from $1.00 per share based on amortized cost. The extent of any deviation will
be examined by the Board of Trustees. If such deviation exceeds 1/2 of 1%, the
Board will promptly consider what action, if any, will be initiated. In the
event the Board determines that a deviation exists that may result in material
dilution or other unfair results to investors or existing shareholders, the
Board will take such corrective action as it regards as necessary and
appropriate, including the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity,
withholding dividends or establishing a net asset value per share by using
available market quotations. It is the intention of the Funds to maintain a per
share net asset value of $1.00, but there can be no assurance that each Fund
will do so.
Instruments having variable or floating interest rates or demand features
may be deemed to have remaining maturities as follows: (a) a government security
with a variable rate of interest readjusted no less frequently than every
thirteen months may be deemed to have a maturity equal to the period remaining
until the next readjustment of the interest rate; (b) an instrument with a
variable rate of interest, the principal amount of which is scheduled on the
face of the instrument to be paid in thirteen months or less, may be deemed to
have a maturity equal to the period remaining until the next readjustment of the
interest rate; (c) an instrument with a variable rate of interest that is
subject to a demand feature may be deemed to have a maturity equal to the longer
of the period remaining until the next readjustment of the interest rate or the
period remaining until the principal amount can be recovered through demand; (d)
an instrument with a floating rate of interest that is subject to a demand
feature may be deemed to have a maturity equal to the period remaining until the
principal amount can be recovered through demand; and (e) a repurchase agreement
may be deemed to have a maturity equal to the period remaining until the date on
which the repurchase of
23
<PAGE>
the underlying securities is scheduled to occur or, where no date is specified
but the agreement is subject to demand, the notice period applicable to a demand
for the repurchase of the securities.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Funds may be purchased on any day the Funds are open for
business (a "Business Day"). The Funds are open on any day Wells Fargo Bank is
open. Wells Fargo Bank is open Monday through Friday and is closed on federal
bank holidays. Currently, those holidays are New Year's Day, President's Day,
Martin Luther King Jr. Day, Memorial Day, Independence Day, Labor Day, Columbus
Day, Veterans Day, Thanksgiving Day and Christmas Day.
Purchase orders for a Fund received before such Fund's NAV calculation time
generally are processed at such time on that Business Day. Purchase Orders
received after a Fund's NAV calculation time generally are processed at such
Fund's NAV calculation time on the next Business Day. Selling Agents may
establish earlier cut-off times for processing your order. Requests received by
a Selling Agent after the applicable cut-off time will be processed on the next
Business Day. On any day the trading markets for both U.S. government
securities and money market instruments close early, the Funds will close early.
On these days, the net asset value calculation time and the dividend, purchase
and redemption cut-off times for the Funds may be earlier than 12:00 Noon.
Payment for shares may, in the discretion of the Advisor, be made in the
form of securities that are permissible investments for the Funds. For further
information about this form of payment please contact Stephens. In connection
with an in-kind securities payment, the Funds will require, among other things,
that the securities be valued on the day of purchase in accordance with the
pricing methods used by a Fund and that such Fund receives satisfactory
assurances that (i) it will have good and marketable title to the securities
received by it; (ii) that the securities are in proper form for transfer to the
Fund; and (iii) adequate information will be provided concerning the basis and
other matters relating to the securities.
Under the 1940 Act, the Funds may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
NYSE is closed (other than customary weekend and holiday closings, or during
which trading is restricted, or during which as determined by the SEC by rule or
regulation) an emergency exists as a result of which disposal or valuation of
portfolio securities is not reasonably practicable, or for such periods as the
SEC may permit. The Trust may also redeem shares involuntarily or make payment
for redemption in securities or other property if it appears appropriate to do
so in light of the Company's responsibilities under the 1940 Act. In addition,
the Trust may redeem shares involuntarily to reimburse the Funds for any losses
sustained by reason of the failure of a shareholders to make full payment for
shares purchased or to collect any charge relating to a transaction effected for
the benefit of a shareholder which is applicable to shares of a Fund.
24
<PAGE>
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trust's Board of Trustees, Wells Fargo Bank is responsible
for each Fund's portfolio decisions and the placing of portfolio transactions.
In placing orders, it is the policy of the Trust to obtain the best results
taking into account the dealer's general execution and operational facilities,
the type of transaction involved and other factors such as the dealer's risk in
positioning the securities involved. While Wells Fargo Bank generally seeks
reasonably competitive spreads or commissions, the Funds will not necessarily be
paying the lowest spread or commission available.
Purchases and sales of non-equity securities usually will be principal
transactions. Portfolio securities normally will be purchased or sold from or
to dealers serving as market makers for the securities at a net price. Each of
the Funds also will purchase portfolio securities in underwritten offerings and
may purchase securities directly from the issuer. Generally, municipal
obligations and taxable money market securities are traded on a net basis and do
not involve brokerage commissions. The cost of executing a Fund's portfolio
securities transactions will consist primarily of dealer spreads and
underwriting commissions. Under the 1940 Act, persons affiliated with the Trust
are prohibited from dealing with the Trust as a principal in the purchase and
sale of securities unless an exemptive order allowing such transactions is
obtained from the SEC or an exemption is otherwise available. The Funds may
purchase securities from underwriting syndicates of which Stephens or Wells
Fargo Bank is a member under certain conditions in accordance with the
provisions of a rule adopted under the 1940 Act and in compliance with
procedures adopted by the Board of Trustees.
Wells Fargo Bank, as the Investment Advisor of each of the Funds, may, in
circumstances in which two or more dealers are in a position to offer comparable
results for a Fund portfolio transaction, give preference to a dealer that has
provided statistical or other research services to Wells Fargo Bank. By
allocating transactions in this manner, Wells Fargo Bank is able to supplement
its research and analysis with the views and information of securities firms.
Information so received will be in addition to, and not in lieu of, the services
required to be performed by Wells Fargo Bank under the Advisory Contracts, and
the expenses of Wells Fargo Bank will not necessarily be reduced as a result of
the receipt of this supplemental research information. Furthermore, research
services furnished by dealers through which Wells Fargo Bank places securities
transactions for a Fund may be used by Wells Fargo Bank in servicing its other
accounts, and not all of these services may be used by Wells Fargo Bank in
connection with advising the Funds.
Portfolio Turnover. The portfolio turnover rate is not a limiting factor
------------------
when Wells Fargo Bank deems portfolio changes appropriate. Changes may be made
in the portfolios consistent with the investment objectives and policies of the
Funds whenever such changes are believed to be in the best interests of the
Funds and their shareholders. The portfolio turnover rate is calculated by
dividing the lesser of purchases or sales of portfolio securities by the average
monthly value of the Fund's portfolio securities. For purposes of this
calculation, portfolio securities exclude all
25
<PAGE>
securities having a maturity when purchased of one year or less. Portfolio
turnover generally involves some expenses to the Funds, including brokerage
commissions or dealer mark-ups and other transaction costs on the sale of
securities and the reinvestment in other securities. Portfolio turnover also can
generate short-term capital gain tax consequences. Portfolio turnover rate is
not a limiting factor when Wells Fargo Bank deems portfolio changes appropriate.
FUND EXPENSES
From time to time, Wells Fargo Bank may waive fees from the Funds in whole
or in part. Any such waiver will reduce expenses and, accordingly, have a
favorable impact on a Fund's performance. Except for the expenses borne by
Wells Fargo Bank, the Trust bears all costs of its operations, including the
compensation of its Trustees who are not affiliated with Wells Fargo Bank or any
of their affiliates; advisory, shareholder servicing and administration fees;
payments pursuant to any Plan; interest charges; taxes; fees and expenses of its
independent auditors, legal counsel, transfer agent and dividend disbursing
agent; expenses of redeeming shares; expenses of preparing and printing
prospectuses (except the expense of printing and mailing prospectuses used for
promotional purposes, unless otherwise payable pursuant to a Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues; brokerage and other expenses
connected with the execution of portfolio transactions; fees and expenses of its
custodian, including those for keeping books and accounts and calculating the
net asset value per share of a Fund; expenses of shareholders' meetings;
expenses relating to the issuance, registration and qualification of a Fund's
shares; pricing services, and any extraordinary expenses. Expenses attributable
to a Fund are charged against a Fund assets. General expenses of the Trust are
allocated among all of the funds of the Trust, including a Fund, in a manner
proportionate to the net assets of each Fund, on a transactional basis, or on
such other basis as the Trust's Board of Trustees deems equitable.
FEDERAL INCOME TAXES
The following information supplements and should be read in conjunction
with the Prospectus section entitled "Taxes." The Prospectuses of each Fund
describe generally the tax treatment of distributions by the Funds. This
section of the SAI includes additional information concerning Federal income
taxes.
General. The Company intends to qualify each Fund as a regulated
-------
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), as long as such qualification is in the best interest of
the Fund's shareholders. Each Fund will be treated as a separate entity for
Federal income tax purposes. Thus, the provisions of the Code applicable to
regulated investment companies generally will be applied to each Fund, rather
than to the Company as a whole. In addition, net capital gains, net investment
income, and operating expenses will be determined separately for each Fund. As
a regulated investment company, each
26
<PAGE>
Fund will not be taxed on its net investment income and capital gains
distributed to its shareholders.
Qualification as a regulated investment company under the Code requires,
among other things, that each Fund (a) derive at least 90% of its annual gross
income from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other income (including, but not limited to, gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; and (b) diversify its holdings so that,
at the end of each quarter of the taxable year, (i) at least 50% of the market
value of the Fund's assets is represented by cash, government securities and
other securities limited in respect of any one issuer to an amount not greater
than 5% of the Fund's assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its assets is invested
in the securities of any one issuer (other than U.S. Government obligations and
the securities of other regulated investment companies), or in two or more
issuers which the Fund controls and which are determined to be engaged in the
same or similar trades or businesses.
The Funds also must distribute or be deemed to distribute to their
shareholders at least 90% of their net investment income (which, for this
purpose, includes net short-term capital gains) earned in each taxable year. In
general, these distributions must actually or be deemed to be made in the
taxable year. However, in certain circumstances, such distributions may be made
in the 12 months following the taxable year. Furthermore, distributions
declared in October, November or December of one taxable year and paid by
January 31 of the following taxable year will be treated as paid by December 31
of the first taxable year. The Funds intend to pay out substantially all of
their net investment income and net realized capital gains (if any) for each
year.
In addition, a regulated investment company must, in general, derive less
than 30% of its gross income from the sale or other disposition of securities or
options thereon held for less than three months. However, this restriction has
been repealed with respect to a regulated investment company's taxable years
beginning after August 5, 1997.
Excise Tax. A 4% nondeductible excise tax will be imposed on each Fund
----------
(other than to the extent of its tax-exempt interest income) to the extent it
does not meet certain minimum distribution requirements by the end of each
calendar year. Each Fund intends to actually or be deemed to distribute
substantially all of its net investment income and net capital gains by the end
of each calendar year and, thus, expects not to be subject to the excise tax.
Taxation of Fund Investments. Except as provided herein, gains and losses
----------------------------
on the sale of portfolio securities by a Fund will generally be capital gains
and losses. Such gains and losses will ordinarily be long-term capital gains
and losses if the securities have been held by the Fund for more than one year
at the time of disposition of the securities.
27
<PAGE>
Gains recognized on the disposition of a debt obligation (including tax-
exempt obligations purchased after April 30, 1993) purchased by the Fund at a
market discount (generally at a price less than its principal amount) will be
treated as ordinary income to the extent of the portion of market discount which
accrued, but was not previously recognized pursuant to an available election,
during the term the Fund held the debt obligation.
If a Fund enters into a "constructive sale" of any appreciated position in
stock, a partnership interest, or certain debt instruments, the Fund must
recognize gain (but not loss) with respect to that position. For this purpose,
a constructive sale occurs when the Fund enters into one of the following
transactions with respect to the same or substantially identical property: (i) a
short sale; (ii) an offsetting notional principal contract; or (iii) a futures
or forward contract.
Capital Gain Distributions. Distributions which are designated by a Fund
--------------------------
as capital gain distributions will be taxed to shareholders as long-term term
capital gain (to the extent such dividends do exceed the Fund's actual net
capital gains for the taxable year), regardless of how long a shareholder has
held Fund shares. Such distributions will be designated as capital gain
distributions in a written notice mailed by the Fund to its shareholders not
later than 60 days after the close of the Fund's taxable year.
Other Distributions. For Federal income tax purposes, a Fund's earnings
-------------------
and profits will be determined at the end of each taxable year and will be
allocated pro rata over the entire year. For Federal income tax purposes, only
amounts paid out of earnings and profits will qualify as dividends. Thus, if
during a taxable year a Fund's declared dividends (as declared daily throughout
the year) exceed the Fund's net income (as determined at the end of the year),
only that portion of the year's distributions which equals the year's earnings
and profits will be deemed to have constituted a dividend. It is expected that
each Fund's net income, on an annual basis, will equal the dividends declared
during the year.
Disposition of Fund Shares. A disposition of Fund shares pursuant to a
--------------------------
redemption (including a redemption in-kind) or an exchange will ordinarily
result in a taxable capital gain or loss, depending on the amount received for
the shares (or are deemed to be received in the case of an exchange) and the
cost of the shares.
If a shareholder exchanges or otherwise disposes of Fund shares within 90
days of having acquired such shares and if, as a result of having acquired those
shares, the shareholder subsequently pays a reduced sales charge on a new
purchase of shares of the Fund or a different regulated investment company, the
sales charge previously incurred in acquiring the Fund's shares shall not be
taken into account (to the extent such previous sales charges do not exceed the
reduction in sales charges on the new purchase) for the purpose of determining
the amount of gain or loss on the disposition, but will be treated as having
been incurred in the acquisition of such other shares. Also, any loss realized
on a redemption or exchange of shares of the Fund will be disallowed to the
extent that substantially identical shares are acquired within the 61-day period
beginning 30 days before and ending 30 days after the shares are disposed of.
If a shareholder receives a designated capital gain distribution (to be
treated by the shareholder as a long-term capital gain) with respect to any Fund
share and such Fund share is
28
<PAGE>
held for six months or less, then (unless otherwise disallowed) any loss on the
sale or exchange of that Fund share will be treated as a long-term capital loss
to the extent of the designated capital gain distribution. In addition, if a
shareholder holds Fund shares for six months or less, any loss on the sale or
exchange of those shares will be disallowed to the extent of the amount of
exempt-interest dividends received with respect to the shares. The Treasury
Department is authorized to issue regulations reducing the six months holding
requirement to a period of not less than the greater of 31 days or the period
between regular dividend distributions where a Fund regularly distributes at
least 90% of its net tax-exempt interest, if any. No such regulations have been
issued as of the date of this SAI. The loss disallowance rules described in this
paragraph do not apply to losses realized under a periodic redemption plan.
Federal Income Tax Rates. As of the printing of this SAI, the maximum
------------------------
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gain is 20%; and the maximum corporate tax rate applicable to
ordinary income and net capital gain is 35% (marginal tax rates may be higher
for some corporations to reduce or eliminate the benefit of lower marginal
income tax rates). Naturally, the amount of tax payable by an individual or
corporation will be affected by a combination of tax laws covering, for example,
deductions, credits, deferrals, exemptions, sources of income and other matters.
Backup Withholding. The Company may be required to withhold, subject to
------------------
certain exemptions, at a rate of 31% ("backup withholding") on dividends,
capital gain distributions, and redemption proceeds (including proceeds from
exchanges and redemptions in-kind) paid or credited to an individual Fund
shareholder, unless the shareholder certifies that the Taxpayer Identification
Number ("TIN") provided is correct and that the shareholder is not subject to
backup withholding, or the IRS notifies the Company that the shareholder's TIN
is incorrect or that the shareholder is subject to backup withholding. Such tax
withheld does not constitute any additional tax imposed on the shareholder, and
may be claimed as a tax payment on the shareholder's Federal income tax return.
An investor must provide a valid TIN upon opening or reopening an account.
Failure to furnish a valid TIN to the Company also could subject the investor to
penalties imposed by the IRS.
Foreign Shareholders. Under the Code, distributions of net investment
--------------------
income by the Funds to a nonresident alien individual, foreign trust (i.e.,
trust which a U.S. court is able to exercise primary supervision over
administration of that trust and one or more U.S. persons have authority to
control substantial decisions of that trust), foreign estate (i.e., the income
of which is not subject to U.S. tax regardless of source), foreign corporation,
or foreign partnership (a "foreign shareholder") will be subject to U.S.
withholding tax (at a rate of 30% or a lower treaty rate, if applicable).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected" with a U.S. trade or business (or, if an
income tax treaty applies, is attributable to a U.S. permanent establishment of
the foreign shareholder), in which case the reporting and withholding
requirements applicable to U.S. persons will apply. Distributions of capital
gains are generally not subject to tax withholding.
29
<PAGE>
New Regulations. On October 6, 1997, the Treasury Department issued new
---------------
regulations (the "New Regulations") which make certain modifications to the
backup withholding, U.S. income tax withholding and information reporting rules
applicable to foreign shareholders. The New Regulations will generally be
effective for payments made after December 31, 1999, subject to certain
transition rules. Among other things, the New Regulations will permit the Funds
to estimate the portion of their distributions qualifying as capital gain
distributions for purposes of determining the portion of such distributions paid
to foreign shareholders that will be subject to U.S. income tax withholding.
Prospective investors are urged to consult their own tax advisors regarding the
New Regulations.
Tax Deferred Plans. The shares of the Funds are available for a variety of
------------------
tax-deferred retirement and other plans, including Individual Retirement
Accounts ("IRA"), Simplified Employee Pension Plans ("SEP-IRA"), Savings
Incentive Match Plans for Employees ("SIMPLE plans"), Roth IRAs, and Education
IRAs, which permit investors to defer some of their income from taxes. Investors
should contact their selling agents for details concerning retirement plans.
Additional Considerations for the National Tax-Free Money Market and
----------------------------------------------------------------------
National Tax-Free Institutional Money Market Funds. If at least 50% of the
- --------------------------------------------------
value of a regulated investment company's total assets at the close of each
quarter of its taxable years consists of obligations the interest on which is
exempt from federal income tax, it will qualify under the Code to pay "exempt-
interest dividends." The National Tax-Free Money Market and National Tax-Free
Institutional Money Market Funds intend to so qualify and are designed to
provide investors with a high level of income exempt from federal income tax.
The portion of total dividends paid by the National Tax-Free Money Market
and National Tax-Free Institutional Money Market Funds with respect to any
taxable year that constitutes exempt-interest dividends will be the same for all
shareholders receiving dividends during such year. Distributions of capital
gains or from net investment income not attributable to interest on the Fund's
tax-exempt obligations will not constitute exempt-interest dividends and will be
taxable to their shareholders. The exemption of interest income derived from
investments in tax-exempt obligations for federal income tax purposes may not
result in a similar exemption under the laws of a particular state or local
taxing authority.
Not later than 60 days after the close of its taxable year, the National
Tax-Free Money Market and National Tax-Free Institutional Money Market Funds
will notify their shareholders of the portion of the dividends paid with respect
to such taxable year which constitutes exempt-interest dividends. The aggregate
amount of dividends so designated cannot exceed the excess of the amount of
interest excludable from gross income under Section 103 of the Code received by
a Fund during the taxable year over any amounts disallowed as deductions under
Sections 265 and 171(a)(2) of the Code. Interest on indebtedness incurred to
purchase or carry shares of the National Tax-Free Money Market and National
Tax-Free Institutional Money Market Funds will not be deductible to the extent
that the Fund's distributions are exempt from federal income tax.
In addition, the federal alternative minimum tax ("AMT") rules ensure that
at least a minimum amount of tax is paid by taxpayers who obtain significant
benefit from certain tax deductions and exemptions. Some of these deductions and
exemptions have been designated "tax preference items" which must be added back
to taxable income for purposes of calculating AMT. Among the tax preference
items is tax-exempt interest from "private activity bonds" issued after August
7, 1986. To the extent that the National Tax-Free Money Market Fund or National
Tax-Free Institutional Money Market Fund invests in private activity bonds, its
shareholders who pay AMT will be required to report that portion of Fund
dividends attributable to income from the bonds as a tax preference item in
determining their AMT. Shareholders will be notified of the tax status of
distributions made by the National Tax-Free Money Market and National Tax-Free
Institutional Money Market Funds. Persons who may be "substantial users" (or
"related persons" of substantial users) of facilities financed by private
activity bonds should consult their tax advisors before purchasing shares in the
National Tax-Free Money Market Fund or National Tax-Free Institutional Money
Market Fund. Furthermore, shareholders will not be permitted to deduct any of
their share of expenses of the National Tax-Free Money Market Fund or National
Tax-Free Institutional Money Market Fund in computing their AMT. With respect to
a corporate shareholder of the National Tax-Free Money Market Fund or National
Tax-Free Institutional Money Market Fund, exempt-interest dividends
paid by the Fund is included in the corporate shareholder's "adjusted current
earnings" as part of its AMT calculation, and may also affect its federal
"environmental tax" liability. As of the printing of this SAI, individuals are
subject to an AMT at a maximum rate of 28% and corporations at a maximum rate of
20%. Shareholders with questions or concerns about AMT should consult their own
tax advisors.
Shares of the National Tax-Free Money Market Fund or National Tax-Free
Institutional Money Market Fund would not be suitable for tax-exempt
institutions and may not be suitable for retirement plans qualified under
Section 401 of the Code, H.R. 10 plans and IRAs since such plans and accounts
are generally tax-exempt and, therefore, would not benefit from the exempt
status of dividends from the Fund. Such dividends may ultimately be taxable to
the beneficiaries when distributed to them.
The foregoing discussion and the discussions in the Prospectus applicable
to each shareholder address only some of the Federal tax considerations
generally affecting investments in the Funds. Each investor is urged to consult
his or her tax advisor regarding specific questions as to Federal, state, local
or foreign taxes.
CAPITAL STOCK
The Funds are six of the funds in the Wells Fargo Funds Trust family of
funds. The Trust was organized as a Delaware business trust on March 10, 1999.
Most of the Trust's funds are authorized to issue multiple classes of
shares, one class generally subject to a front-end sales charge and, in some
cases, classes subject to a contingent-deferred sales charge, that are offered
to retail investors. Certain of the Trust's funds also are authorized to issue
other classes of shares, which are sold primarily to institutional investors.
Each class of shares in a fund represents an equal, proportionate interest in a
fund with other shares of the same class. Shareholders of each class bear their
pro rata portion of the fund's operating expenses, except for certain class-
specific expenses (e.g., any state securities registration fees, shareholder
servicing fees or distribution fees that may be paid under Rule 12b-1) that are
allocated to a particular class. Please contact Investor Services at 1-800-222-
8222 if you would like additional information about other funds or classes of
shares offered.
With respect to matters that affect one class but not another, shareholders
vote as a class; for example, the approval of a Plan. Subject to the foregoing,
all shares of a Fund have equal voting rights and will be voted in the
aggregate, and not by series, except where voting by a series is required by law
or where the matter involved only affects one series. For example, a change in
a Fund's fundamental investment policy affects only one Series and would be
voted upon only by shareholders of the Fund involved. Additionally, approval of
an advisory contract since it affects only one Fund, is a matter to be
determined separately by each Series. Approval by the shareholders of one
Series is effective as to that Series whether or not sufficient votes are
received from the shareholders of the other Series to approve the proposal as to
those Series.
As used in the Prospectus and in this SAI, the term "majority" when
referring to approvals to be obtained from shareholders of a Class of a Fund,
means the vote of the lesser of (i) 67% of the shares of such class of the Fund
represented at a meeting if the holders of more than 50% of the outstanding
shares of such Class Fund are present in person or by proxy, or (ii) more than
50% of
30
<PAGE>
the outstanding shares of such Class of the Fund. The term "majority," when
referring to the approvals to be obtained from shareholders of the Trust as a
whole, means the vote of the lesser of (i) 67% of the Trust's shares represented
at a meeting if the holders of more than 50% of the Trust's outstanding shares
are present in person or by proxy, or (ii) more than 50% of the Trust's
outstanding shares.
Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held. Shareholders are not entitled to
any preemptive rights. All shares, when issued, will be fully paid and non-
assessable by the Trust.
The Trust may dispense with an annual meeting of shareholders in any year
in which it is not required to elect directors under the 1940 Act.
Each share of a class of a Fund represents an equal proportional interest
in the Fund with each other share in the same class and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
the Fund as are declared in the discretion of the Trustees. In the event of the
liquidation or dissolution of the Trust, shareholders of a Fund or class are
entitled to receive the assets attributable to the Fund or class that are
available for distribution, and a distribution of any general assets not
attributable to a particular investment portfolio that are available for
distribution in such manner and on such basis as the Trustees in their sole
discretion may determine.
Set forth below as of March 25, 1999, is the name, address and share
ownership of each person known by the Trust to have beneficial or record
ownership of 5% or more of a class of each Fund or 5% or more of the voting
securities of each Fund as a whole. The term "N/A" is used where a shareholder
holds 5% or more of a class, but less than 5% of a Fund as a whole.
5% OWNERSHIP AS OF MARCH 25, 1999
<TABLE>
<CAPTION>
NAME AND CLASS; TYPE PERCENTAGE PERCENTAGE
FUND ADDRESS OF OWNERSHIP OF CLASS OF FUND
- -------------------- ------------------------------ -------------- ------------- -------------
<S> <C> <C> <C> <C>
CASH INVESTMENT
MONEY MARKET
Service Class Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Institutional Class Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
MONEY MARKET
Class A Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class B Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
</TABLE>
31
<PAGE>
<TABLE>
<S> <C> <C> <C>
NATIONAL TAX-FREE
MONEY MARKET
Class A Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
NATIONAL TAX-FREE
INSTITUTIONAL
MONEY MARKET
Service Class Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Institutional Class Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
TREASURY
PLUS INSTITUTIONAL
MONEY MARKET
Service Class Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Institutional Class Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
GOVERNMENT
MONEY MARKET
Class A Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Service Class Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class (or Fund) or is identified as the holder of
record or more than 25% of a class (or Fund) and has voting and/or investment
powers, it may be presumed to control such class (or Fund).
32
<PAGE>
OTHER
The Trust's Registration Statement, including the Prospectus and SAI for
the Funds and the exhibits filed therewith, may be examined at the office of the
U.S. Securities and Exchange Commission in Washington, D.C. Statements
contained in the Prospectus or the SAI as to the contents of any contract or
other document referred to herein or in the Prospectus are not necessarily
complete, and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
COUNSEL
Morrison & Forester LLP, 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C. 20006, as counsel for the Trust, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance of the
shares of beneficial interest being sold pursuant to the Funds' Prospectus.
INDEPENDENT AUDITORS
KPMG LLP has been selected as the independent auditors for the Trust.
KPMG LLP provides audit services, tax return preparation and assistance and
consultation in connection with review of certain SEC filings. KPMG LLP's
address is Three Embarcadero Center, San Francisco, California 94111.
33
<PAGE>
APPENDIX
The following is a description of the ratings given by Moody's and S&P to
corporate and municipal bonds, municipal notes, and corporate and municipal
commercial paper.
Corporate and Municipal Bonds
- -----------------------------
Moody's: The four highest ratings for corporate and municipal bonds are
-------
"Aaa," "Aa," "A" and "Baa." Bonds rated "Aaa" are judged to be of the "best
quality" and carry the smallest amount of investment risk. Bonds rated "Aa" are
of "high quality by all standards," but margins of protection or other elements
make long-term risks appear somewhat greater than "Aaa" rated bonds. Bonds
rated "A" possess many favorable investment attributes and are considered to be
upper medium grade obligations. Bonds rated "Baa" are considered to be medium
grade obligations; interest payments and principal security appear adequate for
the present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds have
speculative characteristics as well. Moody's applies numerical modifiers: 1, 2
and 3 in each rating category from "Aa" through "Baa" in its rating system. The
modifier 1 indicates that the security ranks in the higher end of its category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end.
S&P: The four highest ratings for corporate and municipal bonds are
---
"AAA," "AA," "A" and "BBB." Bonds rated "AAA" have the highest ratings assigned
by S&P and have an extremely strong capacity to pay interest and repay
principal. Bonds rated "AA" have a "very strong capacity to pay interest and
repay principal" and differ "from the highest rated issued only in small
degree." Bonds rated "A" have a "strong capacity" to pay interest and repay
principal, but are "somewhat more susceptible" to adverse effects of changes in
economic conditions or other circumstances than bonds in higher rated
categories. Bonds rated "BBB" are regarded as having an "adequate capacity" to
pay interest and repay principal, but changes in economic conditions or other
circumstances are more likely to lead to a "weakened capacity" to make such
repayments. The ratings from "AA" to "BBB" may be modified by the addition of a
plus or minus sign to show relative standing within the category.
Municipal Notes
- ---------------
Moody's: The highest ratings for state and municipal short-term
-------
obligations are "MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG
3" in the case of an issue having a variable rate demand feature). Notes rated
"MIG 1" or "VMIG 1" are judged to be of the "best quality." Notes rated "MIG 2"
or "VMIG 2" are of "high quality," with margins of protections "ample although
not as large as in the preceding group." Notes rated "MIG 3" or "VMIG 3" are of
"favorable quality," with all security elements accounted for, but lacking the
strength of the preceding grades.
A-1
<PAGE>
S&P: The "SP-1" rating reflects a "very strong or strong capacity to pay
---
principal and interest." Notes issued with "overwhelming safety
characteristics" will be rated "SP-1+." The "SP-2" rating reflects a
"satisfactory capacity" to pay principal and interest.
Corporate and Municipal Commercial Paper
- ----------------------------------------
Moody's: The highest rating for corporate and municipal commercial paper
-------
is "P-1" (Prime-1). Issuers rated "P-1" have a "superior capacity for repayment
of short-term promissory obligations." Issuers rated "P-2" (Prime-2) "have a
strong capacity for repayment of short-term promissory obligations," but
earnings trends, while sound, will be subject to more variation.
S&P: The "A-1" rating for corporate and municipal commercial paper
---
indicates that the "degree of safety regarding timely payment is either
overwhelming or very strong." Commercial paper with "overwhelming safety
characteristics" will be rated "A-1+." Commercial paper with a strong capacity
for timely payments on issues will be rated "A-2."
Corporate Notes
- ---------------
S&P: The two highest ratings for corporate notes are "SP-1" and "SP-2."
---
The "SP-1" rating reflects a "very strong or strong capacity to pay principal
and interest." Notes issued with "overwhelming safety characteristics" will be
rated "SP-1+." The "SP-2" rating reflects a "satisfactory capacity" to pay
principal and interest.
A-2
<PAGE>
WELLS FARGO FUNDS TRUST
Telephone: 1-800-222-8222
STATEMENT OF ADDITIONAL INFORMATION
Dated June 1, 1999
INCOME FUND
INTERMEDIATE GOVERNMENT INCOME FUND
LIMITED TERM GOVERNMENT INCOME FUND
TAX-FREE INCOME FUND
CLASS A, CLASS B, CLASS C AND INSTITUTIONAL CLASS
Wells Fargo Funds Trust (the "Trust") is an open-end, management investment
company. This Statement of Additional Information ("SAI") contains additional
information about four funds in the Wells Fargo Funds Trust family of funds
(each, a "Fund" and collectively, the "Funds") -- the INCOME, INTERMEDIATE
GOVERNMENT INCOME, LIMITED TERM GOVERNMENT INCOME and TAX-FREE INCOME FUNDS.
Each Fund offers Class A, Class B, and Institutional Class shares. The
Intermediate Government Income and Tax-Free Income Funds also offer Class C
shares. This SAI relates to all such classes of shares.
This SAI is not a prospectus and should be read in conjunction with the
Funds' Prospectus, dated June 1, 1999. All terms used in this SAI that are
defined in the Prospectus have the meanings assigned in the Prospectus. A copy
of the Prospectus may be obtained free of charge by calling 1-800-222-8222 or
writing to Wells Fargo Funds Trust, P.O. Box 7066, San Francisco, CA 94120-7066.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Historical Fund Information...................................... 1
Investment Restrictions.......................................... 2
Additional Permitted Investment Activities and Associated Risks.. 4
Management....................................................... 16
Performance Calculations......................................... 22
Determination of Net Asset Value................................. 26
Additional Purchase and Redemption Information................... 27
Portfolio Transactions........................................... 28
Fund Expenses.................................................... 29
Federal Income Taxes............................................. 29
Capital Stock.................................................... 34
Other............................................................ 37
Counsel.......................................................... 37
Independent Auditors............................................. 37
Appendix......................................................... A-1
</TABLE>
i
<PAGE>
HISTORICAL FUND INFORMATION
On March 25, 1999, the Board of Trustees of Norwest Advantage Funds
("Norwest"), the Board of Directors of Stagecoach Funds, Inc. ("Stagecoach") and
the Board of Trustees of the Trust approved an Agreement and Plan of
Reorganization providing for, among other things, the transfer of the assets and
stated liabilities of various predecessor Norwest and Stagecoach portfolios to
the Funds. Prior to September 17, 1999, the effective date of the consolidation
of the Funds and the predecessor Norwest and Stagecoach portfolios (the
"Consolidation"), the Funds had only nominal assets.
The INCOME FUND will commence operations on September 17, 1999, as successor
to the Income, Total Return Bond, and Performa Strategic Value Bond Funds of
Norwest. The Norwest Income Fund commenced operations on August 5, 1993, the
Norwest Total Return Bond Fund commenced operations on December 31, 1993, and
the Performa Strategic Value Bond Fund commenced operations on October 15, 1997.
For accounting purposes, the Norwest Income predecessor portfolio is considered
the surviving entity, and the financial highlights shown for periods prior to
September 17, 1999 are the financial highlights of the Norwest Income Fund.
The INTERMEDIATE GOVERNMENT INCOME FUND will commence operations on
September 17, 1999, as successor to the U.S. Government Income and U.S.
Government Allocation Funds of Stagecoach and the Intermediate Government Income
Fund of Norwest. The predecessor Stagecoach U.S. Government Income Fund
commenced operations as a portfolio of Overland Express Fund, Inc. ("Overland")
on January 1, 1992, as the successor to the Ginnie Mae Fund of the Wells Fargo
Investment Trust for Retirement Programs ("WFIT"), which commenced operations on
January 3, 1991. On December 12, 1997, as part of the consolidation of Overland
into Stagecoach, the U.S. Government Income Fund of Overland was reorganized
with and into the Stagecoach U.S. Government Income Fund. The predecessor
Stagecoach U.S. Government Allocation Fund commenced operations on January 2,
1992 as successor to the Fixed-Income Strategy Fund of WFIT, which commenced
operations on March 31, 1987. The predecessor Norwest Intermediate Government
Income Fund commenced operations on November 11, 1994. For accounting purposes,
the Norwest Intermediate Government Income predecessor portfolio is considered
the surviving entity, and the financial highlights shown for periods prior to
September 17, 1999 are the financial highlights of the Norwest Intermediate
Government Income Fund. The predecessor Norwest Intermediate Government Income
Fund did not offer Class C shares.
The LIMITED TERM GOVERNMENT INCOME FUND will commence operations on
September 17, 1999, as successor to Short-Intermediate U.S. Government Income
Fund of Stagecoach and the Limited Term Government Income Fund of Norwest. The
predecessor Stagecoach Short-Intermediate U.S. Government Income Fund commenced
operations on October 27, 1993. The predecessor Norwest Limited Term Government
Income Fund commenced operations on October 1, 1997. For accounting purposes,
the Stagecoach Short-Intermediate U.S. Government Income predecessor portfolio
is considered the surviving entity, and the financial highlights shown for
periods prior to September 17, 1999 are the financial highlights of the
Stagecoach Short-Intermediate U.S. Government Income Fund.
1
<PAGE>
The TAX-FREE INCOME FUND will commence operations on September 17, 1999, as
successor to the National Tax-Free Fund of Stagecoach and the Tax-Free Income
Fund of Norwest. The predecessor Stagecoach National Tax-Free Fund was
originally organized as an investment portfolio of Westcore Trust under the name
Quality Tax-Exempt Income Fund. On October 1, 1995, the Quality Tax-Exempt
Income Fund was reorganized as the National Tax-Exempt Fund of Pacifica Funds
Trust ("Pacifica"). On the September 6, 1996, the Pacifica National Tax-Exempt
Fund was reorganized as the Stagecoach National Tax-Free Fund. The predecessor
Norwest Tax-Free Income Fund commenced operations on August 2, 1993. For
accounting purposes, the Norwest Tax-Free Income predecessor portfolio is
considered the surviving entity, and the financial highlights shown for periods
prior to September 17, 1999 are the financial highlights of the Norwest Tax-Free
Income Fund. The predecessor Norwest Tax-Free Income Fund did not offer Class C
shares.
INVESTMENT RESTRICTIONS
Fundamental Investment Policies
-------------------------------
Each Fund has adopted the following investment restrictions, all of which
are fundamental policies; that is, they may not be changed without approval by
the vote of the holders of a majority (as defined in the Investment Trust Act of
1940, as amended (the "1940 Act")) of the outstanding voting securities of such
Fund.
The Funds may not:
(1) purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of a Fund's investments in that industry would equal 25% of
the current value of the Fund's total assets, provided that there is no
limitation with respect to investment in securities issued or guaranteed by the
United States Government, its agencies or instrumentalities, and further
provided that the tax-free income fund may not purchase any securities that
would cause 25% or more of the value of its total assets at the time of purchase
to be invested in municipal obligations with similar characteristics (such as
private activity bonds where the payment of principal and interest is the
ultimate responsibility of issuers in the same industry, pollution control
revenue bonds, housing finance agency bonds or hospital bonds);
(2) purchase securities of any issuer if, as a result, with respect to 75%
of a Fund's total assets, more than 5% of the value of its total assets would be
invested in the securities of any one issuer or, with respect to 100% of its
assets, the Fund's ownership would be more than 10% of the outstanding voting
securities of such issuer. This policy does not restrict a Fund's ability to
invest in securities issued or guaranteed by the U.S. Government, its agencies
and instrumentalities;
(3) borrow money except to the extent permitted by the 1940 Act, and the
rules, regulations and exemptions thereunder;
2
<PAGE>
(4) issue senior securities except to the extent permitted by the 1940
Act, and the rules, regulations and exemptions thereunder;
(5) make loans to other parties if, as a result, the aggregate value of
such loans would exceed one-third of a Fund's total assets. For the purposes of
this limitation, entering into repurchase agreements, lending securities and
acquiring any debt securities are not deemed to be the making of loans;
(6) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with a Fund's investment program may be deemed to be an underwriting;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business); nor
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Funds from purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities).
Non-Fundamental Investment Policies
-----------------------------------
Each Fund has adopted the following non-fundamental policies which may be
changed by a majority vote of the Board of Trustees of the Trust at any time and
without approval of such Fund's shareholders.
(1) Each Fund may invest in shares of other open-end management investment
companies, subject to the limitations of the 1940 Act, the rules thereunder, and
any orders obtained thereunder now or in the future. Other investment companies
in which the Funds invest can be expected to charge fees for operating expenses,
such as investment advisory and administration fees, that would be in addition
to those charged by a Fund.
(2) Each Fund may not invest or hold more than 15% of the Fund's net assets
in illiquid securities. For this purpose, illiquid securities include, among
others, (a) securities that are illiquid by virtue of the absence of a readily
available market or legal or contractual restrictions on resale, (b) fixed time
deposits that are subject to withdrawal penalties and that have maturities of
more than seven days, and (c) repurchase agreements not terminable within seven
days.
(3) Each Fund may invest in futures or options contracts regulated by the
CFTC for (i) bona fide hedging purposes within the meaning of the rules of the
CFTC and (ii) for other purposes if, as a result, no more than 5% of the Fund's
net assets would be invested in initial margin and premiums (excluding amounts
"in-the-money") required to establish the contracts.
3
<PAGE>
Each Fund (i) will not hedge more than [50%] of its total assets by
selling futures contracts, buying put options, and writing call options (so
called "short positions"), (ii) will not buy futures contracts or write put
options whose underlying value exceeds [25%] of the Fund's total assets, and
(iii) will not buy call options with a value exceeding [5%] of the Fund's total
assets.
(4) Each Fund may lend securities from its portfolio to brokers, dealers and
financial institutions, in amounts not to exceed (in the aggregate) one-third of
the Fund's total assets. Any such loans of portfolio securities will be fully
collateralized based on values that are marked to market daily. The Fund will
not enter into any portfolio security lending arrangement having a duration of
longer than one year.
(5) Each Fund may not make investments for the purpose of exercising control
or management. (Investments by the Fund in entities created under the laws of
foreign countries solely to facilitate investment in securities in that country
will not be deemed the making of investments for the purpose of exercising
control.)
(6) Each Fund may not purchase securities on margin (except for short-term
credits necessary for the clearance of transactions).
(7) Each Fund may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short
(short sales "against the box"), and provided that transactions in futures
contracts and options are not deemed to constitute selling securities short.
(8) Each Fund may not purchase interests, leases, or limited partnership
interests in oil, gas, or other mineral exploration or development programs.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES AND ASSOCIATED RISKS
Set forth below are descriptions of certain investments and additional
investment policies for the Funds.
Asset-Backed Securities
-----------------------
The Funds may invest in various types of asset-backed securities. Asset-
backed securities are securities that represent an interest in an underlying
security. The asset-backed securities in which the Funds invest may consist of
undivided fractional interests in pools of consumer loans or receivables held in
trust. Examples include certificates for automobile receivables (CARS) and
credit card receivables (CARDS). Payments of principal and interest on these
asset-backed securities are "passed through" on a monthly or other periodic
basis to certificate holders and are typically supported by some form of credit
enhancement, such as a surety bond, limited guaranty, or subordination. The
extent of credit enhancement varies, but usually amounts to only a fraction of
the asset-backed security's par value until exhausted. Ultimately, asset-backed
securities are dependent upon payment of the consumer loans or receivables by
individuals, and the certificate holder frequently has no recourse to the entity
that originated the loans or receivables. The actual maturity and realized yield
will vary based upon the prepayment experience of the underlying asset pool and
prevailing interest rates at the time of prepayment. Asset-backed securities are
relatively
4
<PAGE>
new instruments and may be subject to greater risk of default during periods of
economic downturn than other instruments. Also, the secondary market for certain
asset-backed securities may not be as liquid as the market for other types of
securities, which could result in a Fund experiencing difficulty in valuing or
liquidating such securities. The Funds may also invest in securities backed by
pools of mortgages. The investments are described under the heading "Mortgage-
Related Securities."
Bank Obligations
----------------
The Funds may invest in bank obligations, including certificates of deposit,
time deposits, bankers' acceptances and other short-term obligations of domestic
banks, foreign subsidiaries of domestic banks, foreign branches of domestic
banks, and domestic and foreign branches of foreign banks, domestic savings and
loan associations and other banking institutions. With respect to such
securities issued by foreign branches of domestic banks, foreign subsidiaries of
domestic banks, and domestic and foreign branches of foreign banks, a Fund may
be subject to additional investment risks that are different in some respects
from those incurred by a Fund which invests only in debt obligations of U.S.
domestic issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding taxes on interest
income payable on the securities, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on these securities and
the possible seizure or nationalization of foreign deposits. In addition,
foreign branches of U.S. banks and foreign banks may be subject to less
stringent reserve requirements and to different accounting, auditing, reporting
and recordkeeping standards than those applicable to domestic branches of U.S.
banks.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by a Fund will not benefit from insurance from the
Bank Insurance Fund or the Savings Association Insurance Fund administered by
the Federal Deposit Insurance Corporation ("FDIC"). Bankers' acceptances are
credit instruments evidencing the obligation of a bank to pay a draft drawn on
it by a customer. These instruments reflect the obligation both of the bank and
of the drawer to pay the face amount of the instrument upon maturity. The other
short-term obligations may include uninsured, direct obligations, bearing fixed,
floating- or variable-interest rates.
Bonds
-----
Certain of the debt instruments purchased by the Funds may be bonds. The
Funds invests no more than 25% in bonds that are below investment grade. A bond
is an interest-bearing security issued by a company or governmental unit. The
issuer of a bond has a contractual obligation to pay interest at a stated rate
on specific dates and to repay principal (the bond's face value) periodically or
on a specified maturity date. An issuer may have the right to redeem or "call" a
bond before maturity, in which case the investor may have to reinvest the
proceeds at lower market rates. The value of fixed-rate bonds will tend to fall
when interest rates rise and rise when interest rates fall.
5
<PAGE>
The value of "floating-rate" or "variable-rate" bonds, on the other hand,
fluctuate much less in response to market interest rate movements than the value
of fixed rate bonds.
Bonds may be senior or subordinated obligations. Senior obligations
generally have the first claim on a corporation's earnings and assets and, in
the event of liquidation, are paid before subordinated debt. Bonds may be
unsecured (backed only by the issuer's general creditworthiness) or secured
(also backed by specified collateral).
Commercial Paper
----------------
The Funds may invest in commercial paper (including variable amount master
demand notes) which refers to short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Variable amount master demand notes are demand
obligations which permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the issuer and a commercial
bank acting as agent for the payee of such notes whereby both parties have the
right to vary the amount of the outstanding indebtedness on the notes.
Investments by the Funds in commercial paper (including variable rate demand
notes and variable rate master demand notes issued by domestic and foreign bank
holding companies, corporations and financial institutions, as well as similar
instruments issued by government agencies and instrumentalities) will consist of
issues that are rated in one of the two highest rating categories by a
Nationally Recognized Ratings Organization ("NRRO"). Commercial paper may
include variable- and floating-rate instruments.
Convertible Securities
----------------------
The Funds may invest in convertible securities. A convertible security is
generally a debt obligation or preferred stock that may be converted within a
specified period of time into a certain amount of common stock of the same or a
different user. A convertible security provides a fixed-income stream and the
opportunity, through its conversion feature, to participate in the capital
appreciation resulting from a market price advance in its underlying common
stock. As with a straight fixed-income security, a convertible security tends to
increase in market value when interest rates decline and decrease in value when
interest rates rise. Like a common stock, the value of a convertible security
also tends to increase as the market value of the underlying stock rises, and it
tends to decrease as the market value of the underlying stock declines. Because
its value can be influenced by both interest rate and market movements, a
convertible security is not as sensitive to interest rats as a similar fixed-
income security, nor is it as sensitive to changes in share price as its
underlying stock.
The creditworthiness of the issuer of a convertible security may be
important in determining the security's true value. This is because the holder
of a convertible security will have recourse only to the issuer. In addition, a
convertible security may be subject to redemption by the issuer, but only after
a specified date and under circumstances established at the time the security is
issued.
While the Funds use the same criteria to rate a convertible debt security
that it uses to rate a more conventional debt security, a convertible preferred
stock is treated like a preferred stock
6
<PAGE>
for a Funds' financial reporting, credit rating, and investment limitation
purposes. A preferred stock is subordinated to all debt obligations in the event
of insolvency, and an issuer's failure to make a dividend payment is generally
not an event of default entitling the preferred shareholder to take action. A
preferred stock generally has no maturity date, so that its market value is
dependent on the issuer's business prospects for an indefinite period of time.
In addition, distributions from preferred stock are dividends, rather than
interest payments, and are usually treated as such for corporate tax purposes.
Derivative Securities
---------------------
The Funds may invest in various instruments that may be considered
"derivatives," including structured notes, bonds or other instruments with
interest rates that are determined by reference to changes in the value of other
interest rates, indices or financial indicators ("References") or the relative
change in two or more References. Some derivative securities represent
relatively recent innovations in the bond markets, and the trading market for
these instruments is less developed than the markets for traditional types of
debt instruments. It is uncertain how these instruments will perform under
different economic and interest rate scenarios. Because certain of these
instruments are leveraged, their market values may be more volatile than other
types of bonds and may present greater potential for capital gain or loss.
Derivative securities and their underlying instruments may experience periods of
illiquidity, which could cause a Fund to hold a security it might otherwise sell
or could force the sale of a security at inopportune times or for prices that do
not reflect current market value. The possibility of default by the issuer or
the issuer's credit provider may be greater for these structured and derivative
instruments than for other types of instruments. As new types of derivative
securities are developed and offered to investors, the advisor will, consistent
with the Funds' investment objective, policies and quality standards, consider
making investments in such new types of derivative securities.
Floating- and Variable-Rate Obligations
-----------------------------------------
The Funds may purchase floating- and variable-rate obligations such as
demand notes and bonds. Variable-rate demand notes include master demand notes
that are obligations that permit a Fund to invest fluctuating amounts, which may
change daily without penalty, pursuant to direct arrangements between the Fund,
as lender, and the borrower. The interest rate on a floating-rate demand
obligation is based on a known lending rate, such as a bank's prime rate, and is
adjusted automatically each time such rate is adjusted. The interest rate on a
variable-rate demand obligation is adjusted automatically at specified
intervals. The issuer of such obligations ordinarily has a right, after a given
period, to prepay in its discretion the outstanding principal amount of the
obligations plus accrued interest upon a specified number of days' notice to the
holders of such obligations. Frequently, such obligations are secured by letters
of credit or other credit support arrangements provided by banks.
There generally is no established secondary market for these obligations
because they are direct lending arrangements between the lender and borrower.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, a Fund's right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. Such
obligations frequently are not rated by credit rating agencies and each Fund may
7
<PAGE>
invest in obligations which are not so rated only if the Advisor determines that
at the time of investment the obligations are of comparable quality to the other
obligations in which such Fund may invest. The Advisor, on behalf of each Fund,
considers on an ongoing basis the creditworthiness of the issuers of the
floating- and variable-rate demand obligations in such Fund's portfolio. No Fund
will invest more than 15% of the value of its total net assets in floating-or
variable-rate demand obligations whose demand feature is not exercisable within
seven days. Such obligations may be treated as liquid, if an active secondary
market exists. Floating- and variable-rate instruments are subject to interest-
rate risk and credit risk.
The floating- and variable-rate instruments that the Funds may purchase
include certificates of participation in such instruments.
Foreign Obligations and Securities
----------------------------------
Each Fund may invest up to 25% of its assets in high-quality, short-term
debt obligations of foreign branches of U.S. banks, U.S. branches of foreign
banks and short-term debt obligations of foreign governmental agencies that are
denominated in and pay interest in U.S. dollars. Investments in foreign
obligations involve certain considerations that are not typically associated
with investing in domestic obligations. There may be less publicly available
information about a foreign issuer than about a domestic issuer and the
available information may be less reliable. In addition, with respect to certain
foreign countries, taxes may be withheld at the source under foreign tax laws,
and there is a possibility of expropriation or confiscatory taxation, political
or social instability or diplomatic developments that could adversely affect
investments in, the liquidity of, and the ability to enforce contractual
obligations with respect to, securities of issuers located in those countries.
The Funds may invest in securities denominated in currencies other than the U.S.
dollar and may temporarily hold funds in bank deposits or other money market
investments denominated in foreign currencies. Therefore, the Funds may be
affected favorably or unfavorably by exchange control regulations or changes in
the exchange rate between such currencies and the dollar. Changes in foreign
currency exchange rates influence values within a Fund from the perspective of
U.S. investors. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors.
The Funds may enter into forward currency exchange contracts ("forward
contracts") to attempt to minimize the risk to the Funds from adverse changes in
the relationship between currencies or to enhance income [CHECK]. A forward
contract is an obligation to buy or sell a specific currency for an agreed price
at a future date which is individually negotiated and is privately traded by
currency traders and their customers. The Funds will either cover a position in
such a transaction or maintain, in a segregated account with their custodian
bank, cash or high-grade marketable money market securities having an aggregate
value equal to the amount of any such commitment until payment is made.
Forward Commitment, When-Issued and Delayed-Delivery Transactions
-----------------------------------------------------------------
The Funds may purchase or sell securities on a when-issued or delayed
delivery basis and make contracts to purchase or sell securities for a fixed
price at a future date beyond customary
8
<PAGE>
settlement time. Delivery and payment on such transaction normally take place
within 120 days after the date of the commitment to purchase. Securities
purchased or sold on a when-issued, delayed-delivery or forward commitment basis
involve a risk of loss if the value of the security to be purchased declines, or
the value of the security to be sold increases, before the settlement date. The
Funds will establish a segregated account in which they will maintain cash, U.S.
Government obligations or other high-quality debt instruments in an amount at
least equal in value to each such Fund's commitments to purchase when-issued
securities. If the value of these assets declines, a Fund will place additional
liquid assets in the account on a daily basis so that the value of the assets in
the account is equal to the amount of such commitments.
Illiquid Securities
-------------------
The Funds may invest in securities not registered under the Securities Act
of 1933, as amended (the "1933 Act") and other securities subject to legal or
other restrictions on resale. Because such securities may be less liquid than
other investments, they may be difficult to sell promptly at an acceptable
price. Delay or difficulty in selling securities may result in a loss or be
costly to a Fund. Each Fund may invest up to 15% of its net assets in illiquid
securities.
Loans of Portfolio Securities
-----------------------------
Each Fund may lend its portfolio securities to brokers, dealers and
financial institutions, provided: (1) the loan is secured continuously by
collateral consisting of U.S. Government securities or cash or letters of credit
maintained on a daily marked-to-market basis in an amount at least equal to the
current market value of the securities loaned; (2) such Fund may at any time
call the loan and obtain the return of the securities loaned within five
business days; (3) such Fund will receive any interest or dividends paid on the
loaned securities; and (4) the aggregate market value of securities loaned will
not at any time exceed the limits established by the 1940 Act.
A Fund will earn income for lending its securities because cash collateral
pursuant to these loans will be invested in short-term money market instruments.
In connection with lending securities, a Fund may pay reasonable finders,
administrative and custodial fees. A Fund will not enter into any security
lending arrangement having a duration longer than one year. Loans of securities
involve a risk that the borrower may fail to return the securities or may fail
to provide additional collateral. In either case, a Fund could experience delays
in recovering securities or collateral or could lose all or part of the value of
the loaned securities. Although voting rights, or rights to consent, attendant
to securities on loan pass to the borrower, such loans may be called at any time
and will be called so that the securities may be voted by a Fund if a material
event affecting the investment is to occur. A Fund may pay a portion of the
interest or fee earned from securities lending to a borrower or a placing
broker. Borrowers and placing brokers may not be affiliated, directly or
indirectly with Wells Fargo Bank, Stephens or any of their affiliates.
9
<PAGE>
Mortgage-Related Securities
---------------------------
The Funds may invest in mortgage-related securities. Mortgage pass-through
securities are securities representing interests in "pools" of mortgages in
which payments of both interest and principal on the securities are made
monthly, in effect "passing through" monthly payments made by the individual
borrowers on the residential mortgage loans which underlie the securities (net
of fees paid to the issuer or guarantor of the securities). Payment of principal
and interest on some mortgage pass-through securities (but not the market value
of the securities themselves) may be guaranteed by the full faith and credit of
the U.S. Government or its agencies or instrumentalities. Mortgage pass-through
securities created by non- government issuers (such as commercial banks,
10
<PAGE>
savings and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers) may be supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance, and letters of credit, which may be issued by governmental entities,
private insurers or the mortgage poolers.
Prepayment Risk. The stated maturities of mortgage-related securities may be
shortened by unscheduled prepayments of principal on the underlying mortgages.
Therefore, it is not possible to predict accurately the average maturity of a
particular mortgage-related security . Variations in the maturities of mortgage-
related securities will affect the yield of the Fund. Early repayment of
principal on mortgage-related securities may expose a Fund to a lower rate of
return upon reinvestment of principal. Also, if a security subject to prepayment
has been purchased at a premium, in the event of prepayment the value of the
premium would be lost. Like other fixed-income securities, when interest rates
rise, the value of a mortgage-related security generally will decline; however,
when interest rates decline, the value of mortgage-related securities with
prepayment features may not increase as much as other fixed-income securities.
Collateralized Mortgage Obligations ("CMOs") and Adjustable Rate Mortgages
("ARMs"). The Funds may also invest in investment grade CMOs. CMOs may be
collateralized by whole mortgage loans but are more typically collateralized by
portfolios of mortgage pass-through securities guaranteed by the Government
National Mortgage Association ("GNMA"), the Federal Home Loan Mortgage
Corporation ("FHLMC") or Federal National Mortgage Association ("FNMA"). CMOs
are structured into multiple classes, with each class bearing a different stated
maturity. Payments of principal, including prepayments, are first returned to
investors holding the shortest maturity class; investors holding the longer
maturity classes receive principal only after the first class has been retired.
As new types of mortgage-related securities are developed and offered to
investors, the Advisor will, consistent with the Fund's investment objective,
policies and quality standards, consider making investments in such new types of
mortgage-related securities.
The Funds each may invest in ARMs issued or guaranteed by the GNMA, FNMA or
the FHLMC. The full and timely payment of principal and interest on GNMA ARMs is
guaranteed by GNMA and backed by the full faith and credit of the U.S.
Government. FNMA also guarantees full and timely payment of both interest and
principal, while FHLMC guarantees full and timely payment of interest and
ultimate payment of principal. FNMA and FHLMC ARMs are not backed by the full
faith and credit of the United States. However, because FNMA and FHLMC are
government-sponsored enterprises, these securities are generally considered to
be high quality investments that present minimal credit risks. The yields
provided by these ARMs have historically exceeded the yields on other types of
U.S. Government securities with comparable maturities, although there can be no
assurance that this historical performance will continue.
The mortgages underlying ARMs guaranteed by GNMA are typically insured or
guaranteed by the Federal Housing Administration, the Veterans Administration or
the Farmers Home Administration, while those underlying ARMs issued by FNMA or
FHLMC are typically conventional residential mortgages which are not so insured
or guaranteed, but which conform to specific underwriting, size and maturity
standards.
11
<PAGE>
The interest rates on the mortgages underlying the ARMs and some of the CMOs
in which the Funds may invest generally are readjusted at periodic intervals
ranging from one year or less to several years in response to changes in a
predetermined commonly-recognized interest rate index. The adjustable rate
feature should reduce, but will not eliminate, price fluctuations in such
securities, particularly when market interest rates fluctuate. The net asset
value of a Funds' shares may fluctuate to the extent interest rates on
underlying mortgages differ from prevailing market interest rates during interim
periods between interest rate reset dates. Accordingly, investors could
experience some loss if they redeem their shares of a Fund or if the Funds sells
these portfolio securities before the interest rates on the underlying mortgages
are adjusted to reflect prevailing market interest rates. The holder of ARMs and
CMOs are also subject to repayment risk.
The Funds will not invest in CMOs that, at the time of purchase, are "high-
risk mortgage securities" as defined in the then current Federal Financial
Institutions Examination Council Supervisory Policy Statement on Securities
Activities. High-risk mortgage securities are generally those with long
durations or those which are likely to be more sensitive to interest-rate
fluctuations.
Mortgage Participation Certificates. The Short - Intermediate U.S.
Government Income Fund and Intermediate Government Income Fund also may invest
in the following types of FHLMC mortgage pass-through securities. FHLMC issues
two types of mortgage pass-through securities: mortgage participation
certificates ("PCs") and guaranteed mortgage certificates ("GMCs"). PCs resemble
GNMA certificates in that each PC represents a pro rata share of all interest
and principal payments made and owed on the underlying pool of mortgages. GMCs
also represent a pro rata interest in a pool of mortgages. These instruments,
however, pay interest semiannually and return principal once a year in
guaranteed minimum payments. These mortgage pass-through securities differ from
bonds in that principal is paid back by the borrower over the length of the loan
rather than returned in a lump sum at maturity. They are called "pass-through"
securities because both interest and principal payments, including prepayments,
are passed through to the holder of the security. PCs and GMCs are both subject
to prepayment risk.
Other Investment Companies
--------------------------
The Funds may invest in shares of other open-end management investment
companies, up to the limits prescribed in Section 12(d) of the 1940 Act. Under
the 1940 Act, a Fund's investment in such securities currently is limited to,
subject to certain exceptions, (i) 3% of the total voting stock of any one
investment company, (ii) 5% of such Fund's net assets with respect to any one
investment company and (iii) 10% of such Fund's net assets in aggregate. Other
investment companies in which the Funds invest can be expected to charge fees
for operating expenses, such as investment advisory and administration fees,
that would be in addition to those charged by the Funds.
Repurchase Agreements. Each Fund may enter into repurchase agreements,
---------------------
wherein the seller of a security to a Fund agrees to repurchase that security
from a Fund at a mutually agreed upon time and price. A Fund may enter into
repurchase agreements only with respect to securities that could otherwise be
purchased by such Fund. All repurchase agreements will be fully collateralized
at 102% based on values that are marked to market daily. The maturities of the
underlying securities in a repurchase agreement transaction may be greater than
twelve months, although the maximum term of a repurchase agreement will always
be less than twelve months. If
12
<PAGE>
the seller defaults and the value of the underlying securities has declined, a
Fund may incur a loss. In addition, if bankruptcy proceedings are commenced with
respect to the seller of the security, the Funds' disposition of the security
may be delayed or limited.
A Fund may not enter into a repurchase agreement with a maturity of more
than seven days, if, as a result, more than 15% of the market value of such
Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. A Fund will only enter into repurchase agreements with primary
broker/dealers and commercial banks that meet guidelines established by the
Board of Trustees and that are not affiliated with the investment advisor. The
Funds may participate in pooled repurchase agreement transactions with other
funds advised by Wells Fargo Bank.
Stripped Securities
-------------------
The Funds may purchase Treasury receipts, securities of government -
sponsored enterprises (GSEs), and other "stripped" securities that evidence
ownership in either the future interest payments or the future principal
payments on U.S. Government and other obligations. The stripped securities the
Funds may purchase are issued by the U.S. Government (or a U.S. Government
agency or instrumentality) or by private issuers such as banks, corporations and
other institutions at a discount to their face value. The Funds will not
purchase stripped mortgage-backed securities ("SMBS"). The stripped securities
purchased by the Funds generally are structured to make a lump-sum payment at
maturity and do not make periodic payments of principal or interest. Hence, the
duration of these securities tends to be longer and they are therefore more
sensitive to interest rate fluctuations than similar securities that offer
periodic payments over time. The stripped securities purchased by the Funds are
not subject to prepayment or extension risk.
The Funds may purchase participations in trusts that hold U.S. Treasury
securities (such as TIGRs and CATS) or other obligations where the trust
participations evidence ownership in either the future interest payments or the
future principal payments on the obligations. These participations are normally
issued at a discount to their "face value," and can exhibit greater price
volatility than ordinary debt securities because of the way in which their
principal and interest are returned to investors. Investments by the Funds in
such participations will not exceed 5% of the value of the Funds' total assets.
Reverse Repurchase Agreements. The Funds intend to limit their borrowings
(including reverse repurchase agreements) during the current fiscal year to not
more than 10% of net assets. At the time a Fund enters into a reverse repurchase
agreement (an agreement under which a Fund sells their portfolio securities and
agrees to repurchase them at an agreed-upon date and price), it will place in a
segregated custodial account liquid assets such as U.S. Government securities or
other liquid high-grade debt securities having a value equal to or greater than
the repurchase price (including accrued interest) and will subsequently monitor
the account to ensure that such value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Funds may decline below the price at which the Funds are obligated to repurchase
the securities. Reverse repurchase agreements are considered to be borrowings
under the 1940 Act.
Municipal Bonds
---------------
13
<PAGE>
The Tax-Free Income Fund may invest in municipal bonds. The two principal
classifications of municipal bonds are "general obligation" and "revenue" bonds.
Municipal bonds are debt obligations issued to obtain funds for various public
purposes. Industrial development bonds are a specific type of revenue bond
backed by the credit and security of a private user. Certain types of
industrial development bonds are issued by or on behalf of public authorities to
obtain funds to provide privately-operated facilities. The Funds may not invest
20% or more of their respective assets in industrial development bonds.
From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on municipal obligations. For example, under federal tax legislation
enacted in 1986, interest on certain private activity bonds must be included in
an investor's alternative minimum taxable income, and corporate investors must
treat all tax-exempt interest as an item of tax preference. Moreover the Fund
cannot predict what legislation, if any, may be proposed in the state
legislature regarding the state income tax status of interest on such
obligations, or which proposals, if any, might be enacted. Such proposals, while
pending or if enacted, might materially and adversely affect the availability of
municipal obligations generally for investment by the Fund and the liquidity and
value of the Fund's portfolio. In such an event, the Fund would re-evaluate its
investment objective and policies and consider possible changes in its structure
or possible dissolution.
Certain of the municipal obligations held by the Fund may be insured as to
the timely payment of principal and interest. The insurance policies usually are
obtained by the issuer of the municipal obligation at the time of its original
issuance. In the event that the issuer defaults on interest or principal
payment, the insurer will be notified and will be required to make payment to
the bondholders. There is, however, no guarantee that the insurer will meet its
obligations. In addition, such insurance does not protect against market
fluctuations caused by changes in interest rates and other factors.
Municipal Notes. The Tax-Free Income Fund may invest in municipal notes.
Municipal notes include, but are not limited to, tax anticipation notes
("TANs"), bond anticipation notes ("BANs"), revenue anticipation notes ("RANs")
and construction loan notes. Notes sold as interim financing in anticipation of
collection of taxes, a bond sale or receipt of other revenues are usually
general obligations of the issuer.
TANs. An uncertainty in a municipal issuer's capacity to raise taxes as a
result of such events as a decline in its tax base or a rise in delinquencies
could adversely affect the issuer's ability to meet its obligations on
outstanding TANs. Furthermore, some municipal issuers mix various tax proceeds
into a general fund that is used to meet obligations other than those of the
outstanding TANs. Use of such a general fund to meet various obligations could
affect the likelihood of making payments on TANs.
BANs. The ability of a municipal issuer to meet its obligations on its
BANs is primarily dependent on the issuer's adequate access to the longer term
municipal bond market and the likelihood that the proceeds of such bond sales
will be used to pay the principal of, and interest on, BANs.
14
<PAGE>
RANs. A decline in the receipt of certain revenues, such as anticipated
revenues from another level of government, could adversely affect an issuer's
ability to meet its obligations on outstanding RANs. In addition, the
possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal of, and
interest on, RANs.
The values of outstanding municipal securities will vary as a result of
changing market evaluations of the ability of their issuers to meet the interest
and principal payments (i.e., credit risk). Such values also will change in
response to changes in the interest rates payable on new issues of municipal
securities (i.e., market risk). Changes in the value of municipal securities
held in the Fund's portfolio arising from these or other factors will cause
changes in the net asset value per share of the Fund.
U.S. Government Obligations
---------------------------
The Funds may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government Obligations").
Payment of principal and interest on U.S. Government Obligations (i) may be
backed by the full faith and credit of the United States (as with U.S. Treasury
bills and GNMA certificates) or (ii) may be backed solely by the issuing or
guaranteeing agency or instrumentality itself (as with FNMA notes). In the
latter case investors must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment, which agency or
instrumentality may be privately owned. There can be no assurance that the U.S.
Government will provide financial support to its agencies or instrumentalities
where it is not obligated to do so. In addition, U.S. Government Obligations are
subject to fluctuations in market value due to fluctuations in market interest
rates. As a general matter, the value of debt instruments, including U.S.
Government Obligations, declines when market interest rates increase and rises
when market interest rates decrease. Certain types of U.S. Government
Obligations are subject to fluctuations in yield or value due to their structure
or contract terms.
Zero Coupon Bonds
-----------------
The Funds may invest in zero coupon bonds. Zero coupon bonds are securities
that make no periodic interest payments, but are instead sold at discounts from
face value. The buyer of such a bond receives the rate of return by the gradual
appreciation of the security, which is redeemed at face value on a specified
maturity date. Because zero coupon bonds bear no interest, they are more
sensitive to interest-rate changes and are therefore more volatile. When
interest rates rise, the discount to face value of the security deepens and the
securities decrease more rapidly in value, when interest rates fall, zero coupon
securities rise more rapidly in value because the bonds carry fixed interest
rates that become more attractive in a falling interest rate environment.
Nationally Recognized Ratings Organizations
-------------------------------------------
The ratings of Moody's, S&P, Division of McGraw Hill, Duff & Phelps Credit
Rating Co., Fitch Investors Service, Inc. Thomson Bank Watch and IBCA Inc.
represent their opinions as to the quality of debt securities. It should be
emphasized, however, that ratings are general and not absolute standards of
quality, and debt securities with the same maturity, interest rate and rating
15
<PAGE>
may have different yields while debt securities of the same maturity and
interest rate with different ratings may have the same yield. Subsequent to
purchase by the Funds, an issue of debt securities may cease to be rated or its
rating may be reduced below the minimum rating required for purchase by the
Funds. The Advisor will consider such an event in determining whether the Fund
involved should continue to hold the obligation.
MANAGEMENT
The following information supplements, and should be read in conjunction
with, the section in the Prospectus entitled "Organization and Management of the
Funds." The principal occupations during the past five years of the Trustees
and principal executive Officer of the Trust are listed below. The address of
each, unless otherwise indicated, is 111 Center Street, Little Rock, Arkansas
72201. Trustees deemed to be "interested persons" of the Trust for purposes of
the 1940 Act are indicated by an asterisk.
<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- ---------------------
<S> <C> <C>
*Robert C. Brown, 65 Trustee Director, Federal Farm Credit Banks Funding
1431 Landings Place Corporation and Farm Credit System Financial
Sarasota, FL 34231 Assistance Corporation since February 1993.
Donald H. Burkhardt, 70 Trustee Principal of the Burkhardt Law Firm.
777 South Steele Street
Denver, CO 80209
Jack S. Euphrat, 77 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.
Thomas S. Goho, 56 Trustee Business Associate Professor, Wake Forest
321 Beechcliff Court University, Calloway School of Business and
Winston-Salem, NC 27104 Accountancy since 1994; previously Associate
Professor of Finance.
Peter G. Gordon, 56 Trustee Chairman and Co-Founder of Crystal Geyser
Crystal Geyser Water Co. Water Company and President of Crystal Geyser
55 Francisco Street, Suite 410
Roxane Water Company since 1977.
San Francisco, CA 94133
*W. Rodney Hughes, 72 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Richard M. Leach, 63 Trustee President of Richard M. Leach Associates (a
P.O. Box 1888 financial consulting firm) since 1992.
</TABLE>
16
<PAGE>
<TABLE>
<S> <C> <C>
New London, NH 03257
*J. Tucker Morse, 54 Trustee Private Investor/Real Estate Developer;
Four Beaufain Street Chairman of Vault Holdings, LLC.
Charleston, SC 29401
Timothy J. Penny, 45 Trustee Senior Counselor to the public relations firm
500 North State Street of Himle-Horner since January 1995 and Senior
Waseca, MN 56095 Fellow at the Humphrey Institute, Minneapolis,
Minnesota (a public policy organization) since
January 1995.
Richard H. Blank, Jr., 42 Chief Operating Vice President of Stephens Inc.; Director of
Officer, Stephens Sports Management Inc.; and Director
Secretary and of Capo Inc.
Treasurer
</TABLE>
Compensation Table
------------------
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
----------------- ----------------------- -----------------
<S> <C> <C>
Robert C. Brown N/A N/A
Trustee
Donald Burkhardt N/A N/A
Trustee
Jack S. Euphrat N/A N/A
Trustee
Thomas S. Goho N/A N/A
Trustee
Peter G. Gordon N/A N/A
Trustee
W. Rodney Hughes N/A N/A
Trustee
Richard M. Leach N/A N/A
Trustee
J. Tucker Morse N/A N/A
Trustee
Timothy J. Penny N/A N/A
</TABLE>
17
<PAGE>
Trustee
Each of the Trustees and Officers listed above, act in the identical
capacities for Wells Fargo Variable Trust and Wells Fargo Core Trust
(collectively the "Fund Complex"). Trustees are compensated annually by the
Trust and by all the registrants in each fund complex they serve beginning
September 17, 1999, and beginning March 26, 1999, receive a per-meeting fee of
$250. Trustees also are reimbursed for all out-of-pocket expenses relating to
attendance at board meetings. Each of the Trustees and Officers of the Trust
serves in the identical capacity as trustees and/or officers of each registered
open-end management investment company in the Fund Complex. The Trustees are
compensated by other companies and trusts within a fund complex for their
services as directors/trustees to such companies and trusts. Currently the
Trustees do not receive any retirement benefits or deferred compensation from
the Trust or any other member of each fund complex.
As of the date of this SAI, Trustees and Officers of the Trust as a group
beneficially owned less than 1% of the outstanding shares of the Trust.
INVESTMENT ADVISOR. Wells Fargo Bank provides investment advisory services
------------------
to the Funds. As investment advisor, Wells Fargo Bank furnishes investment
guidance and policy direction in connection with the daily portfolio management
of the Funds. Wells Fargo Bank furnishes to the Trust's Board of Trustees
periodic reports on the investment strategy and performance of each Fund. Wells
Fargo Bank provides the Funds with, among other things, money market security
and fixed-income research, analysis and statistical and economic data and
information concerning interest rate and securities markets trends, portfolio
composition, and credit conditions.
As compensation for its advisory services, Well Fargo Bank is entitled to
receive a monthly fee at the annual rates indicated below of each Fund's average
daily net assets:
<TABLE>
<CAPTION>
Annual Rate
Fund (as percentage of net assets)
- ---- -------------------------------
<S> <C>
Income 0.50%
Intermediate Government Income 0.50%
Limited Term Government Income 0.50%
Tax-Free Income 0.40%
</TABLE>
General. Each Fund's Advisory Contract will continue in effect for more
-------
than two years from the effective date provided the continuance is approved
annually (i) by the holders of a majority of the respective Fund's outstanding
voting securities or by the Trust's Board of Trustees and (ii) by a majority of
the Trustees of the Trust who are not parties to the Advisory Contract or
"interested persons" (as defined in the 1940 Act) of any such party. A Fund's
Advisory Contract may be terminated on 60 days' written notice by either party
and will terminate automatically if assigned.
18
<PAGE>
INVESTMENT SUB-ADVISORS. Wells Fargo Bank has engaged Wells Capital
-----------------------
Management ("WCM") to serve as Investment Sub-Advisor to the Funds. Subject to
the direction of the Trust's Board of Trustees and the overall supervision and
control of Wells Fargo Bank and the Trust, WCM makes recommendations regarding
the investment and reinvestment of the Funds' assets. WCM furnishes to Wells
Fargo Bank periodic reports on the investment activity and performance of the
Funds. WCM also furnishes such additional reports and information as Wells Fargo
Bank and the Trust's Board of Trustees and officers may reasonably request.
As compensation for its sub-advisory services, WCM is entitled to receive a
monthly fee equal to an annual rate of 0.15% of the first $400 million of the
Funds' average daily net assets, 0.125% of the next $400 million of the Funds'
net assets, and 0.10% of net assets over $800 million. WCM receives a minimum
annual sub-advisory fee of $120,000 from each Fund. This minimum annual fee
payable to WCM does not increase the advisory fee paid by each Fund to Wells
Fargo Bank. These fees may be paid by Wells Fargo Bank or directly by the Fund.
If the sub-advisory fee is paid directly by the Fund, the compensation paid to
Wells Fargo Bank for advisory fees will be reduced accordingly.
PORTFOLIO MANAGERS.
------------------
JACQUELINE A. FLIPPIN
PRINCIPAL
Ms. Flippin will co-manage the Limited Term Government Income Fund upon
inception. She manages taxable fixed income portfolios as a member of the core-
plus fixed income team for WCM. Her area of expertise includes both mortgage-
backed securities and high yield debt. She has over 10 years of progressive
investment experience as both an analyst and fixed income portfolio manager.
Prior to joining the firm this year, Ms. Flippin was employed at TIAA/CREF and
most recently at McMorgan & Co. She received her MBA from New York University
and her BA from Northwestern University.
PAUL C. SINGLE
PRINCIPAL
Mr. Single will manage the Limited Term Government Income Fund upon inception.
19
<PAGE>
MR. SINGLE manages taxable fixed income portfolios as a member of the core-plus
team for WCM. He specializes in asset backed securities, and transportation,
media, telecom and cable sectors. Mr. Single's 16 years of experience in fixed
income investing includes 10 years at this firm. Previously Mr. Single worked
for Benham Capital Management Group where he was a portfolio manager. Mr. Single
received his BS from Springfield College and is currently a Chartered Financial
Analyst Level II candidate.
MARJORIE H. GRACE, CFA
Ms. Grace will manage the Income Fund and the Intermediate Government Income
Fund upon inception. Ms. Grace joins WCM from Norwest Investment Management,
Inc. ("NIM"), where she was Director of Taxable Fixed Income Investing. She had
been associated with NIM and its affiliates since 1992. She began her 18 years
of investment experience as an account executive at Piper, Jaffray & Hopwood. Ms
Grace received an MBA from the University of Colordao at Denver, and a B.A. in
Mathematics and Computer Science from the University of California at Los
Angeles.
WILLIAM T. JACKSON, CFA
Mr. Jackson will manage the Tax-Free Income Fund upon inception. Mr. Jackson
joins WCM from NIM, where he was Managing Director of Tax Exempt Fixed Income
Investing, and was associated with NIM and its affiliates since 1993. He
received his B.A. from Colgate University in upstate New York.
ADMINISTRATOR. The Trust has retained Wells Fargo Bank as Administrator on
-------------
behalf of each Fund. Under the Administration Agreement between Wells Fargo
Bank and the Trust, Wells Fargo Bank shall provide as administration services,
among other things: (i) general supervision of the Funds' operations, including
coordination of the services performed by each Fund's investment Advisor,
transfer agent, custodian, shareholder servicing agent(s), independent auditors
and legal counsel, regulatory compliance, including the compilation of
information for documents such as reports to, and filings with, the U.S.
Securities and Exchange Commission ("SEC") and state securities commissions; and
preparation of proxy statements and shareholder reports for each Fund; and (ii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Trust's officers and Board of
Trustees. Wells Fargo Bank also furnish office space and certain facilities
required for conducting the Funds' business together with ordinary clerical and
bookkeeping services. The Administrator is entitled to receive a fee of 0.15%
of average daily net assets on an annual basis.
DISTRIBUTOR. Stephens (the "Distributor"), located at 111 Center Street,
-----------
Little Rock, Arkansas 72201, serves as the Distributor for the Funds. Each
Fund has adopted a distribution plan (a "Plan") under Section 12(b) of the 1940
Act and Rule 12b-1 thereunder (the "Rule") for its Class B and Class C shares.
The Plan was adopted by the Trust's Board of Trustees, including a majority of
the Trustees who were not "interested persons" (as defined in the 1940 Act) of
the Funds and who had no direct or indirect financial interest in the operation
of the Plan or in any agreement related to the Plan (the "Non-Interested
Trustees").
Under the Plan and pursuant to the related Distribution Agreement, the
Funds may pay Stephens up to 0.75% of the average daily net assets attributable
to the Class B and Class C shares of the Funds as compensation for distribution-
related services or as reimbursement for distribution-related expenses.
20
<PAGE>
The actual fee payable to the Distributor is determined, within such
limits, from time to time by mutual agreement between the Trust and the
Distributor and will not exceed the maximum sales charges payable by mutual
funds sold by members of the National Association of Securities Dealers, Inc.
("NASD") under the Conduct Rules of the NASD. The Distributor may enter into
selling agreements with one or more selling agents (which may include Wells
Fargo Bank and its affiliates) under which such agents may receive compensation
for distribution-related services from the Distributor, including, but not
limited to, commissions or other payments to such agents based on the average
daily net assets of Fund shares attributable to their customers. The
Distributor may retain any portion of the total distribution fee payable
thereunder to compensate it for distribution-related services provided by it or
to reimburse it for other distribution-related expenses.
General. The Plan will continue in effect from year to year if such
-------
continuance is approved by a majority vote of both the Trustees of the Trust and
the Non-Interested Trustees. Any Distribution Agreement related to the Plan
also must be approved by such vote of the Trustees and the Non-Interested
Trustees. Such Agreement will terminate automatically if assigned, and may be
terminated at any time, without payment of any penalty, by a vote of a majority
of the outstanding voting securities of the relevant class of the Fund or by
vote of a majority of the Non-Interested Trustees on not more than 60 days'
written notice. The Plan may not be amended to increase materially the amounts
payable thereunder without the approval of a majority of the outstanding voting
securities of the Fund, and no material amendment to the Plan may be made except
by a majority of both the Trustees of the Trust and the Non-Interested Trustees.
The Plan requires that the Treasurer of the Trust shall provide to the
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Plan. The Rule also
requires that the selection and nomination of Trustees who are not "interested
persons" of the Trust be made by such disinterested Trustees.
Wells Fargo Bank, an interested person (as that term is defined in Section
2(a)(19) of the 1940 Act) of the Trust, acts as a selling agent for the Funds'
shares pursuant to selling agreements with Stephens authorized under the Plan.
As a selling agent, Wells Fargo Bank has an indirect financial interest in the
operation of the Plans. The Board of Trustees has concluded that the Plan is
reasonably likely to benefit the Funds and their shareholders because the Plan
authorize the relationships with selling agents, including Wells Fargo Bank,
that have previously developed distribution channels and relationships with the
retail customers that the Funds are designed to serve. These relationships and
distribution channels are believed by the Board to provide potential for
increased Fund assets and ultimately corresponding economic efficiencies (i.e.,
lower per-share transaction costs and fixed expenses) that are generated by
increased assets under management.
SHAREHOLDER SERVICING AGENT. The Funds have approved a Servicing Plan for
---------------------------
the Class A, Class B and Class C shares of the Funds, as applicable, and have
entered into related shareholder servicing agreements with financial
institutions, including Wells Fargo Bank. Under the agreements, Shareholder
Servicing Agents (including Wells Fargo Bank) agree to perform, as agents for
their customers, administrative services, with respect to Fund shares, which
include aggregating and transmitting shareholder orders for purchases, exchanges
and redemptions; maintaining shareholder accounts and records; and providing
such other related services as the
21
<PAGE>
Trust or a shareholder may reasonably request. For providing shareholder
services, a Servicing Agent is entitled to a fee from the applicable Fund, on an
annualized basis, of 0.25% of the average daily net assets of the class of
shares owned of record or beneficially by the customers of the Servicing Agent
during the period for which payment is being made. The Servicing Plan and
related forms of shareholder servicing agreements were approved by the Trust's
Board of Trustees and provide that a Fund shall not be obligated to make any
payments under such Plans or related Agreements that exceed the maximum amounts
payable under the Conduct Rules of the NASD.
General. The Servicing Plan will continue in effect from year to year if
-------
such continuance is approved by a majority vote of the Trustees of the Trust,
including a majority of the Trustees who are not "interested periods" (as
defined in the 1940 Act) of the Funds ("Non-Interested Trustees"). Any form of
Servicing Agreement related to the Servicing Plan also must be approved by such
vote of the Trustees and Non-Interested Trustees. Servicing Agreements may be
terminated at any time, without payment of any penalty, by vote of a majority of
the Board of Trustees, including a majority of the Non-Interested Trustees. No
material amendment to the Servicing Plan or related Servicing Agreements may be
made except by a majority of both the Trustees of the Trust and the Non-
Interested Trustees.
The Servicing Plan requires that the Administrator shall provide to the
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Servicing Plan.
CUSTODIAN. Norwest Bank Minnesota, N.A. ("Norwest Bank") acts as Custodian
---------
for each Fund. The Custodian, among other things, maintains a custody account or
accounts in the name of each Fund, receives and delivers all assets for each
Fund upon purchase and upon sale or maturity, collects and receives all income
and other payments and distributions on account of the assets of each Fund, and
pays all expenses of each Fund. For its services as Custodian, Norwest Bank is
entitled to receive a fee of 0.02% of the average daily net assets of each Fund.
FUND ACCOUNTANT. Forum Financial Services, Inc. acts as Fund Accountant
---------------
for the Funds. The Fund Accountant, among other things, computes net asset
values on a daily basis and performance calculations on a regular basis and as
requested by the Funds. For providing such services, Forum is entitled to
receive a fee of [___.]
TRANSFER AND DIVIDEND DISBURSING AGENT. State Street Bank, acting through
--------------------------------------
its affiliate Boston Financial Data Services ("BFDS"), acts as Transfer and
Dividend Disbursing Agent for the Funds. For providing such services, BFDS is
entitled to receive a per-account fee of [0.04% OF THE AVERAGE DAILY NET ASSETS
OF EACH SUCH ACCOUNT ON AN ANNUAL BASIS].
PERFORMANCE CALCULATIONS
The Funds may advertise certain yield and total return information.
Quotations of yield and total return reflect only the performance of a
hypothetical investment in a Fund or class of shares during the particular time
period shown. Yield and total return vary based on changes in the market
conditions and the level of a Fund's expenses, and no reported performance
figure should be considered an indication of performance which may be expected
in the future.
22
<PAGE>
In connection with communicating its performance to current or prospective
shareholders, these figures may also be compared to the performance of other
mutual funds tracked by mutual fund rating services or to unmanaged indices
which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
Performance information for a Fund or Class of shares in a Fund may be
useful in reviewing the performance of such Fund or Class of shares and for
providing a basis for comparison with investment alternatives. The performance
of a Fund and the performance of a Class of shares in a Fund, however, may not
be comparable to the performance from investment alternatives because of
differences in the foregoing variables and differences in the methods used to
value portfolio securities, compute expenses and calculate performance.
Performance information may be advertised for non-standardized periods,
including year-to-date and other periods less than a year for the Funds.
AVERAGE ANNUAL TOTAL RETURN: The Funds may advertise certain total return
---------------------------
information. As and to the extent required by the SEC, an average annual
compound rate of return ("T") is computed by using the redeemable value at the
end of a specified period ("ERV") of a hypothetical initial investment ("P")
over a period of years ("n") according to the following formula: P(1+T)/n/=ERV.
CUMULATIVE TOTAL RETURN. In addition to the above performance information,
-----------------------
each Fund may also advertise the cumulative total return of the Fund.
Cumulative total return is based on the overall percentage change in value of a
hypothetical investment in the Fund, assuming all Fund dividends and capital
gain distributions are reinvested, without reflecting the effect of any sales
charge that would be paid by an investor, and is not annualized.
YIELD CALCULATIONS: The Funds may, from time to time, include their yields
------------------
and effective yields in advertisements or reports to shareholders or prospective
investors. Quotations of yield for the Funds are based on the investment income
per share earned during a particular seven-day or thirty-day period, less
expenses accrued during a period ("net investment income") and are computed by
dividing net investment income by the offering price per share on the last date
of the period, according to the following formula:
YIELD = 2[(a - b + 1)/6/- 1]
-----
Cd
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 of each class outstanding during the period that were entitled to receive
dividends; and d = the maximum offering price per share each class of shares on
the last day of the period.
EFFECTIVE YIELD: Effective yields for the Funds are based on the change in
---------------
the value of a hypothetical investment (exclusive of capital changes) over a
particular thirty-day period, less a pro-rata share of each Fund's expenses
accrued over that period (the "base period"), and stated as a percentage of the
investment at the start of the base period (the "base period return"). The base
period return is then annualized multiplying by 365/30, with the resulting yield
figure carried to at least the nearest hundredth of one percent. "Effective
yield" for the Funds assumes that all
23
<PAGE>
dividends received during the period have been reinvested. Calculation of
"effective yield" begins with the same "base period return" used in the
calculation of yield, which is then annualized to reflect weekly compounding
pursuant to the following formula:
Effective Thirty-Day Yield = [Base Period Return +1)365/30]-1
Quotations of yield and total return reflect only the performance of a
hypothetical investment in a Fund or class of shares during the particular time
period shown. Yield and total return vary based on changes in the market
conditions and the level of a Fund's expenses, and no reported performance
figure should be considered an indication of performance which may be expected
in the future. In connection with communicating its yields or total return to
current or prospective shareholders, these figures may also be compared to the
performance of other mutual funds tracked by mutual fund rating services or to
unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.
The yields for each class of shares will fluctuate from time to time,
unlike bank deposits or other investments that pay a fixed yield for a stated
period of time, and do not provide a basis for determining future yields since
they are based on historical data. Yield is a function of portfolio quality,
composition, maturity and market conditions as well as the expenses allocated to
a Fund or to a particular class of a Fund.
In addition, investors should recognize that changes in the net asset
values of shares of each class of a Fund will affect the yield of the respective
class of shares for any specified period, and such changes should be considered
together with such class' yield in ascertaining such class' total return to
shareholders for the period. Yield information for each class of shares may be
useful in reviewing the performance of the class of shares and for providing a
basis for comparison with investment alternatives. The yield of each class of
shares, however, may not be comparable to the yields from investment
alternatives because of differences in the foregoing variables and differences
in the methods used to value portfolio securities, compute expenses and
calculate yield.
From time to time and only to the extent the comparison is appropriate for
a Fund or a Class of shares, the Trust may quote the performance or price-
earning ratio of a Fund or a Class of in advertising and other types of
literature as compared with the performance of the S&P Index, the Dow Jones
Industrial Average, the Lehman Brothers 20+ Treasury Index, the Lehman Brothers
5-7 Year Treasury Index, Donoghue's Money Fund Averages, Real Estate Investment
Averages (as reported by the National Association of Real Estate Investment
Trusts), Gold Investment Averages (provided by the World Gold Council), Bank
Averages (which is calculated from figures supplied by the U.S. League of
Savings Institutions based on effective annual rates of interest on both
passbook and certificate accounts), average annualized certificate of deposit
rates (from the Federal Reserve G-13 Statistical Releases or the Bank Rate
Monitor), the Salomon One Year Treasury Benchmark Index, the Consumer Price
Index (as published by the U.S. Bureau of Labor Statistics), other managed or
unmanaged indices or performance data of bonds, municipal securities, stocks or
government securities (including data provided by Ibbotson Associates), or by
other services, companies, publications or persons who monitor mutual funds on
overall performance or other criteria. The S&P Index and the Dow Jones
Industrial Average are unmanaged indices of selected common stock prices. The
performance of a Fund or a class also may be compared to that of other
24
<PAGE>
mutual funds having similar objectives. This comparative performance could be
expressed as a ranking prepared by Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., Bloomberg Financial Markets or Morningstar, Inc.,
independent services which monitor the performance of mutual funds. The Funds'
performance will be calculated by relating net asset value per share of each
class at the beginning of a stated period to the net asset value of the
investment, assuming reinvestment of all gains distributions paid, at the end of
the period. The Funds' comparative performance will be based on a comparison of
yields, as described above, or total return, as reported by Lipper, Survey
Publications, Donoghue or Morningstar, Inc.
Any such comparisons may be useful to investors who wish to compare past
performance of the Funds or a class of shares with the performance of a Fund's
competitors. Of course, past performance cannot be a guarantee of future
results. The Trust also may include, from time to time, a reference to certain
marketing approaches of the Distributor, including, for example, a reference to
a potential shareholder being contacted by a selected broker or dealer. General
mutual fund statistics provided by the Investment Trust Institute may also be
used.
The Trust also may use the following information in advertisements and
other types of literature, only to the extent the information is appropriate for
each class of shares of a Fund: (i) the Consumer Price Index may be used to
assess the real rate of return from an investment in each class of shares of a
Fund; (ii) other government statistics, including, but not limited to, The
Survey of Current Business, may be used to illustrate investment attributes of
each class of shares of a Fund or the general economic, business, investment, or
financial environment in which a Fund operates; (iii) the effect of tax-deferred
compounding on the investment returns of each class of shares of a Fund or on
returns in general, may be illustrated by graphs, charts, etc., where such
graphs or charts would compare, at various points in time, the return from an
investment in each class of shares of the Fund (or returns in general) on a tax-
deferred basis (assuming reinvestment of capital gains and dividends and
assuming one or more tax rates) with the return on a taxable basis; and (iv) the
sectors or industries in which the Fund invests may be compared to relevant
indices of stocks or surveys (e.g., S&P Industry Surveys) to evaluate the
historical performance or current or potential value of each class of shares of
a Fund with respect to the particular industry or sector.
The Trust also may use, in advertisements and other types of literature,
information and statements: (1) showing that bank savings accounts offer a
guaranteed return of principal and a fixed rate of interest, but no opportunity
for capital growth; and (2) describing Wells Fargo Bank, and its affiliates and
predecessors, as one of the first investment managers to advise investment
accounts using asset allocation and index strategies. The Trust also may
include in advertising and other types of literature information and other data
from reports and studies prepared by the Tax Foundation, including information
regarding federal and state tax levels and the related "Tax Freedom Day."
The Trust also may discuss in advertising and other types of literature
that a Fund has been assigned a rating by an NRSRO, such as Standard Poor's
Corporation. Such rating would assess the creditworthiness of the investments
held by a Fund. The assigned rating would not be a recommendation to purchase,
sell or hold a Fund's shares since the rating would not comment on the market
price of a Fund's shares or the suitability of a Fund for a particular investor.
In addition, the assigned rating would be subject to change, suspension or
withdrawal as a result of changes in, or unavailability of, information relating
to a Fund or its investments. The Trust may compare the
25
<PAGE>
performance of each class of shares of a Fund with other investments which are
assigned ratings by NRSROs. Any such comparisons may be useful to investors who
wish to compare each class' past performance with other rated investments.
From time to time, a Fund may use the following statements, or variations
thereof, in advertisements and other promotional materials: "Wells Fargo Bank,
as a Shareholder Servicing Agent for the Wells Fargo Funds Trust, provides
various services to its customers that are also shareholders of the Funds.
These services may include access to Wells Fargo Funds Trust's account
information through Automated Teller Machines (ATMs), the placement of purchase
and redemption requests for shares of the Funds through ATMs and the
availability of combined Wells Fargo Bank and Wells Fargo Funds Trust account
statements."
The Trust also may disclose, in advertising and other types of literature,
information and statements that Wells Capital Management, Inc. (formerly, Wells
Fargo Investment Management) a subsidiary of Wells Fargo Bank, is listed in the
top 100 by Institutional Investor magazine in its July 1997 survey "America's
Top 300 Money Managers." This survey ranks money managers in several asset
categories. The Trust also may disclose in advertising and other types of sales
literature the assets and categories of assets under management by the Trust's
investment Advisor and the total amount of assets and mutual fund assets managed
by Wells Fargo Bank. As of August 1, 1998, Wells Fargo Bank and its affiliates
provided investment advisory services for approximately $63 billion of assets of
individuals, trusts, estates and institutions and $32 billion of mutual fund
assets.
The Trust may disclose in advertising and other types of literature that
investors can open and maintain Sweep Accounts over the Internet or through
other electronic channels (collectively, "Electronic Channels"). Such
advertising and other literature may discuss the investment options available to
investors, including the types of accounts and any applicable fees. Such
advertising and other literature may disclose that Wells Fargo Bank is the first
major bank to offer an on-line application for a mutual fund account that can be
filled out completely through Electronic Channels. Advertising and other
literature may disclose that Wells Fargo Bank may maintain Web sites, pages or
other information sites accessible through Electronic Channels (an "Information
Site") and may describe the contents and features of the Information Site and
instruct investors on how to access the Information Site and open a Sweep
Account. Advertising and other literature may also disclose the procedures
employed by Wells Fargo Bank to secure information provided by investors,
including disclosure and discussion of the tools and services for accessing
Electronic Channels. Such advertising or other literature may include
discussions of the advantages of establishing and maintaining a Sweep Account
through Electronic Channels and testimonials from Wells Fargo Bank customers or
employees and may also include descriptions of locations where product
demonstrations may occur. The Trust may also disclose the ranking of Wells Fargo
Bank as one of the largest money managers in the United States.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for each class of the Funds is determined as of
the close of regular trading (currently 1:00 p.m., Pacific time/3:00 p.m.
Central time) on each day the New York Stock Exchange ("NYSE") is open for
business. Expenses and fees, including advisory
26
<PAGE>
fees, are accrued daily and are taken into account for the purpose of
determining the net asset value of the Funds' shares.
Securities of a Fund for which market quotations are available are valued
at latest prices. Any security for which the primary market is an exchange is
valued at the last sale price on such exchange on the day of valuation or, if
there was no sale on such day, the latest bid price quoted on such day. In the
case of other Fund securities, including U.S. Government securities but
excluding money market instruments and debt securities maturing in 60 days or
less, the valuations are based on latest quoted bid prices. Money market
instruments and debt securities maturing in 60 days or less are valued at
amortized cost. Futures contracts will be marked to market daily at their
respective settlement prices determined by the relevant exchange. Prices may be
furnished by a reputable independent pricing service approved by the Trust's
Board of Trustees. Prices provided by an independent pricing service may be
determined without exclusive reliance on quoted prices and may take into account
appropriate factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. All other securities and other assets of
a Fund for which current market quotations are not readily available are valued
at fair value as determined in good faith by the Trust's Board of Trustees and
in accordance with procedures adopted by the Trustees.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Funds may be purchased on any day the Funds are open for
business. Each Fund is open for business each day the NYSE is open for trading
(a "Business Day"). Currently, the NYSE is closed on New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day (each a "Holiday"). When any
Holiday falls on a weekend, the NYSE typically is closed on the weekday
immediately before or after such Holiday.
Payment for shares may, in the discretion of the advisor, be made in the
form of securities that are permissible investments for the Funds. For further
information about this form of payment please contact Stephens. In connection
with an in-kind securities payment, the Funds will require, among other things,
that the securities be valued on the day of purchase in accordance with the
pricing methods used by a Fund and that such Fund receives satisfactory
assurances that (i) it will have good and marketable title to the securities
received by it; (ii) that the securities are in proper form for transfer to the
Fund; and (iii) adequate information will be provided concerning the basis and
other matters relating to the securities.
Under the 1940 Act, the Funds may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
NYSE is closed (other than customary weekend and holiday closings, or during
which trading is restricted, or during which as determined by the SEC by rule or
regulation) an emergency exists as a result of which disposal or valuation of
portfolio securities is not reasonably practicable, or for such periods as the
SEC may permit. The Trust may also redeem shares involuntarily or make payment
for redemption in securities or other property if it appears appropriate to do
so in light of the Trust's responsibilities under the 1940 Act. In addition,
the Trust may redeem shares involuntarily to reimburse the Fund for any losses
sustained by reason of the failure of a shareholder to make full payment for
shares purchased or to
27
<PAGE>
collect any charge relating to a transaction effected for the benefit of a
shareholder which is applicable to shares of a Fund as provided from time to
time in the Prospectus.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trust's Board of Trustees, Wells Fargo Bank is responsible
for each Fund's portfolio decisions and the placing of portfolio transactions.
In placing orders, it is the policy of the Trust to obtain the best results
taking into account the dealer's general execution and operational facilities,
the type of transaction involved and other factors such as the dealer's risk in
positioning the securities involved. While Wells Fargo Bank generally seeks
reasonably competitive spreads or commissions, the Funds will not necessarily be
paying the lowest spread or commission available.
Purchases and sales of non-equity securities usually will be principal
transactions. Portfolio securities normally will be purchased or sold from or
to dealers serving as market makers for the securities at a net price. Each of
the Funds also will purchase portfolio securities in underwritten offerings and
may purchase securities directly from the issuer. Generally, municipal
obligations and taxable money market securities are traded on a net basis and do
not involve brokerage commissions. The cost of executing a Fund's portfolio
securities transactions will consist primarily of dealer spreads and
underwriting commissions. Under the 1940 Act, persons affiliated with the Trust
are prohibited from dealing with the Trust as a principal in the purchase and
sale of securities unless an exemptive order allowing such transactions is
obtained from the SEC or an exemption is otherwise available. The Fund may
purchase securities from underwriting syndicates of which Stephens or Wells
Fargo Bank is a member under certain conditions in accordance with the
provisions of a rule adopted under the 1940 Act and in compliance with
procedures adopted by the Board of Trustees.
Wells Fargo Bank, as Investment Advisor to the Funds, may, in circumstances
in which two or more dealers are in a position to offer comparable results for a
Fund portfolio transaction, give preference to a dealer that has provided
statistical or other research services to Wells Fargo Bank. By allocating
transactions in this manner, Wells Fargo Bank is able to supplement its research
and analysis with the views and information of securities firms. Information so
received will be in addition to, and not in lieu of, the services required to be
performed by Wells Fargo Bank under the Advisory Contracts, and the expenses of
Wells Fargo Bank will not necessarily be reduced as a result of the receipt of
this supplemental research information. Furthermore, research services
furnished by dealers through which Wells Fargo Bank places securities
transactions for a Fund may be used by Wells Fargo Bank in servicing its other
accounts, and not all of these services may be used by Wells Fargo Bank in
connection with advising the Funds.
Portfolio Turnover. The portfolio turnover rate is not a limiting factor
------------------
when Wells Fargo Bank deems portfolio changes appropriate. Changes may be made
in the portfolios consistent with the investment objectives and policies of the
Funds whenever such changes are believed to be in the best interests of the
Funds and their shareholders. The portfolio turnover rate is calculated by
dividing the lesser of purchases or sales of portfolio securities by the average
monthly value of the
28
<PAGE>
Fund's portfolio securities. For purposes of this calculation, portfolio
securities exclude all securities having a maturity when purchased of one year
or less. Portfolio turnover generally involves some expenses to the Funds,
including brokerage commissions or dealer mark-ups and other transaction costs
on the sale of securities and the reinvestment in other securities. Portfolio
turnover also can generate short-term capital gain tax consequences. Portfolio
turnover rate is not a limiting factor when Wells Fargo Bank deems portfolio
changes appropriate.
FUND EXPENSES
From time to time, Wells Fargo Bank and Stephens may waive fees from the
Funds in whole or in part. Any such waiver will reduce expenses and,
accordingly, have a favorable impact on a Fund's performance.
Except for the expenses borne by Wells Fargo Bank and Stephens, the Trust
bears all costs of its operations, including the compensation of its Trustees
who are not affiliated with Stephens or Wells Fargo Bank or any of their
affiliates; advisory, shareholder servicing and administration fees; payments
pursuant to any Plan; interest charges; taxes; fees and expenses of its
independent auditors, legal counsel, transfer agent and dividend disbursing
agent; expenses of redeeming shares; expenses of preparing and printing
Prospectuses (except the expense of printing and mailing Prospectuses used for
promotional purposes, unless otherwise payable pursuant to a Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues; brokerage and other expenses
connected with the execution of portfolio transactions; fees and expenses of its
custodian, including those for keeping books and accounts and calculating the
net asset value per share of a Fund; expenses of shareholders' meetings;
expenses relating to the issuance, registration and qualification of a Fund's
shares; pricing services, organizational expenses and any extraordinary
expenses. Expenses attributable to the Fund are charged against Fund assets.
General expenses of the Trust are allocated among all of the funds of the Trust,
including the Funds, in a manner proportionate to the net assets of each Fund,
on a transactional basis, or on such other basis as the Trust's Board of
Trustees deems equitable.
FEDERAL INCOME TAXES
The following information supplements and should be read in conjunction
with the Prospectus section entitled "Taxes." The Prospectuses of each Fund
describe generally the tax treatment of distributions by the Funds. This section
of the SAI includes additional information concerning federal income taxes.
General. The Trust intends to qualify each Fund as a regulated investment
-------
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), as long as such qualification is in the best interest of the Fund's
shareholders. Each Fund will be treated as a separate entity for federal income
tax purposes. Thus, the provisions of the Code applicable to regulated
investment companies generally will be applied to each Fund, rather than to the
Trust as a whole. In addition, net capital gains, net investment income, and
operating expenses will be
29
<PAGE>
determined separately for each Fund. As a regulated investment company, each
Fund will not be taxed on its net investment income and capital gains
distributed to its shareholders.
Qualification as a regulated investment company under the Code requires,
among other things, that each Fund (a) derive at least 90% of its annual gross
income from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other income (including, but not limited to, gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; and (b) diversify its holdings so that,
at the end of each quarter of the taxable year, (i) at least 50% of the market
value of the Fund's assets is represented by cash, government securities and
other securities limited with respect to any one issuer to an amount not greater
than 5% of the Fund's assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its assets is invested
in the securities of any one issuer (other than U.S. Government obligations and
the securities of other regulated investment companies), or in two or more
issuers which the Fund controls and which are determined to be engaged in the
same or similar trades or businesses.
The Funds also must distribute or be deemed to distribute to their
shareholders at least 90% of their net investment income (which, for this
purpose, includes net short-term capital gains) earned in each taxable year. In
general, these distributions must actually or be deemed to be made in the
taxable year. However, in certain circumstances, such distributions may be made
in the 12 months following the taxable year. Furthermore, distributions
declared in October, November or December of one taxable year and paid by
January 31 of the following taxable year will be treated as paid by December 31
of the first taxable year. The Funds intend to pay out substantially all of
their net investment income and net realized capital gains (if any) for each
year.
Excise Tax. A 4% nondeductible excise tax will be imposed on each Fund
----------
(other than to the extent of its tax-exempt interest income) to the extent it
does not meet certain minimum distribution requirements by the end of each
calendar year. Each Fund intends to actually or be deemed to distribute
substantially all of its net investment income and net capital gains by the end
of each calendar year and, thus, expects not to be subject to the excise tax.
Taxation of Fund Investments. Except as provided herein, gains and losses
----------------------------
on the sale of portfolio securities by a Fund will generally be capital gains
and losses. Such gains and losses will ordinarily be long-term capital gains
and losses if the securities have been held by the Fund for more than one year
at the time of disposition of the securities.
Gains recognized on the disposition of a debt obligation (including tax-
exempt obligations purchased after April 30, 1993) purchased by a Fund at a
market discount (generally at a price less than its principal amount) will be
treated as ordinary income to the extent of the portion of market discount which
accrued, but was not previously recognized pursuant to an available election,
during the term the Fund held the debt obligation.
30
<PAGE>
If an option granted by a Fund lapses or is terminated through a closing
transaction, such as a repurchase by the Fund of the option from its holder, the
Fund will realize a short-term capital gain or loss, depending on whether the
premium income is greater or less than the amount paid by the Fund in the
closing transaction. Some realized capital losses may be deferred if they
result from a position which is part of a "straddle," discussed below. If
securities are sold by the Fund pursuant to the exercise of a call option
written by it, the Fund will add the premium received to the sale price of the
securities delivered in determining the amount of gain or loss on the sale. If
securities are purchased by a Fund pursuant to the exercise of a put option
written by it, such Fund will subtract the premium received from its cost basis
in the securities purchased.
The amount of any gain or loss realized by a Fund on closing out a
regulated futures contract will generally result in a realized capital gain or
loss for federal income tax purposes. Regulated futures contracts held at the
end of each fiscal year will be required to be "marked to market" for federal
income tax purposes pursuant to Section 1256 of the Code. In this regard, they
will be deemed to have been sold at market value. Sixty percent (60%) of any net
gain or loss recognized on these deemed sales, and sixty percent (60%) of any
net realized gain or loss from any actual sales, will generally be treated as
long-term capital gain or loss, and the remainder will be treated as short-term
capital gain or loss. Transactions that qualify as designated hedges are
excepted from the "mark-to-market" rule and the "60%/40%" rule.
Under Section 988 of the Code, a Fund generally will recognize ordinary
income or loss to the extent that gain or loss realized on the disposition of
portfolio securities is attributable to changes in foreign currency exchange
rates. In addition, gain or loss realized on the disposition of a foreign
currency forward contract, futures contract, option or similar financial
instrument, or of foreign currency itself, will generally be treated as ordinary
income or loss. The Funds will attempt to monitor Section 988 transactions,
where applicable, to avoid adverse Federal income tax impact.
Offsetting positions held by a Fund involving certain financial forward,
futures or options contracts may be considered, for tax purposes, to constitute
"straddles." "Straddles" are defined to include "offsetting positions" in
actively traded personal property. The tax treatment of "straddles" is governed
by Section 1092 of the Code which, in certain circumstances, overrides or
modifies the provisions of Section 1256. If a Fund were treated as entering
into "straddles" by engaging in certain financial forward, futures or option
contracts, such straddles could be characterized as "mixed straddles" if the
futures, forwards, or options comprising a part of such straddles were governed
by Section 1256 of the Code. The Fund may make one or more elections with
respect to "mixed straddles." Depending upon which election is made, if any,
the results with respect to the Fund may differ. Generally, to the extent the
straddle rules apply to positions established by the Fund, losses realized by
the Fund may be deferred to the extent of unrealized gain in any offsetting
positions. Moreover, as a result of the straddle and the conversion transaction
rules, short-term capital loss on straddle positions may be recharacterized as
long-term capital loss, and long-term capital gain may be characterized as
short-term capital gain or ordinary income.
If a Fund enters into a "constructive sale" of any appreciated position in
stock, a partnership interest, or certain debt instruments, the Fund must
recognize gain (but not loss) with respect to that position. For this purpose,
a constructive sale occurs when the Fund enters into
31
<PAGE>
one of the following transactions with respect to the same or substantially
identical property: (i) a short sale; (ii) an offsetting notional principal
contract; or (iii) a futures or forward contract.
Income and dividends received by the Funds from sources within foreign
countries may be subject to withholding and other taxes imposed by such
countries.
Capital Gain Distributions. Distributions which are designated by a Fund as
--------------------------
capital gain distributions will be taxed to shareholders as long-term term
capital gain (to the extent such dividends do exceed the Fund's actual net
capital gains for the taxable year), regardless of how long a shareholder has
held Fund shares. Such distributions will be designated as capital gain
distributions in a written notice mailed by the Fund to its shareholders not
later than 60 days after the close of the Fund's taxable year.
Disposition of Fund Shares. A disposition of Fund shares pursuant to a
--------------------------
redemption (including a redemption in-kind) or an exchange will ordinarily
result in a taxable capital gain or loss, depending on the amount received for
the shares (or are deemed to be received in the case of an exchange) and the
cost of the shares.
If a shareholder exchanges or otherwise disposes of Fund shares within 90
days of having acquired such shares and if, as a result of having acquired those
shares, the shareholder subsequently pays a reduced sales charge on a new
purchase of shares of the Fund or a different regulated investment company, the
sales charge previously incurred in acquiring the Fund's shares shall not be
taken into account (to the extent such previous sales charges do not exceed the
reduction in sales charges on the new purchase) for the purpose of determining
the amount of gain or loss on the disposition, but will be treated as having
been incurred in the acquisition of such other shares. Also, any loss realized
on a redemption or exchange of shares of the Fund will be disallowed to the
extent that substantially identical shares are acquired within the 61-day period
beginning 30 days before and ending 30 days after the shares are disposed of.
If a shareholder receives a designated capital gain distribution (to be
treated by the shareholder as a long-term capital gain) with respect to any Fund
share and such Fund share is held for six months or less, then (unless otherwise
disallowed) any loss on the sale or exchange of that Fund share will be treated
as a long-term capital loss to the extent of the designated capital gain
distribution. In addition, if a shareholder holds Fund shares for six months or
less,
32
<PAGE>
any loss on the sale or exchange of those shares will be disallowed to the
extent of the amount of exempt-interest dividends received with respect to the
shares. The Treasury Department is authorized to issue regulations reducing the
six months holding requirement to a period of not less than the greater of 31
days or the period between regular dividend distributions where a Fund regularly
distributes at least 90% of its net tax-exempt interest, if any. No such
regulations have been issued as of the date of this SAI. The loss disallowance
rules described in this paragraph do not apply to losses realized under a
periodic redemption plan.
Federal Income Tax Rates. As of the printing of this SAI, the maximum
------------------------
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gain is 20%; and the maximum corporate tax rate applicable to
ordinary income and net capital gain is 35% (marginal tax rates may be higher
for some corporations to reduce or eliminate the benefit of lower marginal
income tax rates). Naturally, the amount of tax payable by an individual or
corporation will be affected by a combination of tax laws covering, for example,
deductions, credits, deferrals, exemptions, sources of income and other matters.
Backup Withholding. The Trustees may be required to withhold, subject to
------------------
certain exemptions, at a rate of 31% ("backup withholding") on dividends,
capital gain distributions, and redemption proceeds (including proceeds from
exchanges and redemptions in-kind) paid or credited to an individual Fund
shareholder, if the shareholder fails to certify that the Taxpayer
Identification Number ("TIN") provided is correct and that the shareholder is
not subject to backup withholding, or if the IRS notifies the Trust that the
shareholder's TIN is incorrect or that the shareholder is subject to backup
withholding. Such tax withheld does not constitute any additional tax imposed
on the shareholder, and may be claimed as a tax payment on the shareholder's
federal income tax return. An investor must provide a valid TIN upon opening or
reopening an account. Failure to furnish a valid TIN to the Trust could also
subject the investor to penalties imposed by the IRS.
Corporate Shareholders. Corporate shareholders of the Funds may be eligible
----------------------
for the dividends-received deduction on dividends distributed out of a Fund's
net investment income attributable to dividends received from domestic
corporations, which, if received directly by the corporate shareholder, would
qualify for such deduction. A distribution by a Fund attributable to dividends
of a domestic corporation will only qualify for the dividends-received deduction
if (i) the corporate shareholder generally holds the Fund shares upon which the
distribution is made for at least 46 days during the 90 day period beginning 45
days prior to the date upon which the shareholder becomes entitled to the
distribution; and (ii) the Fund generally holds the shares of the domestic
corporation producing the dividend income for at least 46 days during the 90 day
period beginning 45 days prior to the date upon which the Fund becomes entitled
to such dividend income.
Foreign Shareholders. Under the Code, distributions of net investment
--------------------
income by the Funds to a nonresident alien individual, foreign trust (i.e.,
trust which a U.S. court is able to exercise primary supervision over
administration of that trust and one or more U.S. persons have authority to
control substantial decisions of that trust), foreign estate (i.e., the income
of which is not subject to U.S. tax regardless of source), foreign corporation,
or foreign partnership (a
33
<PAGE>
"foreign shareholder") will be subject to U.S. withholding tax (at a rate of 30%
or a lower treaty rate, if applicable). Withholding will not apply if a dividend
paid by the Fund to a foreign shareholder is "effectively connected" with a U.S.
trade or business (or, if an income tax treaty applies, is attributable to a
U.S. permanent establishment of the foreign shareholder), in which case the
reporting and withholding requirements applicable to U.S. persons will apply.
Distributions of net long-term capital gains are generally not subject to tax
withholding.
New Regulations. On October 6, 1997, the Treasury Department issued new
---------------
regulations (the "New Regulations") which make certain modifications to the
backup withholding, U.S. income tax withholding and information reporting rules
applicable to foreign shareholders. The New Regulations will generally be
effective for payments made after December 31, 1999, subject to certain
transition rules. Among other things, the New Regulations will permit the Funds
to estimate the portion of their distributions qualifying as capital gain
distributions for purposes of determining the portion of such distributions paid
to foreign shareholders that will be subject to U.S. income tax withholding.
Prospective investors are urged to consult their own tax advisors regarding the
New Regulations.
Tax-Deferred Plan. The shares of the Funds are available for a variety of
-----------------
tax-deferred retirement and other plans, including Individual Retirement
Accounts ("IRA"), Simplified Employee Pension Plans ("SEP-IRA"), Savings
Incentive Match Plans for Employees ("SIMPLE plans"), Roth IRAs, and Education
IRAs, which permit investors to defer some of their income from taxes.
Investors should contact their selling agents for details concerning retirement
plans.
Additional Considerations for the Tax-Free Income Fund. If at least 50% of
------------------------------------------------------
the value of a regulated investment company's total assets at the close of each
quarter of its taxable years consists of obligations the interest on which is
exempt from federal income tax, it will qualify under the Code to pay
"exempt-interest dividends." The Tax-Free Income Fund intends to so qualify and
is designed to provide investors with a high level of income exempt from federal
income tax.
The portion of total dividends paid by the Tax-Free Income Fund with
respect to any taxable year that constitutes exempt-interest dividends will be
the same for all shareholders receiving dividends during such year.
Distributions of capital gains or from net investment income not attributable to
interest on the Fund's tax-exempt obligations will not constitute
exempt-interest dividends and will be taxable to its shareholders. The exemption
of interest income derived from investments in tax-exempt obligations for
federal income tax purposes may not result in a similar exemption under the laws
of a particular state or local taxing authority.
Not later than 60 days after the close of its taxable year, the Tax-Free
Income Fund will notify its shareholders of the portion of the dividends paid
with respect to such taxable year which constitutes exempt-interest dividends.
The aggregate amount of dividends so designated cannot exceed the excess of the
amount of interest excludable from gross income under Section 103 of the Code
received by the Fund during the taxable year over any amounts disallowed as
deductions under Sections 265 and 171(a)(2) of the Code. Interest on
indebtedness incurred to purchase or carry shares of the Tax-Exempt Income Fund
will not be deductible to the extent that the Fund's distributions are exempt
from federal income tax.
In addition, the federal alternative minimum tax ("AMT") rules ensure that
at least a minimum amount of tax is paid by taxpayers who obtain significant
benefit from certain tax deductions and exemptions. Some of these deductions and
exemptions have been designated "tax preference items" which must be added back
to taxable income for purposes of calculating AMT. Among the tax preference
items is tax-exempt interest from "private activity bonds" issued after August
7, 1986. To the extent that the Tax-Free Income Fund invests in private activity
bonds, its shareholders who pay AMT will be required to report that portion of
Fund dividends attributable to income from the bonds as a tax preference item
in determining their AMT. Shareholders will be notified of the tax status of
distributions made by the Tax-Free Income Fund. Persons who may be "substantial
users" (or "related persons" of substantial users) of facilities financed by
private activity bonds should consult their tax advisors before purchasing
shares in the Tax-Free Income Fund. Furthermore, shareholders will not be
permitted to deduct any of their share of the Tax-Free Income Fund's expenses in
computing their AMT. With respect to a corporate shareholder of the Tax-Free
Income Fund, exempt-interest dividends paid by the Fund is included in the
corporate shareholder's "adjusted current earnings" as part of its AMT
calculation, and may also affect its federal "environmental tax" liability. As
of the printing of this SAI, individuals are subject to an AMT at a maximum rate
of 28% and corporations at a maximum rate of 20%. Shareholders with questions or
concerns about AMT should consult their own tax advisors.
Shares of the Tax-Free Income Fund would not be suitable for tax-exempt
institutions and may not be suitable for retirement plans qualified under
Section 401 of the Code, H.R. 10 plans and IRAs since such plans and accounts
are generally tax-exempt and, therefore, would not benefit from the exempt
status of dividends from the Fund. Such dividends may ultimately be taxable to
the beneficiaries when distributed to them.
Other Matters. Investors should be aware that the investments to be made by
-------------
the Funds may involve sophisticated tax rules that may result in income or gain
recognition by the Funds without corresponding current cash receipts. Although
the Funds will seek to avoid significant noncash income, such noncash income
could be recognized by the Funds, in which case the Funds may distribute cash
derived from other sources in order to meet the minimum distribution
requirements described above.
The foregoing discussion and the discussions in the Prospectus applicable
to each shareholder address only some of the Federal tax considerations
generally affecting investments in the Funds. Each investor is urged to consult
his or her tax advisor regarding specific questions as to federal, state, local
or foreign taxes.
CAPITAL STOCK
The Funds are four of the funds in the Wells Fargo Funds Trust family of
funds. The Trust was organized as a Delaware business trust on March 10, 1999.
Most of the Trust's funds are authorized to issue multiple classes of
shares, one class generally subject to a front-end sales charge and, in some
cases, classes subject to a contingent-deferred sales charge, that are offered
to retail investors. Certain of the Trust's funds also are authorized to issue
other classes of shares, which are sold primarily to institutional investors.
Each class of shares in a fund represents an equal, proportionate interest in a
fund with other shares of the same class. Shareholders of each class bear their
pro rata portion of the fund's operating
34
<PAGE>
expenses, except for certain class-specific expenses (e.g., any state securities
registration fees, shareholder servicing fees or distribution fees that may be
paid under Rule 12b-1) that are allocated to a particular class. Please contact
Shareholder Services at 1-800-222-8222 if you would like additional information
about other funds or classes of shares offered.
With respect to matters affecting one class but not another, shareholders
vote as a class; for example, the approval of a Plan. Subject to the foregoing,
all shares of a Fund have equal voting rights and will be voted in the
aggregate, and not by series, except where voting by a series is required by law
or where the matter involved only affects one series. For example, a change in
a Fund's fundamental investment policy affects only one series and would be
voted upon only by shareholders of the Fund involved. Additionally, approval of
an advisory contract, since it affects only one Fund, is a matter to be
determined separately by Series. Approval by the shareholders of one Series is
effective as to that Series whether or not sufficient votes are received from
the shareholders of the other Series to approve the proposal as to those Series.
As used in the Prospectus and in this SAI, the term "majority," when
referring to approvals to be obtained from shareholders of a Class of shares of
a Fund, means the vote of the lesser of (i) 67% of the shares of the Class
represented at a meeting if the holders of more than 50% of the outstanding
shares of the Class are present in person or by proxy, or (ii) more than 50% of
the outstanding shares of the Class of the Fund. The term "majority," when
referring to approvals to be obtained from shareholders of the Fund, means the
vote of the lesser of (i) 67% of the shares of the Fund represented at a meeting
if the holders of more than 50% of the outstanding shares of the Fund are
present in person or by proxy, or (ii) more than 50% of the outstanding shares
of the Fund. The term "majority," when referring to the approvals to be
obtained from shareholders of the Trust as a whole, means the vote of the lesser
of (i) 67% of the Trust's shares represented at a meeting if the holders of more
than 50% of the Trust's outstanding shares are present in person or by proxy, or
(ii) more than 50% of the Trust's outstanding shares.
Shareholders are not entitled to any preemptive rights. All shares, when
issued, will be fully paid and non-assessable by the Trust. The Trust may
dispense with an annual meeting of shareholders in any year in which it is not
required to elect Trustees under the 1940 Act.
Each share of a class of a Fund represents an equal proportional interest
in the Fund with each other share of the same class and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
the Fund as are declared in the discretion of the Trustees. In the event of the
liquidation or dissolution of the Trust, shareholders of a Fund are entitled to
receive the assets attributable to that Fund that are available for
distribution, and a distribution of any general assets not attributable to a
particular Fund or portfolio that are available for distribution in such manner
and on such basis as the Trustees in their sole discretion may determine.
Set forth below, as of May 25, 1999, is the name, address and share
ownership of each person known by the Trust to have beneficial or record
ownership of 5% or more of a class of a Fund or 5% or more of the voting
securities as a whole. The term "N/A" is used where a shareholder holds 5% or
more of a class, but less than 5% of a Fund as a whole.
35
<PAGE>
5% OWNERSHIP AS OF MAY 25, 1999
-------------------------------
<TABLE>
<CAPTION>
TYPE OF PERCENTAGE PERCENTAGE
FUND NAME AND ADDRESS OWNERSHIP OF CLASS OF PORTFOLIO
- --------------- ---------------------------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C>
INCOME
Class A Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class B Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Institutional Stephens Inc. Record 100%
Class 111 Center Street
Little Rock, AR 72201
INTERMEDIATE
GOVERNMENT
INCOME
Class A Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class B Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class C Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Institutional Stephens Inc. Record 100%
Class 111 Center Street
Little Rock, AR 72201
LIMITED TERM
GOVERNMENT
INCOME
Class A
Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class B Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Institutional Stephens Inc. Record 100%
Class 111 Center Street
Little Rock, AR 72201
TAX-FREE INCOME
Class A
Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Class B Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
</TABLE>
36
<PAGE>
<TABLE>
<S> <C> <C> <C>
Class C Stephens Inc. Record 100%
111 Center Street
Little Rock, AR 72201
Institutional Stephens Inc. Record 100%
Class 111 Center Street
Little Rock, AR 72201
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class (or Fund), or is identified as the holder of
record of more than 25% of a class (or Fund) and has voting and/or investment
powers, it may be presumed to control such class (or Fund).
OTHER
The Trust's Registration Statement, including the Prospectus and SAI for
the Funds and the exhibits filed therewith, may be examined at the office of the
U.S. Securities and Exchange Commission in Washington, D.C. Statements contained
in the Prospectus or the SAI as to the contents of any contract or other
document referred to herein or in the Prospectus are not necessarily complete,
and, in each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.
COUNSEL
Morrison & Foerster LLP, 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C. 20006, as counsel for the Trust, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance of the
shares of beneficial interest being sold pursuant to the Funds' Prospectus.
INDEPENDENT AUDITORS
KPMG LLP has been selected as the independent auditors for the Trust. KPMG
LLP provides audit services, tax return preparation and assistance and
consultation in connection with review of certain SEC filings. KPMG LLP's
address is Three Embarcadero Center, San Francisco, California 94111.
37
<PAGE>
APPENDIX
The following is a description of the ratings given by Moody's and S&P to
corporate and municipal bonds, municipal notes, and corporate and municipal
commercial paper.
Corporate Bonds
Moody's: The four highest ratings for corporate bonds are "Aaa," "Aa," "A"
and "Baa." Bonds rated "Aaa" are judged to be of the "best quality" and carry
the smallest amount of investment risk. Bonds rated "Aa" are of "high quality by
all standards," but margins of protection or other elements make long-term risks
appear somewhat greater than "Aaa" rated bonds. Bonds rated "A" possess many
favorable investment attributes and are considered to be upper medium grade
obligations. Bonds rated "Baa" are considered to be medium grade obligations;
interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well. Moody's
also applies numerical modifiers in its rating system: 1, 2 and 3 in each rating
category from "Aa" through "Baa" in its rating system. The modifier 1 indicates
that the security ranks in the higher end of its category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks
in the lower end.
S&P: The four highest ratings for corporate and municipal bonds are "AAA,"
"AA," "A" and "BBB." Bonds rated "AAA" have the "highest rating" assigned by S&P
and have "an extremely strong capacity" to pay interest and repay principal.
Bonds rated "AA" have a "very strong capacity" to pay interest and repay
principal and "differ from the highest rated obligations only in small degree."
Bonds rated "A" have a "strong capacity" to pay interest and repay principal,
but are "somewhat more susceptible" to adverse effects of changes in economic
conditions or other circumstances than bonds in higher rated categories. Bonds
rated "BBB" are regarded as having "adequate protection parameters" to pay
interest and repay principal, but changes in economic conditions or other
circumstances are more likely to lead to a "weakened capacity" to make such
repayments. The ratings from "AA" to "BBB" may be modified by the addition of a
plus or minus sign to show relative standing within the category.
Commercial Paper
Moody's: The highest rating for commercial paper is "P-1" (Prime-1). Issuers
rated "P-1" have a "superior ability for repayment of senior short-term debt
obligations." Issuers rated "P-2" (Prime-2) "have a strong capacity for
repayment of senior short-term debt obligations," but earnings trends, while
sound, will be subject to more variation.
A-1
<PAGE>
S&P: The "A-1" rating for commercial paper is rated "in the highest
category" by S&P and "the obligor's capacity to meet its financial commitment on
the obligation is strong." The "A-1+" rating indicates that said capacity is
"extremely strong." The A-2 rating indicates that said capacity is
"satisfactory," but that corporate and municipal commercial paper rated "A-2" is
"more susceptible" to the adverse effects of changes in economic conditions or
other circumstances than commercial paper rated in higher rating categories.
A-2
<PAGE>
WELLS FARGO FUNDS TRUST
FILE NOS. 333-74295; 811-09253
PART C
OTHER INFORMATION
Item 23. Exhibits.
---------
Exhibit
Number Description
------ -----------
(a) - Form of Amended and Restated Declaration of Trust, filed
herewith.
(b) - Not applicable.
(c) - Not applicable.
(d)(1) - Form of Investment Advisory Contract with Wells Fargo Bank,
N.A., filed herewith.
(2)(i) - Form of Sub-Advisory Contract with Barclays Global Fund
Advisors, filed herewith.
(ii) - Form of Sub-Advisory Contract with Galliard Capital
Management, Inc., filed herewith.
(iii) - Form of Sub-Advisory Contract with Peregrine Capital
Management, Inc., filed herewith.
(iv) - Form of Sub-Advisory Contract with Shroder Capital
Management International, Inc., filed herewith.
(v) - Form of Sub-Advisory Contract with Smith Asset Management,
L.P., filed herewith.
(vi) - Form of Sub-Advisory Contract with Wells Capital Management,
Inc., filed herewith.
(e) - Form of Distribution Agreement along with Form of Selling
Agreement, filed herewith.
(f) - Not applicable.
(g)(1) - Form of Custody Agreement with Barclays Global Investors,
N.A., filed herewith.
(2) - Form of Custody Agreement with Norwest Bank Minnesota, N.A.,
filed herewith.
(h)(1) - Form of Administration Agreement with Wells Fargo Bank,
N.A., filed herewith.
(2) - Form of Fund Accounting Agreement, filed herewith.
(3) - Form of Transfer Agency and Service Agreement with Boston
Financial Data Services, Inc., filed herewith.
(4) - Shareholder Servicing Plan, filed herewith.
(5) - Form of Shareholder Servicing Agreement, filed herewith.
(i) - Legal Opinion, filed herewith.
(j) - Not applicable.
(k) - Not applicable.
C-1
<PAGE>
(l) - Not applicable.
(m) - Rule 12b-1 Plan, filed herewith.
(n) - Not applicable.
(o) - Rule 18f-3 Plan, filed herewith.
Item 24. Persons Controlled by or Under Common Control with the Fund.
-----------------------------------------------------------
No person is controlled by or under common control with Registrant.
Item 25. Indemnification.
---------------
Article V of the Registrant's Declaration of Trust limits the
liability and, in certain instances, provides for mandatory indemnification of
the Registrant's trustees, officers, employees, agents and holders of beneficial
interests in the Trust and its four Funds. In addition, the Trustees are
empowered under Section 3.9 of the Registrant's Declaration of Trust to obtain
such insurance policies as they deem necessary.
Item 26. Business and Other Connections of Investment Adviser.
----------------------------------------------------
Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly owned subsidiary
of Wells Fargo & Company, serves as investment adviser to all of the
Registrant's investment portfolios, and to certain other registered open-end
management investment companies. Wells Fargo Bank's business is that of a
national banking association with respect to which it conducts a variety of
commercial banking and trust activities.
To the knowledge of Registrant, none of the directors or executive
officers of Wells Fargo Bank, except those set forth below, is or has been at
any time during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
executive officers also hold various positions with and engage in business for
Wells Fargo & Company. Set forth below are the names and principal businesses
of the directors and executive officers of Wells Fargo Bank who are or during
the past two fiscal years have been engaged in any other business, profession,
vocation or employment of a substantial nature for their own account or in the
capacity of director, officer, employee, partner or trustee. All the directors
of Wells Fargo Bank also serve as directors of Wells Fargo & Company.
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
H. Jesse Arnelle Senior Partner of Arnelle, Hastie, McKee, Willis &
Director Greene
455 Market Street
San Francisco, CA 94105
Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408
C-2
<PAGE>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
Michael R. Bowlin Chairman of the Board, Chief Executive Officer,
Chief Operating
Officer and President of Atlantic Richfield Co. (ARCO)
Highway 150
Santa Paula, CA 93060
Edward Carson Chairman of the Board and Chief Executive Officer of
First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Director of Aztar Corporation
2390 East Camelback Road Suite 400
Phoenix, AZ 85016
Director of Castle & Cook, Inc.
10900 Wilshire Blvd.
Los Angeles, CA 90024
William S. Davila President and Director of The Vons Companies, Inc.
Director 618 Michillinda Avenue
Arcadia, CA 91007
Officer of Western Association of Food Chains
825 Colorado Blvd. #203
Los Angeles, CA 90041
Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065
Director of Tejon Ranch Co.
P.O. Box 1000
Lebec, CA 93243
Director of Turner Casting Corp.
P.O. Box 1099
Cudahy, CA 90201
Director of The Bakersfield Californian
P.O. Box 440
1707 I Street
Bakersfield, CA 93302
C-3
<PAGE>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
Director of Kern County Economic Development Corp.
P.O. Box 1229
2700 M Street, Suite 225
Bakersfield, CA 93301
Chairman of the Board of Trustees of Whittier College
13406 East Philadelphia Avenue
P.O. Box 634
Whittier, CA 90608
Paul Hazen Chairman of the Board of Directors
Chairman of the and Chief Executive Officer of
Board of Directors Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105
Director of Pacific Telesis Group
130 Kearny Street
San Francisco, CA 94108
Director of Phelps Dodge Corp.
2600 North Central Avenue
Phoenix, AZ 85004
Director of Safeway Inc.
Fourth and Jackson Streets
Oakland, CA 94660
Robert K. Jaedicke Accounting Professor and Dean Emeritus of
Director Graduate School of Business, Stanford University
Stanford, CA 94305
Director of Homestake Mining Co.
650 California Street
San Francisco, CA 94108
Director of California Water Service Company
1720 North First Street
San Jose, CA 95112
Director of Boise Cascade Corp.
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728
Director of Enron Corp.
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333
C-4
<PAGE>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
Thomas L. Lee Chairman and Chief Executive Officer
of The Newhall Land and Farming Company
10302 Avenue 7 1-2
Firebaugh, CA 93622
Director of Calmat Co.
501 El Charro Rod
Pleasanton, CA 94588
Director of the Los Angeles Area Chamber of Commerce
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Ellen M. Newman President of Ellen Newman Associates
Director 323 Geary Street, Suite 507
San Francisco, CA 94102
Chair of Board of Trustees of
University of California at San Francisco Foundation
250 Executive Park Blvd., Suite 2000
San Francisco, CA 94143
Director of American Conservatory Theater
30 Grant Avenue
San Francisco, CA 94108
Director of California Chamber of Commerce
1201 K Street, 12th Floor
Sacramento, CA 95814
Philip J. Quigley Chairman, Chief Executive Officer and
Director Director of Pacific Telesis Group
130 Kearney Street, Rm. 3700
San Francisco, CA 94108
Director of Varian Associates
3050 Hansen Way
P.O. Box 10800
Palo Alto, CA 94303
Carl E. Reichardt Director of Ford Motor Company
Director The American Road
Dearborn, MI 48121
Director of Hospital Corporation of America,
HCA-Hospital Corp. of America
One Park Plaza
Nashville, TN 37203
C-5
<PAGE>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Donald B. Rice President, Chief Operating Officer and Director of
Director Teledyne, Inc.
2049 Century Park East
Los Angeles, CA 90067
Director of Vulcan Materials Company
One Metroplex Drive
Birmingham, AL 35209
Retired Secretary of the Air Force
Richard J. Stegemeier Chairman (Emeritus) of Unocal Corp
44141 Yucca Avenue
Lancaster, CA 93534
Director of Foundation Health Corporation
166 4th
Fort Irwin, CA 92310
Director of Halliburton Company
3600 Lincoln Plaza
500 North Alcard Street
Dallas, TX 75201
Director of Northrop Grumman corp.
1840 Century Park East
Los Angeles, CA 90067
Director of Outboard Marine Corporation
100 Seahorse Drive
Waukegan, IL 60085
Director of Pacific Enterprises
555 West Fifth Street Suite 2900
Los Angeles, CA 90031
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
C-6
<PAGE>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
Susan G. Swenson President and Chief Executive Officer of Cellular One
Director 651 Gateway Blvd.
San Francisco, CA 94080
David M. Tellep Chairman of the Board of Directors and
Chief Executive Officer of Lockheed Martin Corp.
6801 Rockledge Drive
Bethesda, MD 20817
Director of Edison International and
Southern California Edison Company
2244 Walnut Grove Ave.
Rosemead, CA 91770
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Chang-Lin Tien Chancellor of University of California at Berkeley
Director UC at Berkeley
Berkeley, CA 94720
John A. Young President, Director and Chief Executive Officer of
Director Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104
William F. Zuendt President and Chief Operating Officer of
President Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105
Director of 3Com Corp.
5400 Bayfront Plaza
P.O. Box 58145
Santa Clara, CA 95052
Director of MasterCard International
888 Seventh Avenue
New York, NY 10106
Trustee of Golden Gate University
536 Mission Street
San Francisco, CA 94163
C-7
<PAGE>
Barclays Global Fund Advisors ("BGFA"), a wholly-owned subsidiary of
Barclays Global Investors, N.A. ("BGI", formerly, Wells Fargo Institutional
Trust Company), serves as sub-adviser to the Asset Allocation and U.S.
Government Allocation Funds of the Trust and as adviser or sub-adviser to
certain other open-end management investment companies.
The directors and officers of BGFA consist primarily of persons who
during the past two years have been active in the investment management business
of the former sub-adviser to the Asset Allocation and U.S. Government
Allocation Funds, Wells Fargo Nikko Investment Advisors ("WFNIA") and, in some
cases, the service business of BGI. With the exception of Irving Cohen, each of
the directors and executive officers of BGFA will also have substantial
responsibilities as directors and/or officers of BGI. To the knowledge of the
Registrant, except as set forth below, none of the directors or executive
officers of BGFA is or has been at any time during the past two fiscal years
engaged in any other business, profession, vocation or employment of a
substantial nature.
Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
- ------- -------------------------------
Frederick L.A. Grauer Director of BGFA and Co-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105
Patricia Dunn Director of BGFA and C-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105
Lawrence G. Tint Chairman of the Board of Directors of BGFA
Chairman and Director and Chief Executive Officer of BGI
45 Fremont Street, San Francisco, CA 94105
Geoffrey Fletcher Chief Financial Officer of BGFA and BGI since May 1997
Chief Financial Officer 45 Fremont Street, San Francisco, CA 94105
Managing Director and Principal Accounting Officer at
Bankers Trust Company from 1988 - 1997
505 Market Street, San Francisco, CA 94105
Item 27. Principal Underwriters.
----------------------
(a) Stephens Inc. ("Stephens"), distributor for the Registrant,
does not presently act as investment adviser for any other registered investment
companies, but does act as principal underwriter for MasterWorks Funds Inc.,
Stagecoach Funds, Inc. and Stagecoach Trust, Nations Fund, Inc., Nations Fund
Trust, Nations Fund Portfolios, Inc., Nations LifeGoal Funds, Inc. and Nations
Institutional Reserves, and Wells Fargo Variable Trust, Wells Fargo Core Trust
and Wells Fargo Funds Trust and is the exclusive placement agent for Master
Investment Portfolio, all of which are registered open-end management investment
companies.
(b) Information with respect to each director and officer of the
principal underwriter is incorporated by reference to Form ADV and Schedules A
and D thereto, filed by Stephens with the Securities and Exchange Commission
pursuant to the Investment Advisors Act of 1940 (file No. 501-15510).
(c) Not applicable.
C-8
<PAGE>
Item 28. Location of Accounts and Records.
--------------------------------
(a) The Registrant maintains accounts, books and other documents
required by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder (collectively, "Records") at the offices of Stephens Inc., 111 Center
Street, Little Rock, Arkansas 72201.
(b) Wells Fargo Bank maintains all Records relating to its services
as investment adviser, administrator and custodian and transfer and dividend
disbursing agent at 525 Market Street, San Francisco, California 94105.
(c) BGFA and BGI maintain all Records relating to their services as
sub-adviser and custodian, respectively, to the Asset Allocation and U.S.
Government Allocation Funds at 45 Fremont Street, San Francisco, California
94105.
(d) Stephens maintains all Records relating to its services as
sponsor, co- administrator and distributor at 111 Center Street, Little Rock,
Arkansas 72201.
Item 29. Management Services.
-------------------
Other than as set forth under the captions "Organization and
Management of the Funds"" in the Prospectus constituting Part A of this
Registration Statement and "Management" in the Statement of Additional
Information constituting Part B of this Registration Statement, the Registrant
is not a party to any management-related service contract.
Item 30. Undertakings.
-------------
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of its most current annual report to
shareholders, upon request and without charge.
(d) 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 provisions
set forth above in response to Item 27, 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 such 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.
(e) Registrant undertakes to hold a special meeting of its
shareholders for the purpose of voting on the question of removal
of a trustee or trustees if requested in writing by the holders
of at least 10% of the Trust's outstanding voting securities, and
to assist in communicating with other shareholders as required by
Section 16(c) of the Investment Company Act of 1940.
C-9
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement on Form N-1A pursuant to Rule 485(b) under the Securities Act of 1933,
and has duly caused this Amendment to be signed on its behalf by the
undersigned, thereto duly authorized in the City of Little Rock, State of
Arkansas on the 28th day of May, 1999.
WELLS FARGO FUNDS TRUST
By /s/ Richard H. Blank, Jr.
--------------------------------
Richard H. Blank, Jr.
Secretary and Treasurer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement on Form N-1A has been signed below by
the following persons in the capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* Trustee
-----------------------
Robert C. Brown
* Trustee
-----------------------
Donald H. Burkhardt
* Trustee
-----------------------
Jack S. Euphrat
* Trustee
-----------------------
Thomas S. Goho
* Trustee
-----------------------
Peter G. Gordon
* Trustee
-----------------------
W. Rodney Hughes
* Trustee
-----------------------
Richard M. Leach
* Trustee
-----------------------
J. Tucker Morse
* Trustee
-----------------------
Timothy J. Penny
/s/Richard H. Blank, Jr. Secretary and Treasurer 5/28/99
-----------------------
Richard H. Blank, Jr. (Principal Financial Officer)
*By /s/Richard H. Blank, Jr.
---------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
May 28, 1999
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this Amendment to its Registration Statement on
Form N-1A to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Little Rock, State of Arkansas on the 28th day of
May, 1999.
WELLS FARGO CORE TRUST
By /s/ Richard H. Blank, Jr.
--------------------------------
Richard H. Blank, Jr.
Secretary and Treasurer
(Principal Financial Officer)
Signature Title Date
--------- ----- ----
* Trustee
-----------------------
(Robert C. Brown)
/s/ Richard H. Blank, Jr. Secretary and Treasurer 5/28/99
----------------------- (Principal Financial Officer)
(Richard H. Blank, Jr.)
* Trustee
-----------------------
(Jack S. Euphrat)
* Trustee
-----------------------
(Thomas S. Goho)
* Trustee
-----------------------
(W. Rodney Hughes)
* Trustee
-----------------------
(J. Tucker Morse)
* Trustee
-----------------------
(Donald H. Burkhardt)
* Trustee
-----------------------
(Richard M. Leach)
* Trustee
-----------------------
(Timothy J. Penny)
*By /s/ Richard H. Blank, Jr.
---------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
May 28, 1999
<PAGE>
WELLS FARGO FUNDS TRUST
FILE NOS. 333-74295; 811-09253
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
99.B(a) - Form of Amended and Restated Declaration of Trust.
99.B(d)(1) - Form of Investment Advisory Contract with Wells Fargo Bank,
N.A.
99.B(d)(2)(i) - Form of Sub-Advisory Contract with Barclays Global Fund
Advisors.
99.B(d)(2)(ii) - Form of Sub-Advisory Contract with Galliard Capital
Management, Inc.
99.B(d)(2)(iii) - Form of Sub-Advisory Contract with Peregrine Capital
Management, Inc.
99.B(d)(2)(iv) - Form of Sub-Advisory Contract with Schroder Capital
Management International, Inc.
99.B(d)(2)(v) - Form of Sub-Advisory Contract with Smith Asset
Management, L.P.
99.B(d)(2)(vi) - Form of Sub-Advisory Contract with Wells Capital
Management, Inc.
99.B(e) - Form of Distribution Agreement along with Form of Selling
Agreement.
99.B(g)(1) - Form of Custody Agreement with Barclays Global Investors,
N.A.
99.B(g)(2) - Form of Custody Agreement with Norwest Bank Minnesota, N.A.
99.B(h)(1) - Form of Administration Agreement with Wells Fargo Bank, N.A.
99.B(h)(2) - Form of Fund Accounting Agreement.
99.B(h)(3) - Form of Transfer Agency and Service Agreement with Boston
Financial Data Services, Inc.
99.B(h)(4) - Shareholder Servicing Plan.
99.B(h)(5) - Form of Shareholder Servicing Agreement.
99.B(i) - Opinion of Morrison & Foerster LLP.
99.B(m) - Rule 12b-1 Plan.
99.B(o) - Rule 18f-3 Plan.
<PAGE>
Exhibit 99.B(a)
WELLS FARGO FUNDS TRUST
AMENDED AND RESTARTED
DECLARATION OF TRUST
DATED
MARCH 26,1999
<PAGE>
DECLARATION OF TRUST
OF
WELLS FARGO FUNDS TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. DEFINITIONS....................................................................................... 1
ARTICLE II. THE TRUSTEES..................................................................................... 2
Section 1. Management of the Trust.................................................................. 2
Section 2. Initial Trustees; Election and Number of Trustees........................................ 2
Section 3. Term of Office of Trustees............................................................... 3
Section 4. Vacancies; Appointment of Trustees....................................................... 3
Section 5. Temporary Vacancy or Absence............................................................. 3
Section 6. Chairman................................................................................. 3
Section 7. Action by Trustees....................................................................... 4
Section 8. Meetings of the Trustees; Required Notice................................................ 4
Section 9. Committees............................................................................... 4
Section 10. Audit Committee.......................................................................... 5
Section 11. Nominating Committee..................................................................... 5
Section 12. Ownership of Trust Property.............................................................. 5
Section 13. Effect of Trustees Not Serving........................................................... 5
Section 14. Trustees as Shareholders................................................................. 5
Section 15. Compensation of Trustees................................................................. 6
ARTICLE III. POWERS OF THE TRUSTEES.......................................................................... 6
Section 1. Powers................................................................................... 6
Section 2. Certain Transactions..................................................................... 9
ARTICLE IV. SERIES; CLASSES; SHARES.......................................................................... 9
Section 1. Establishment of Series or Class......................................................... 9
Section 2. Shares................................................................................... 10
Section 3. Investment in the Trust.................................................................. 10
Section 4. Assets and Liabilities of Series......................................................... 10
Section 5. Ownership and Transfer of Shares......................................................... 11
Section 6. Status of Shares; Limitation of Shareholder Liability.................................... 12
ARTICLE V. DISTRIBUTIONS AND REDEMPTION...................................................................... 12
Section 1. Distributions............................................................................ 12
Section 2. Redemptions.............................................................................. 12
Section 3. Determination of Net Asset Value......................................................... 13
Section 4. Suspension of Right of Redemption........................................................ 13
Section 5. Redemption Necessary for Tax Purposes.................................................... 13
ARTICLE VI. SHAREHOLDERS'VOTING POWERS AND MEETINGS.......................................................... 13
Section 1. Voting Powers............................................................................ 14
Section 2. Meetings of Shareholders................................................................. 14
Section 3. Quorum; Required Vote.................................................................... 14
ARTICLE VII. CONTRACTS WITH SERVICE PROVIDERS................................................................ 15
Section 1. Investment Adviser....................................................................... 15
Section 2. Principal Underwriter.................................................................... 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 3. Transfer Agency, Shareholder Services, and Administration Agreements..................... 15
Section 4. Custodian................................................................................ 15
Section 5. Parties to Contracts with Service Providers.............................................. 16
ARTICLE VIII. EXPENSES OF THE TRUST AND SERIES............................................................... 16
ARTICLE IX. LIMITATION OF LIABILITY AND INDEMNIFICATION...................................................... 17
Section 1. Limitation of Liability ................................................................. 17
Section 2. Mandatory Indemnification ............................................................... 17
Section 3. Indemnification of Shareholders.......................................................... 18
Section 4. Contractual Modification of Duties....................................................... 18
ARTICLE X. OFFICERS.......................................................................................... 19
Section 1. General.................................................................................. 19
Section 2. Election, Tenure and Qualifications of Officers.......................................... 19
Section 3. Vacancies and Newly Created Officers. ................................................... 19
Section 4. Removal and Resignation.................................................................. 19
Section 5. President................................................................................ 19
Section 6. Treasurer and Assistant Treasurer(s)..................................................... 19
Section 7. Secretary and Assistant Secretaries...................................................... 19
Section 8. Authority to Execute and File Applications for Exemptive Relief.......................... 20
Section 9. Compensation of Officers................................................................. 20
Section 10. Surety Bond.............................................................................. 20
ARTICLE XI. MISCELLANEOUS.................................................................................... 20
Section 1. Trust Not a Partnership.................................................................. 20
Section 2. Trustee Action; Expert Advice; No Bond or Surety......................................... 20
Section 3. Record Dates............................................................................. 21
Section 4. Dissolution of the Trust................................................................. 21
Section 5. Reorganization .......................................................................... 22
Section 6. Declaration.............................................................................. 22
Section 7. Derivative Actions....................................................................... 22
Section 8. Applicable Law........................................................................... 22
Section 9. Amendments............................................................................... 23
Section 10. Fiscal Year.............................................................................. 23
Section 11. Severability............................................................................. 23
Section 12. Principal Office......................................................................... 23
Section 13. Inspection of the Books.................................................................. 24
</TABLE>
ii
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
WELLS FARGO FUNDS TRUST
This Amended and Restated DECLARATION OF TRUST of Wells Fargo Funds
Trust is made on March 26, 1999, by the Trustees, to create a Delaware business
trust for the investment and reinvestment of funds contributed to the Trust by
the holders from time to time, of undivided beneficial interests in the assets
of the Trust or a Series of the Trust. The Trustees declare that all money and
property contributed to the Trust shall be held and managed in trust pursuant to
amended and restated Declaration. The name of the Trust created by this
Declaration is Wells Fargo Funds Trust.
ARTICLE I
DEFINITIONS
Unless otherwise provided or required by the context:
(a) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time, and all terms and requirements that are defined
herein by reference to the 1940 Act shall be interpreted as that term or
requirement has been modified or interpreted by applicable orders of the
Commission or any rules or regulations adopted by, or interpretive releases of
the Commission or its staff, and staff no-action letters issued under the 1940
Act.
(b) "Board" means the Board of Trustees of the Trust as described in
Article II of this Declaration;
(c) "By-Laws" means the By-Laws of the Trust if adopted by the
Trustees, as amended from time to time;
(d) "Class" means the class of Shares of a Series established pursuant
to Article IV;
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations thereunder, as adopted or amended
from time to time;
(f) "Commission," "Interested Person," and "Principal Underwriter"
have the meanings provided in the 1940 Act;
(g) "Covered Person" means a person so defined in Article IX,
Section 2;
(h) "Declaration" shall mean this Amended and Restated Declaration of
Trust as amended, modified, supplemented or restated from time to time.
(i) "Delaware Act" means Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time,
and as interpreted by the Delaware courts;
<PAGE>
(j) "Majority Shareholder Vote" means "the vote of a majority of the
outstanding voting securities" as defined in the 1940 Act;
(k) "Net Asset Value" means the net asset value of each Series of the
Trust, determined as provided in Article V, Section 3;
(l) "Outstanding Shares" means Shares shown in the books and records
of the Trust or its transfer agent as then issued and outstanding, but does not
include Shares which have been repurchased or redeemed by the Trust and which
are held in the treasury of the Trust;
(m) "Series" means a series of Shares established pursuant to
Article IV;
(n) "Shareholder" means a record owner of Outstanding Shares;
(o) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest of each Series or Class is divided
from time to time (including whole Shares and fractions of Shares);
(p) "Trust" means Wells Fargo Funds Trust, created hereby;
(q) "Trustees" means the persons who have signed this Declaration, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who may from time to time be duly qualified and serving as
Trustees in accordance with Article II, in all cases in their capacities as
Trustees hereunder;
(r) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the Trust or any Series
or by the Trustees on behalf of the Trust or any Series.
ARTICLE II
THE TRUSTEES
Section 1. Management of the Trust. The business and affairs of the
Trust shall be managed by or under the direction of the Board of Trustees, and
they shall have all powers necessary or desirable, convenient or incidental, to
carry out that responsibility. The Trustees may execute all instruments and
take all action they deem necessary, desirable, convenient or incidental, to
promote the interests of the Trust. Any determination made by the Trustees in
good faith as to what is in the interests of the Trust shall be conclusive.
Section 2. Initial Trustees; Election and Number of Trustees. The
initial Trustees shall be the persons initially signing this Declaration. The
number of Trustees (other than the initial Trustees) shall be fixed from time to
time by a majority of the Trustees; provided, that there shall be at least two
(2) Trustees. The Shareholders shall elect the Trustees (other than the initial
Trustees), only if required by the 1940 Act, on such dates as the Trustees may
fix from time to time.
2
<PAGE>
Section 3. Term of Office of Trustees. Each Trustee shall hold
office for life or until his or her successor is elected or the Trust
terminates; except that (a) any Trustee may resign by delivering to the other
Trustees or to any Trust officer a written resignation effective upon delivery
or a later date specified therein; (b) any Trustee may be removed with or
without cause at any time by a written instrument signed by at least two-thirds
of the other Trustees, specifying the effective date of removal; (c) any Trustee
who requests to be retired or who meets the criteria of any retirement policy
adopted by the Board, or has become physically or mentally incapacitated or is
otherwise unable to serve, may be retired by a written instrument signed by a
majority of the other Trustees, specifying the effective date of retirement; and
(d) any Trustee may be removed at any meeting of the Shareholders by a vote of
at least two-thirds of the Outstanding Shares.
Section 4. Vacancies; Appointment of Trustees. Whenever a vacancy
shall exist in the Board of Trustees, regardless of the reason for such vacancy,
the remaining Trustees shall appoint any person as they determine in their sole
discretion to fill that vacancy, except that the Trustee appointed may not be an
"interested person" within the meaning of the 1940 Act if the appointment of an
interested person would cause a violation of the 1940 Act. Such appointment
shall be made by a written instrument signed by a majority of the Trustees or by
a resolution of the Trustees, duly adopted and recorded in the records of the
Trust, specifying the effective date of the appointment. The Trustees may
appoint a new Trustee as provided above in anticipation of a vacancy expected to
occur because of the retirement, resignation, or removal of a Trustee, or an
increase in number of Trustees, provided that such appointment shall become
effective only at or after the expected vacancy occurs. As soon as any such
Trustee has accepted his or her appointment in writing, the trust estate shall
vest in the new Trustee, together with the continuing Trustees, without any
further act or conveyance, and he or she shall be deemed a Trustee hereunder.
The power of appointment is subject to Section 16(a) of the 1940 Act, and
shareholders may vote on such appointments only if expressly required under the
1940 Act.
Notwithstanding the foregoing, all of the Initial Trustees may resign
by written instrument to be effective on the date specified in the instrument
("Resignation Instrument"). However, before resigning as permitted in this
paragraph, the Initial Trustees shall determine and set forth in the Resignation
Instrument the number of Trustees of the Trust (subject to the Trustees' power
to change the required number as detailed in Section 2 of this Article) and
shall appoint their successors.
Section 5. Temporary Vacancy or Absence. Whenever a vacancy in the
Board of Trustees shall occur, until such vacancy is filled, or while any
Trustee is absent from his or her domicile (unless that Trustee has made
arrangements to be informed about, and to participate in, the affairs of the
Trust during such absence), or is physically or mentally incapacitated, the
remaining Trustees shall have all the powers hereunder and their certification
as to such vacancy, absence, or incapacity shall be conclusive. To the extent
permitted under the 1940 Act, any Trustee may, by power of attorney, delegate
his or her powers as Trustee for a period not exceeding six (6) months at any
one time to any other Trustee or Trustees.
Section 6. Chairman. The Board of Trustees may appoint one or more
of its members to be Chairman or Co-Chairmen of the Board of Trustees. The
Chairman or Co-Chairmen shall preside at all meetings of the Trustees, and shall
have such other duties and powers as the
3
<PAGE>
Trustees determine from time to time. The Chairman or Co-Chairmen may be, but
are not required to be, officers of the Trust. If the Trustees choose to appoint
a Chairman or Co-Chairman who will not be officers of the Trust, the Trustees
shall determine, and specify in Board resolutions, the powers and duties, and
any limitations thereon, of the Chairman or Co-Chairman so selected.
Section 7. Action by Trustees. The Trustees shall act by majority
vote at a meeting duly called at which a quorum is present or by written consent
of a majority of the Trustees (or such greater number as may be required by
applicable law) without a meeting. Unless a higher amount is required by this
Declaration, by Board resolution, or the 1940 Act, a quorum of the Trustees
shall be one-third of the total number of Trustees, but no less than two
Trustees. An action of a majority of the Trustees, as defined above, shall
constitute action by the Trustees except to the extent otherwise required by the
1940 Act, this Declaration of Trust or by Board resolution.
Section 8. Meetings of the Trustees; Required Notice. Unless
required under this Declaration or under the 1940 Act, the Trustees may act with
or without a meeting. All of the Trustees or any one of them may participate in
a meeting by means of a conference call or similar communication equipment,
provided that all participants may hear each other, and participation in a
meeting pursuant to such communication equipment shall constitute presence at
the meeting, unless the 1940 Act specifically requires the Trustees to act "in
person," in which case such term shall be construed in accordance with the 1940
Act. Unless required otherwise by this Declaration, Board resolution or by the
1940 Act, any action of the Trustees may be taken without a meeting by written
consent of a majority Trustees.
Meetings of the Trustees may be called orally or in writing by the
Chairman, if any, or by any two other trustees. Regular meetings of the
Trustees may be held without call or notice at a place and time fixed by
resolution of the Trustees. Notice of any other meeting shall be given to each
Trustee by telephone, facsimile or other electronic mechanism sent to his or her
home or business address at least twenty-four hours in advance of the meeting.
Notice need not be given to any Trustee who attends the meeting without
objecting to the lack of notice or who signs a waiver of notice either before or
after the meeting. Subject only to any express limitation in the 1940 Act, the
Board, by majority vote, may delegate to any Trustee or Trustees authority to
approve particular matters or take particular action on behalf of the Trust.
Written consents or waivers of the Trustees may be executed in one or more
counterparts, and may be provided and delivered to the Trust by facsimile or
other similar electronic mechanism.
Section 9. Committees. To facilitate certain requirements under the
1940 Act, the Trust shall have a permanent Audit Committee and a permanent
Nominating Committee (collectively, the "Standing Committees"). The Trustees may
designate other committees of the Trustees. The Trustees shall determine the
number of members of each committee, and may determine the quorum for each
committee, and shall appoint its members and its chair. Each committee member
shall serve at the pleasure of the Trustees. The Trustees may abolish any
committee other than the Standing Committees, at any time. Each committee shall
maintain records of its meetings and report its actions to the Trustees. The
Trustees may rescind any action of any committee, but such rescission shall not
have retroactive effect. The Trustees may delegate to any committee any of its
powers, subject only to the express limitations of the 1940 Act.
4
<PAGE>
Committees may act with or without a meeting. Each committee may adopt
such rules governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable if the Board does not determine otherwise. In the
absence of the adoption of such rules, a majority of the committee shall
constitute a quorum, and a committee shall act at a meeting by the vote of a
majority of the members present, or without a meeting by written consent of a
majority of the committee members.
Section 10. Audit Committee. The Audit Committee is responsible for
(a) recommending independent accountants for selection by the Boards, (b)
reviewing the scope of audit, accounting and financial internal controls and the
quality and adequacy of each Trust's accounting staff with the independent
accountants and such other persons as may be deemed appropriate, (c) reviewing,
as necessary, with the accounting staff and the independent accountants the
compliance of transactions between each Trust and any affiliated persons of the
Trust, (d) reviewing reports of the independent accountants, and (e) making
themselves directly available to the independent accountants and responsible
Officers of the Trusts for consultation on audit, accounting and related
financial matters.
Section 11. Nominating Committee. The Nominating Committee shall
recommend to the Board a slate of persons to be nominated for election as
Trustees by the Shareholders at any required Shareholder Meeting and a person to
be appointed to fill any vacancy occurring on the Board. Notwithstanding this
section, the nomination and selection of those Trustees who are not "interested
persons" (as defined under the 1940 Act) shall be committed to the discretion of
the disinterested Trustees so long as the Trust has in effect one or more plans
pursuant to Rule 12b-1 under the 1940 Act.
Section 12. Ownership of Trust Property. The Trust Property of the
Trust and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity (other than as Trustee hereunder) by the Trustees
or any successor Trustees. All of the Trust Property and legal title thereto
shall at all times be considered as vested in the Trustees on behalf of the
Trust, except that the Trustees may cause legal title to any Trust Property to
be held by or in the name of the Trust, or in the name of any person as nominee.
No Shareholder shall have any interest in specific property of the Trust or of
any Series or any right of partition or possession thereof, but each Shareholder
shall have, as provided in Article IV, a proportionate undivided beneficial
interest in the assets of the Trust or Series represented by Shares.
Section 13. Effect of Trustees Not Serving. The death, resignation,
retirement, removal, incapacity, or inability or refusal to serve of the
Trustees, or any one of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration.
Section 14. Trustees as Shareholders. Subject to any restrictions
that the Trustees may establish, any Trustee, officer, agent or independent
contractor of the Trust may acquire, own and dispose of Shares to the same
extent as any other Shareholder; the Trustees may issue and sell Shares to and
buy Shares from any such person or any firm or company in which such person is
interested, subject only to any general limitations herein. The Trustees are
not required to be Shareholders of the Trust.
5
<PAGE>
Section 15. Compensation of Trustees. Each Trustee and each committee
member may receive such compensation for his or her services and reimbursement
for expenses as may be fixed from time to time by the Trustees.
ARTICLE III
POWERS OF THE TRUSTEES
Section 1. Powers. The Board shall have full, exclusive and complete
power and discretion to manage and control the business and affairs of the
Trust, and to make all decisions affecting the business and affairs of the
Trust. No Shareholder or assignee of Shares, as such, shall have any authority,
right or power to bind the Trust or to manage or control, or to participate in
the management or control of, the business and affairs of the Trust in any
manner whatsoever. The Trustees shall have exclusive and absolute control over
the Trust Property and over the business of the Trust to the same extent as if
they were the sole owners of the Trust Property and business in their own right.
The Trustees shall have full power and authority to take or refrain from taking
any action and to execute any contracts and instruments that they may consider
necessary, desirable, convenient or incidental in the management of the Trust.
To the fullest extent permitted by applicable law, the Trustees shall not in any
way be bound or limited by current or future laws or customs applicable to trust
investments, but shall have full power and authority to make any investments
which they, in their sole discretion, deem proper to accomplish the purposes of
the Trust, and to dispose of the same. The Trustees may exercise all of their
powers without recourse to any court or other authority. Subject only to any
express limitation in the 1940 Act, this Declaration or contained in any Board
resolution, the Trustees shall have power and authority, without limitation:
(a) To operate as and carry on the business of a registered investment
company, and exercise all the powers necessary, proper or convenient to conduct
such a business;
(b) To subscribe for, invest in, reinvest in, purchase, or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute, or
otherwise deal in or dispose of any form of property, including, without
limitation, cash (U.S. currency), foreign currencies and related instruments,
and securities (including, without limitation, common and preferred stocks,
equity interests and securities, warrants, bonds, debentures, time notes, and
all other evidences of indebtedness, negotiable or non-negotiable instruments,
obligations, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, reverse repurchase agreements, convertible securities,
forward contracts, options, and futures contracts) issued, guaranteed, or
sponsored by, without limitation, any state, territory, or possession of the
United States or the District of Columbia or their political subdivisions,
agencies, or instrumentalities, or by the U.S. government, any foreign
government, or any agency, instrumentality, or political subdivision thereof, or
by any international instrumentality, or by any bank, savings institution,
corporation, partnership, limited liability company, trust, or other business
entity organized under the laws of the United States (including a Registered
Investment Company or any series thereof, subject to the provisions of the 1940
Act) or under foreign laws without regard to whether any such securities mature
before or after the possible termination of the Trust; to exercise any and all
rights, powers, and privileges of ownership or interest in respect of any and
all such investments of every kind and description; and to hold cash or other
property uninvested, without in any
6
<PAGE>
event being bound or limited by any current or future law or custom concerning
investments by trustees;
(c) To adopt By-Laws not inconsistent with this Declaration providing for
the conduct of the business of the Trust and to amend and repeal them;
(d) To elect and remove such officers of the Trust and appoint and
terminate such agents of the Trust as they deem appropriate;
(e) To employ as custodian of any assets of the Trust, subject to any
provisions herein or by resolution of the Board, one or more banks, trust
companies or companies that are members of a national securities exchange, or
other entities permitted by the Commission to serve as such;
(f) To retain one or more transfer agents and Shareholder servicing agents,
or both;
(g) To provide for the distribution of Shares either through a Principal
Underwriter as provided herein or by the Trust itself, or both, and, subject to
applicable law, to adopt a distribution plan of any kind;
(h) To set record dates in the manner provided for herein or in the
By-Laws;
(i) To delegate such authority as they consider desirable to such of their
number or to officers, employees or agents of the Trust including, without
limitation, the ability to perform actions or execute instruments in the name of
the Trust, the name of the Trustees or otherwise as the Trustees may deem
necessary, desirable or convenient;
(j) To sell or exchange any or all of the assets of the Trust, subject to
Article XI, Section 4;
(k) To vote or give assent, or exercise any rights of ownership, with
respect to other securities or property; and, if necessary, to execute and
deliver powers of attorney delegating such power to other persons;
(l) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(m) To hold any security or other property (i) in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable form, or
(ii) either in the Trust's or Trustees' own name or in the name of a custodian
or a nominee or nominees, subject to safeguards according to the usual practice
of business trusts or investment companies;
(n) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article IV;
7
<PAGE>
(o) To incur and pay all expenses that in the Trustees' opinion are
necessary or incidental to carry out any of the purposes of this Declaration; to
pay reasonable compensation to themselves as Trustees from the Trust Property or
the assets belonging to any appropriate Series or Class; to pay themselves such
compensation for special services, including legal and brokerage services, and
such reimbursement for expenses reasonably incurred by themselves on behalf of
the Trust or any Series or Class, as they in good faith may deem reasonable; and
to fix the compensation of all officers and employees of the Trust;
(p) To the full extent permitted by Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series
and liabilities and expenses to a particular Class or to apportion the same
between or among two or more Series or Classes, provided that any liabilities or
expenses incurred by a particular Series or Class shall be payable solely out of
the assets belonging to that Series or Class as provided for in Article IV,
Section 4;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or other business entity or concern
whose securities are held by the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern; and to
pay calls or subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(s) To make distributions of income and of capital gains to Shareholders in
the manner hereinafter provided for;
(t) To borrow money, issue evidence of indebtedness or otherwise obtain
credit and to secure the same by mortgaging, pledging, or otherwise subjecting
as security any assets of the Trust, including the lending of portfolio
securities, and to endorse, guarantee, or undertake the performance of any
obligation, contract, or engagement of any other person, firm, association, or
corporation subject only to the requirements of the 1940 Act;
(u) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any Shareholders
whose investment is less than such minimum upon giving notice to such
Shareholder;
(v) To establish committees for such purposes, with such membership, and
with such responsibilities as the Trustees may consider proper, including a
committee consisting of fewer than all of the Trustees then in office, which may
act for and bind the Trustees and the Trust with respect to the institution,
prosecution, dismissal, settlement, review or investigation of any legal action,
suit or proceeding, pending or threatened;
(w) To purchase, and pay for, out of Trust Property or the assets belonging
to any appropriate Series, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, and/or independent contractors of the
Trust (including the investment adviser of any Series) against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such person in such capacity, whether or not the Trust would
have the power to indemnify such person against such claim;
8
<PAGE>
(x) To issue, sell, repurchase, redeem, cancel, retire, acquire, hold,
resell, reissue, dispose of and otherwise deal in Shares; to establish terms and
conditions regarding the issuance, sale, repurchase, redemption, cancellation,
retirement, acquisition, holding, resale, reissuance, disposition of or dealing
in Shares; and, subject to Articles IV and V, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or
property of the Trust or of the particular Series with respect to which such
Shares are issued;
(y) To definitively interpret the investment objectives, policies and
limitations of the Trust or any Series; and
(z) To carry on any other business in connection with or incidental to any
of the foregoing powers, to do everything necessary, desirable or convenient to
accomplish any purpose or to further any of the foregoing powers, and to take
every other action incidental to the foregoing business or purposes, objects or
powers.
The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general powers of
the Trustees. Any action by one or more of the Trustees in their capacity as
Trustee(s) shall be deemed an action on behalf of the Trust or the applicable
Series, and not an action in an individual capacity. No one dealing with the
Trustees shall be under any obligation to make any inquiry concerning the
authority of the Trustees, or to see to the application of any payments made or
property transferred to the Trustees or upon their order. In construing this
Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
Section 2. Certain Transactions. Except as expressly prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person. The Trust may employ any such person or
entity in which such person is an Interested Person, or broker, legal counsel,
registrar, investment adviser, administrator, distributor, transfer agent,
dividend disbursing agent, custodian or in any other capacity upon customary
terms.
ARTICLE IV
SERIES; CLASSES; SHARES
Section 1. Establishment of Series or Class. The Trust shall consist of
one or more Series. The Trustees may divide the Shares of any Series into
Classes. The Initial Trustees shall establish the initial Series and Classes of
each Series by written unanimous consent. Each additional Series or division of
Series into Classes may be established by any permissible action of the
Trustees, including by resolution at a meeting. The Trustees may designate the
relative rights and preferences of the Shares of each Series. If a Series is
divided into Classes, each Class of a Series shall represent an undivided
beneficial interest in the assets of that Series and have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that expenses allocated to a Class may be borne solely by such Class as
determined by the Trustees and a Class may have exclusive voting rights with
respect to matters affecting only that
9
<PAGE>
Class. The Trust shall maintain separate and distinct records for each Series
and hold and account for the assets thereof separately from the other assets of
the Trust or of any other Series. A Series may issue any number of Shares and
need not issue Shares. Each Share of a Series shall represent an equal undivided
beneficial interest in the net assets of such Series. Each holder of Shares of a
Series shall be entitled to receive his or her pro rata share of all
distributions made with respect to such Series. Upon redemption of his or her
Shares, such Shareholder shall be paid solely out of the funds and property of
such Series. The Trustees may change the name of any Series or Class.
Section 2. Shares. The beneficial interest in the Trust shall be divided
into Shares of one or more separate and distinct Series or Classes established
by the Trustees. The number of Shares of each Series and Class is unlimited and
each Share shall have a par value (if any) as the Trustees may determine from
time to time. All Shares issued hereunder shall be fully paid and
nonassessable. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust. The
Trustees shall have full power and authority, in their sole discretion and
without obtaining Shareholder approval, to issue original or additional Shares
at such times and on such terms and conditions as they deem appropriate; to
issue fractional Shares and Shares held in the treasury; to establish and to
change in any manner Shares of any Series or Classes with such preferences,
terms of conversion, voting powers, rights and privileges as the Trustees may
determine; to divide or combine the Shares of any Series or Classes into a
greater or lesser number; to classify or reclassify any unissued Shares of any
Series or Classes into one or more Series or Classes of Shares; to abolish any
one or more Series or Classes of Shares; to issue Shares to acquire other assets
(including assets subject to, and in connection with, the assumption of
liabilities) and businesses; and to take such other action with respect to the
Shares as the Trustees may deem desirable. Shares held in the treasury shall
not confer any voting rights on the Trustees and shall not be entitled to any
dividends or other distributions declared with respect to the Shares.
Section 3. Investment in the Trust. The Trustees may accept investments
in any Series from such persons and on such terms as they may from time to time
authorize. At the Trustees' discretion, such investments, subject only to the
express requirements of the 1940 Act, may be in the form of cash or securities
in which that Series is authorized to invest, valued as provided in Article V,
Section 3. Investments in a Series shall be credited to each Shareholder's
account in the form of full Shares at the Net Asset Value per Share next
determined after the investment is received or accepted as may be determined by
the Trustees; provided, however, that the Trustees may, in their sole
discretion, (a) impose a sales charge upon investments in any Series or Class,
(b) issue fractional Shares, or (c) determine the Net Asset Value per Share of
the initial capital contribution. The Trustees shall have the right to refuse
to accept investments, or any investment, in any Series at any time without any
cause or reason whatsoever.
Section 4. Assets and Liabilities of Series. All consideration received
by the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof (including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may
be), shall be held and accounted for separately from the other assets of the
Trust and every other Series and are referred to as "assets belonging to" that
Series. The assets belonging to a
10
<PAGE>
Series shall belong only to that Series for all purposes, and to no other
Series, subject only to the rights of creditors of that Series. Any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more Series as the Trustees
deem fair and equitable. Each such allocation shall be conclusive and binding
upon the Shareholders of all Series for all purposes, and such assets, earnings,
income, profits or funds, or payments and proceeds thereof shall be referred to
as assets belonging to that Series. The assets belonging to a Series shall be so
recorded upon the books of the Trust, and shall be held by the Trustees in trust
for the benefit of the Shareholders of that Series. The assets belonging to a
Series shall be charged with the liabilities of that Series and all expenses,
costs, charges and reserves attributable to that Series, except that liabilities
and expenses allocated solely to a particular Class shall be borne by that
Class. Any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any particular Series
or Class shall be allocated and charged by the Trustees between or among any one
or more of the Series or Classes in such manner as the Trustees deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the Trustees to
allocate general liabilities, expenses, costs, charges or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of the Trust generally or of any other Series and, unless otherwise provided in
this Declaration, none of the debts, liabilities, obligations, expenses
incurred, contracted for or otherwise existing with respect to the Trust
generally or any other Series shall be enforceable against the assets of such
Series. Notice of this contractual limitation on liabilities among Series may,
in the Trustees discretion, be set forth in the certificate of trust of the
Trust (whether originally or by amendment) as filed or to be filed in the Office
of the Secretary of State of the State of Delaware pursuant to the Delaware Act,
and upon the giving of such notice in the certificate of trust, the statutory
provisions of Section 3804 of the Delaware Act relating to limitations on
liabilities among Series (and the statutory effect under Section 3804 of the
Delaware Act of setting forth such notice in the certificate of trust) shall
become applicable to the Trust and each Series. Any person extending credit to,
contracting with or having any claim against any Series may look only to the
assets of that Series to satisfy or enforce any debt, with respect to that
Series. No Shareholder or former Shareholder of any Series shall have a claim
on or any right to any assets allocated or belonging to any other Series.
Section 5. Ownership and Transfer of Shares. The Trust or Transfer Agent
shall maintain a register containing the names and addresses of the Shareholders
of each Series and Class thereof, the number of Shares of each Series and Class
held by such Shareholders, and a record of all Share transfers. The register
shall be conclusive as to the identity of Shareholders of record and the number
of Shares held by them from time to time. Shares shall be uncertificated unless
expressly authorized by the Trustees. The Trustees may authorize the issuance
of certificates representing Shares and adopt rules governing their use. The
Trustees may make rules governing the transfer of Shares, whether or not
represented by certificates. No Shareholder shall be entitled to payments of
distributions nor to any notice given, until it has given its address to such
officer or agent as shall keep the register.
11
<PAGE>
Section 6. Status of Shares; Limitation of Shareholder Liability. Shares
shall be deemed to be personal property giving Shareholders only the rights
provided in this Declaration. Every Shareholder, by virtue of having acquired a
Share, shall be held expressly to have assented to and agreed to be bound by the
terms of this Declaration and to have become a party hereto. No Shareholder
shall be personally liable for the debts, liabilities, obligations and expenses
incurred by, contracted for, or otherwise existing with respect to, the Trust or
any Series. Shareholders shall have the same limitation of personal liability
as is extended to Stockholders of a private corporation for profit organized
under The General Corporation Law of the State of Delaware. Every written
obligation of the Trust or any Series shall contain a statement to the effect
that such obligation may only be enforced against the assets of the Trust or
such Series; however, the omission of such statement shall not operate to bind
or create personal liability for any Shareholder or Trustee.
ARTICLE V
DISTRIBUTIONS AND REDEMPTION
Section 1. Distributions. The Trustees may declare and pay dividends and
other distributions, including dividends on Shares of a particular Series and
other distributions from the assets belonging to that Series. The amount and
payment of dividends or distributions and their form, whether they are in cash,
Shares or other Trust Property, shall be determined by the Trustees in their
sole discretion. Dividends and other distributions may be paid pursuant to a
standing resolution adopted once or more often as the Trustees determine. All
dividends and other distributions on Shares of a particular Series shall be
distributed pro rata to the Shareholders of that Series in proportion to the
number of Shares of that Series they held on the record date established for
such payment, except that such dividends and distributions shall appropriately
reflect expenses allocated to a particular Class of such Series. The Trustees
may adopt and offer to Shareholders such dividend reinvestment plans, cash
dividend payout plans or similar plans as the Trustees deem appropriate.
Section 2. Redemptions. As required under the 1940 Act, each Shareholder
of a Series shall have the right at such times as may be determined by the
Trustees to require the Series to redeem all or any part of his or her Shares at
a redemption price per Share equal to the Net Asset Value per Share at such time
as the Trustees shall have prescribed by resolution, less any applicable charges
or sales loads. In the absence of such resolution, the redemption price per
Share shall be the Net Asset Value next determined after receipt by the Series
of a request for redemption in proper form less such charges as are determined
by the Trustees and described in the Trust's Registration Statement for that
Series under the Securities Act of 1933 or the 1940 Act. The Trustees may
specify conditions, prices, and places of redemption, and may specify binding
requirements for the proper form or forms of requests for redemption. Payment
of the redemption price may be wholly or partly in securities or other assets at
the value of such securities or assets used in such determination of Net Asset
Value, or may be in cash. Upon redemption, Shares shall not be cancelled and
may be reissued from time to time. The Trustees may require Shareholders to
redeem Shares for any reason under terms set by the Trustees, including the
failure of a Shareholder to supply a personal identification number if required
to do so, or to have the minimum investment required, or to pay when due for the
purchase of Shares issued to him. To the extent permitted by law, the Trustees
may retain the proceeds of any
12
<PAGE>
redemption of Shares required by them for payment of amounts due and owing by a
Shareholder to the Trust or any Series or Class. Notwithstanding the foregoing,
the Trustees may postpone payment of the redemption price and may suspend the
right of the Shareholders to require any Series or Class to redeem Shares during
any period of time when and to the extent permissible under the 1940 Act.
Section 3. Determination of Net Asset Value. The Trustees shall cause
the Net Asset Value of Shares of each Series or Class to be determined from time
to time in a manner consistent with the 1940 Act. The Trustees may delegate the
power and duty to determine Net Asset Value per Share to one or more Trustees or
officers of the Trust or to a custodian, depository or other agent appointed for
such purpose. The Net Asset Value of Shares shall be determined separately for
each Series or Class at such times as may be prescribed by the Trustees or, in
the absence of action by the Trustees, as of the close of regular trading on the
New York Stock Exchange on each day for all or part of which such Exchange is
open for unrestricted trading.
Section 4. Suspension of Right of Redemption. If, as referred to in
Section 2 of this Article, the Trustees postpone payment of the redemption price
and suspend the right of Shareholders to redeem their Shares, such suspension
shall take effect at the time the Trustees shall specify, but not later than the
close of business on the business day next following the declaration of
suspension. Thereafter Shareholders shall have no right of redemption or
payment until the Trustees declare the end of the suspension. If the right of
redemption is suspended, a Shareholder may either withdraw his or her request
for redemption or receive payment based on the Net Asset Value per Share next
determined after the suspension-terminates.
Section 5. Redemption Necessary for Tax Purposes. If the Trustees shall
determine that direct or indirect ownership of Shares of any Series has become
concentrated in any person to an extent that would disqualify any Series as a
regulated investment company under the Internal Revenue Code, then the Trustees
shall have the power (but not the obligation) by lot or other means they deem
equitable to (a) call for redemption by any such person of a number, or a
principal amount, of Shares sufficient to maintain or bring the direct or
indirect ownership of Shares into conformity with the requirements for such
qualification, and (b) refuse to transfer or issue shares to any person whose
acquisition of Shares in question would, in the Trustee's judgment, result in
such disqualification. Any such redemption shall be effected at the redemption
price and in the manner provided in Section 2 of this Article V. Shareholders
shall upon demand disclose to the Trustees in writing such information
concerning direct and indirect ownership of Shares as the Trustees deem
necessary to comply with the requirements of any taxing authority.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have the right to vote
only on matters as expressly required under the 1940 Act or under the law of
Delaware applicable to business trusts. This Declaration shall not confer any
independent right to Shareholders to vote for any matter concerning the
creation, operation, dissolution, or termination of the Trust. The
13
<PAGE>
Shareholders shall have the right to vote on other matters only as the Trustees
may consider desirable, and so authorize. To the extent that the 1940 Act or
Delaware law is amended by rule, regulation, order, or no-action letter to
eliminate or limit Shareholders' right to vote on any specific matter, the
Shareholders' right to vote shall be deemed to be amended in accordance with the
amendment of law without further approval by the Trustees or the Shareholders.
Currently, the 1940 Act requires that shareholders have the right to vote,
under certain circumstances, to: (a) elect Trustees; (b) approve investment
advisory agreements and principal underwriting agreements; (c) approve a change
in subclassification; (d) approve any change in fundamental investment policies;
(e) approve a distribution plan under Rule 12b-1 of the 1940 Act; and (f)
terminate the Trust's independent public accountant. The Shareholders may vote
on any additional matter only as the Trustees may consider desirable, and so
authorize.
On any matter that requires Shareholder approval under the 1940 Act,
whether Shareholders are required to vote by Series or Class shall be determined
by reference to the express requirements of the 1940 Act. On other matters
submitted to a vote of the Shareholders in the discretion of the Trustees, or
for which the 1940 Act does not expressly specify the voting procedure, all
Shares shall be voted in the aggregate and not by individual Series or Class
unless the Trustees determine otherwise. Each whole Share shall be entitled to
one vote as to any matter on which it is entitled to vote, and each fractional
Share shall be entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy or in any manner authorized by the Trustees. Unless the Trustees
declare otherwise, proxies may be given by any electronic or telecommunications
device, including telefax, telephone or through the Internet, but if a proposal
by anyone other than the officers or Trustees is submitted to a vote of the
Shareholders of any Series or Class, or if there is a proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees, Shares may be voted only in person or by written proxy unless the
Trustees specifically authorize other permissible methods of transmission.
Until Shares of a Series are issued, as to that Series the Trustees may exercise
all rights of Shareholders and may take any action required or permitted to be
taken by Shareholders by Law, or this Declaration.
Section 2. Meetings of Shareholders. There shall be no annual
Shareholders' meeting unless required by law. The first Shareholders' meeting
shall be held to elect Trustees at such time and place as the Trustees
designate, unless such action is taken by consent of Shareholders. Special
meetings of the Shareholders of any Series or Class may be called by the
Trustees. Only if required under Section 16(c) of the 1940 Act, special
meetings shall be called by the Trustees upon the written request of
Shareholders owning at least ten percent of the Outstanding Shares of such
Series or Class entitled to vote for purposes of removing a Trustee.
Shareholders shall be entitled to at least fifteen calendar days notice of any
meeting, given as determined by the Trustees.
Section 3. Quorum; Required Vote. One-third of the Outstanding Shares of
each Series or Class, or one-third of the Outstanding Shares of the Trust,
entitled to vote in person or by proxy shall be a quorum for the transaction of
business at a Shareholders' meeting with respect to such Series or Class, or
with respect to the entire Trust, respectively. Any lesser number shall be
sufficient for adjournments. Any adjourned session of a Shareholders' meeting
may be held within a reasonable time without further notice. Except when a
larger vote is
14
<PAGE>
expressly required by the 1940 Act, if a quorum is present at a meeting, an
affirmative vote of a majority of the Outstanding Shares voted in person or by
proxy shall decide any matters to be voted upon with respect to the entire
Trust. However, if the 1940 Act requires, or this Declaration permit, or the
Trustees determine, that Shares be voted on any matter by individual Series or
Classes, then a majority of the Outstanding Shares of that Series or Class (or,
if required by law, a Majority Shareholder Vote of that Series or Class) voted
in person or by proxy shall decide that matter insofar as that Series or Class
is concerned. Shareholders may act as to the Trust or any Series or Class by the
written consent of a majority (or such greater amount as may be required by
applicable law or this Declaration) of the Outstanding Shares of the Trust or of
such Series or Class, as the case may be.
ARTICLE VII
CONTRACTS WITH SERVICE PROVIDERS
Section 1. Investment Adviser. The Trustees may enter into one or more
investment advisory contracts on behalf of the Trust or any Series, providing
for investment advisory services, statistical and research facilities and
services, and other facilities and services to be furnished to the Trust or
Series on terms and conditions acceptable to the Trustees. Any such contract
may provide for the investment adviser to effect purchases, sales or exchanges
of portfolio securities or other Trust Property on behalf of the Trustees or may
authorize any officer or agent of the Trust to effect such purchases, sales or
exchanges pursuant to recommendations of the investment adviser. The Trustees
may authorize the investment adviser to employ one or more sub-advisers. The
Shareholders of the Trust shall have the power to vote to approve investment
advisory contracts to the extent such approval is required under the 1940 Act.
Section 2. Principal Underwriter. The Trustees may enter into contracts
on behalf of the Trust or any Series or Class, providing for the distribution
and sale of Shares by the other party, either directly or as sales agent, on
terms and conditions acceptable to the Trustees. The Trustees may adopt a plan
or plans of distribution with respect to Shares of any Series or Class and enter
into any related agreements, whereby the Series or Class finances directly or
indirectly any activity that is primarily intended to result in sales of its
Shares, subject to the requirements of Section 12 of the 1940 Act, Rule 12b-1
thereunder, and other applicable rules and regulations.
Section 3. Transfer Agency, Shareholder Services, Accounting and
Administration Agreements. The Trustees, on behalf of the Trust or any Series
or Class, may enter into transfer agency agreements, Shareholder service
agreements, accounting agreements and administration and management agreements
with any party or parties on terms and conditions acceptable to the Trustees.
Section 4. Custodian. The Trustees shall at all times place and maintain
the securities and similar investments of the Trust and of each Series in
custody meeting the requirements of Section 17(f) of the 1940 Act and the rules
thereunder. The Trustees, on behalf of the Trust or any Series, may enter into
an agreement with a custodian on terms and conditions acceptable to the
Trustees, providing for the custodian, among other things, to (a) hold the
securities owned by the Trust or any Series and deliver the same upon written
order or oral order confirmed in writing, (b) receive and receipt for any moneys
due to the Trust or any Series and deposit the
15
<PAGE>
same in its own banking department or elsewhere, (c) disburse such funds upon
orders or vouchers, and (d) employ one or more sub-custodians.
Section 5. Parties to Contracts with Service Providers. The Trustees may
enter into any contract with any entity, although one more of the Trustees or
officers of the Trust may be an officer, director, trustee, partner,
Shareholder, or member of such entity, and no such contract shall be invalidated
or rendered void or voidable because of such relationship. No person having
such a relationship shall be disqualified from voting on or executing a contract
in his or her capacity as Trustee and/or Shareholder, or be liable merely by
reason of such relationship for any loss or expense to the Trust with respect to
such a contract or accountable for any profit realized directly or indirectly
therefrom; provided, that the contract was reasonable and fair and not
inconsistent with this Declaration.
Any contract referred to in Sections 1 and 2 of this Article shall be
consistent with and subject to the applicable requirements of Section 15 of the
1940 Act and the rules and orders thereunder with respect to its continuance in
effect, its termination, and the method of authorization and approval of such
contract or renewal.
ARTICLE VIII
EXPENSES OF THE TRUST AND SERIES
Subject to Article IV, Section 4, the Trust or a particular Series shall
pay, or shall reimburse the Trustees from the Trust estate or the assets
belonging to the particular Series, for their expenses and disbursements,
including, but not limited to, interest charges, taxes, brokerage fees and
commissions; expenses of issue, repurchase and redemption of Shares; certain
insurance premiums; applicable fees, interest charges and expenses of third
parties, including the Trust's investment advisers, managers, administrators,
distributors, custodians, transfer agents and fund accountants; fees of pricing,
interest, dividend, credit and other reporting services; costs of membership in
trade associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and its
Series and maintaining its existence; costs of preparing and printing the
prospectuses of the Trust and each Series, statements of additional information
and Shareholder reports and delivering them to Shareholders; expenses of
meetings of Shareholders and proxy solicitations therefor; costs of maintaining
books and accounts; costs of reproduction, stationery and supplies; fees and
expenses of the Trustees; compensation of the Trust's officers and employees and
costs of other personnel performing services for the Trust or any Series; costs
of Trustee meetings; Commission registration fees and related expenses; state or
foreign securities laws registration fees and related expenses; and for such
non-recurring items as may arise, including litigation to which the Trust or a
Series (or a Trustee or officer of the Trust acting as such) is a party, and for
all losses and liabilities by them incurred in administering the Trust. The
Trustees shall have a lien on the assets belonging to the appropriate Series, or
in the case of an expense allocable to more than one Series, on the assets of
each such Series, prior to any rights or interests of the Shareholders thereto,
for the reimbursement to them of such expenses, disbursements, losses and
liabilities.
16
<PAGE>
ARTICLE IX
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Liability. All persons contracting with or
having any claim against the Trust or a particular Series shall look only to the
assets of the Trust or such Series, respectively, for payment under such
contract or claim; and neither the Trustees nor any of the Trust's officers,
employees or agents, whether past, present or future (each a "Covered Person,"
and collectively the "Covered Persons"), shall be personally liable therefor.
No Covered Person shall be liable to the Trust or to any Shareholder for any
loss, damage or claim incurred by reason of any act omission performed or
omitted by such Covered Person in good faith on behalf of the Trust, a Series or
a Class, and in a manner reasonably believed to be within the scope of authority
conferred on such Covered Person by this Declaration, except that a Covered
Person shall be liable for any loss, damage or claim incurred by reason of such
Covered Person's bad faith, gross negligence, willful misconduct or reckless
disregard of the duties involved in the conduct of his or her office.
Section 2. Mandatory Indemnification. (a) Subject only to the express
limitations in the 1940 Act or other applicable laws, the Trust or the
appropriate Series shall indemnify each of its Covered Persons to the fullest
extent permitted under the 1940 Act and other applicable laws, including:
(i) against all liabilities and expenses reasonably incurred or
paid by him or her in connection with any claim, action, suit or proceeding in
which he or she becomes involved as a party or otherwise by virtue of his or her
being or having been a Covered Person and against amounts paid or incurred in
the settlement thereof
(ii) As used herein, the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened, and the words
"liability" and "expenses" shall include, without limitation, reasonable
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.
(b) As currently required under the 1940 Act, no indemnification shall
be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office,
or (B) not to have acted in good faith in the reasonable belief that his or her
action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office (A) by the court or other body approving the
settlement; (B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent
17
<PAGE>
legal counsel based upon a review of readily available facts (as opposed to a
full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured against by
policies of insurance maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, and shall inure to the benefit of the heirs, executors
and administrators of a Covered Person.
(d) To the maximum extent permitted by the 1940 Act and other applicable
laws, expenses in connection with the preparation and presentation of a defense
to any claim, action, suit or proceeding of the character described in
subsection (a) of this Section shall be paid by the Trust or applicable Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him or her to the Trust or applicable Series if it is ultimately
determined that he or she is not entitled to indemnification under this Section;
provided, however, that either (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured against
losses arising out of any such advance payments or (iii) either a majority of
the Trustees who are neither Interested Persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed to a full
trial-type inquiry) that there is reason to believe that such Covered Person
will not be disqualified from indemnification under this Section; provided,
however, that the Trust shall not be obligated to pay the expenses of any agent
acting pursuant to a written contract with the Trust, except to the extent
required by such contract;
(e) Any repeal or modification of this Article IX shall be prospective
only, to the extent that such repeal or modification would, if applied
retrospectively, adversely affect any limitation on the liability of any Covered
Person or adversely affect any indemnification available to any Covered Person
with respect to any act or omission which occurred prior to such repeal,
modification or adoption.
Section 3. Indemnification of Shareholders. If any Shareholder or former
Shareholder of any Series shall be held personally liable solely by reason of
his or her being or having been a Shareholder and not because of his or her acts
or omissions or for some other reason, the Shareholder or former Shareholder (or
his or her heirs, executors, administrators or other legal representatives or in
the case of any entity, its general successor) shall be entitled out of the
assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The
Trust, on behalf of the affected Series, shall, upon request by such
Shareholder, assume the defense of any claim made against such Shareholder for
any act or obligation of the Series and satisfy any judgment thereon from the
assets of the Series.
Section 4. Contractual Modification of Duties. To the extent that, at
law or equity, a Covered Person has duties (including fiduciary duties) and
liabilities relating to the Trust or any Series thereof or to any Shareholder,
any such Covered Person acting under this Declaration shall not be liable to the
Trust or any Series thereof or to any Shareholder for the Covered Person's good
faith reliance on the provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the duties and liabilities of a
Covered Person
18
<PAGE>
otherwise existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Covered Person.
ARTICLE X
OFFICERS
Section 1. General. The officers of the Trust shall be a President, a
Treasurer, and a Secretary, and may include one or more Assistant Treasurers or
Assistant Secretaries and such other officers ("Other Officers") as the Trustees
may determine. As specified in Section 6 of Article II, the Trustees may select
one or more of their members to be Chairman or Co-Chairmen of the Board. The
Chairman or Co-Chairmen of the Board may be, but are not required to be,
officers of the Trust. If the Trustees select a Chairman or Co-Chairmen, the
Trustees also will determine the powers and duties, and any limitations thereof,
of any Chairman or Co-Chairman selected by them.
Section 2. Election, Tenure and Qualifications of Officers. The Trustees
shall appoint the officers of the Trust. Each officer appointed by the Trustees
shall hold office until his or her successor shall have been appointed and
qualified or until his or her earlier death, inability to serve, or resignation.
Any person may hold one or more offices, except that the President and the
Secretary may not be the same individual. A person who holds more than one
office in the Trust may not act in more than one capacity to execute,
acknowledge, or verify an instrument required by law to be executed,
acknowledged, or verified by more than one officer. No officer need be a
Trustee or a Shareholder, unless specified otherwise by the Trustees.
Section 3. Vacancies and Newly Created Officers. Whenever a vacancy
shall occur in any office or if any new office is created, the Trustees may fill
such vacancy or new office.
Section 4. Removal and Resignation. Officers serve at the pleasure of
the Trustees and may be removed at any time with or without cause. The Trustees
may delegate this power to the Chairman or President with respect to any Other
Officer. Such removal shall be without prejudice to the contract rights, if
any, of the person so removed. Any officer may resign from office at any time
by delivering a written resignation to the Trustees, Chairman, or the President.
Unless otherwise specified therein, such resignation shall take effect upon
delivery.
Section 5. President. The President shall have such powers and perform
such duties as the Board or the Chairman may determine. In the absence of a
Chairman, the President shall preside over meetings of the Board, unless the
Trustees determine otherwise.
Section 6. Treasurer and Assistant Treasurer(s). The Treasurer is the
principal financial officer and principal accounting officer of the Trust. As
such, the Treasurer shall have general charge of the finances and books of the
Trust, and shall report to the Trustees annually regarding the financial
condition of each Series as soon as possible after the close of such Series'
fiscal year. The Treasurer shall be responsible for the delivery of all funds
and securities of the Trust to such company as the Trustees shall retain as
Custodian. The Treasurer shall furnish such reports concerning the financial
condition of the Trust as the Trustees may request. The Treasurer shall perform
all acts incidental to the office of Treasurer, subject to the Trustees'
supervision, and shall perform such additional duties as the Trustees may
designate.
19
<PAGE>
Any Assistant Treasurer may perform such duties of the Treasurer as the
Trustees or the Treasurer may assign, and, in the absence of the Treasurer, may
perform all the duties of the Treasurer.
Section 7. Secretary and Assistant Secretaries. The Secretary shall
record all votes and proceedings of the meetings of Trustees and Shareholders in
books to be kept for that purpose. The Secretary shall be responsible for
giving and serving notices of the Trust, unless the Trustees determine
otherwise. The Secretary shall have custody of any seal of the Trust and shall
be responsible for the records of the Trust, including the Share register and
such other books and documents as may be required by the Trustees or by law.
The Secretary shall perform all acts incidental to the office of Secretary,
subject to the supervision of the Trustees, and shall perform such additional
duties as the Trustees may designate.
Any Assistant Secretary may perform such duties of the Secretary as the
Trustees or the Secretary may assign, and, in the absence of the Secretary, may
perform all the duties of the Secretary.
Section 8. Authority to Execute and File Applications for Exemptive
Relief. The Officers of the Trust, including, without limitation, the
President, Treasurer, Assistant Treasurer, Secretary, Assistant Secretary, are
delegated the authority to prepare, execute and file with the Commission, any
and all applications for exemptive orders, and any amendments or supplements
thereto, that the Officers believe are necessary, desirable or convenient.
Section 9. Compensation of Officers. Each officer may receive such
compensation from the Trust for services and reimbursement for expenses as the
Trustees may determine.
Section 10. Surety Bond. The Trustees may require any officer or agent of
the Trust to execute a bond (including, without limitation, any bond required by
the 1940 Act and the rules and regulations of the Commission) to the Trust in
such sum and with such surety or sureties as the Trustees may determine,
conditioned upon the faithful performance of his or her duties to the Trust,
including responsibility for negligence and for the accounting of any of the
Trust's property, funds or securities that may come into his or her hands.
ARTICLE XI
MISCELLANEOUS
Section 1. Trust Not a Partnership. This Declaration creates a trust and
not a partnership. No Trustee shall have any power to bind personally either
the Trust's officers or any Shareholder to any obligation to which such person
has not consented.
Section 2. Trustee Action; Expert Advice; No Bond or Surety. The
exercise by the Trustees of their powers and discretion in accordance with the
terms of this Declaration in good faith under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
IX, the Trustees shall not be liable for errors of judgment or mistakes of fact
or law. The Trustees may take advice of counsel or other experts with respect
to the meaning and operation of this Declaration, and subject to the provisions
of Article IX, shall not be liable for any act or omission in accordance with
such advice or for failing to follow such
20
<PAGE>
advice. The Trustees shall not be required to give any bond as such, nor any
surety if a bond is obtained.
Section 3. Record Dates. The Trustees may fix in advance a date up to
ninety (90) days before the date of any Shareholders' meeting, or the date for
the payment of any dividends or other distributions, or the date for the
allotment of any other rights, or the date when any change or conversion or
exchange of Shares shall go into effect as a record date for the determination
of the Shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of such dividend or other distribution, or to
receive any such allotment of rights, or to exercise such rights in respect of
any such change, conversion or exchange of Shares.
Section 4. Dissolution or Termination of the Trust or a Series. (a) This
Trust shall have perpetual existence. Notwithstanding the foregoing, the
Trustees may, without Shareholder approval (unless the 1940 Act or other
applicable law expressly provides otherwise):
(i) sell and convey all or substantially all of the assets of the
Trust or any affected Series to another Series or to another entity which is an
open-end investment company as defined in the 1940 Act, or is a series thereof,
for adequate consideration, which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of the Trust or
any affected Series, and which may include Shares of or interests in such
Series, entity, or series thereof; or
(ii) at any time sell and convert into money all or substantially
all of the assets of the Trust or any affected Series.
Upon payment or the making of reasonable provision for the payment of all
known liabilities of the Trust or any affected Series in either (i) or (ii), by
such assumption or otherwise, the Trustees shall distribute the remaining
proceeds or assets (as the case may be) ratably among the Shareholders of the
Trust or any affected Series; however, the payment to any particular Series or
Class of such Series may be reduced by any fees, expenses or charges allocated
to that Series or Class.
(b) In determining whether to dissolve the Trust or a Series, the Trustees
may take into account whether continuation of the Trust or Series is in the best
interests of the Trust, such Series, or their respective Shareholders as a
result of factors or events adversely affecting the ability of the Trust or such
Series to conduct its business and operations in an economically viable manner.
Such factors and events may include the inability of the Trust or a Series to
maintain its assets at an appropriate size, changes in laws or regulations
governing the Trust or the Series or affecting assets of the type in which the
Trust or Series invests, or economic developments or trends having a significant
adverse impact on the business or operations of the Trust or such Series. If a
majority of the Trustees determine that the continuation of the Trust or Series
is not in the best interests of the Trust, such Series or Shareholders, such
determination is conclusive and binding upon the Trust, Series or Shareholders.
(c) Upon completion of the winding up of the affairs of the Trust and the
distribution of the remaining proceeds or assets pursuant to subsection (a), the
Trust shall terminate and the Trustees and the Trust shall be discharged of any
and all further liabilities and duties hereunder
21
<PAGE>
with respect thereto and the right, title and interest of all parties therein
shall be canceled and discharged. Upon dissolution (as defined in The Delaware
Act) of the Trust, following completion of winding up of its business, the
Trustees shall cause a certificate of cancellation of the Trust's certificate of
Trust, which may be signed by any one Trustee, to be filed in accordance with
the Delaware Act.
(d) The dissolution or termination of a Series or a Class shall not affect
the existence of the Trust or any other Series or Class. Upon completion of the
winding up of the affairs of a terminated Series and the distribution of the
assets pursuant to subparagraph (a), the Trustees shall, by Board resolution or
other written instrument, record in the Trust's books and records that the
Series or Class is terminated.
Section 5. Reorganization. Unless Shareholder approval is expressly
required under the 1940 Act, the Trustees may, without the need of any action or
vote of the Shareholders or any other person or entity, (a) cause the Trust to
merge or consolidate with or into one or more business trust or other business
entities (as defined under The Delaware Act), if the surviving or resulting
entity is the Trust or another open-end management investment company under the
1940 Act, or a series thereof, that will succeed to or assume the Trust's
registration under the 1940 Act, or (b) cause the Trust to incorporate under the
laws of Delaware. Any agreement of merger or consolidation or certificate of
merger may be signed by any Trustee authorized by resolution of a majority of
the Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.
Pursuant to and in accordance with the provisions of Section 3815(f) of the
Delaware Act, an agreement of merger or consolidation approved by the Trustees
in accordance with this Section 5 may effect any amendment to the Declaration or
effect the adoption of a new governing Declaration of the Trust if it is the
surviving or resulting trust in the merger or consolidation.
Section 6. Declaration. The original or a copy of this Declaration and
of each amendment hereto or Declaration supplemental shall be kept at the office
of the Trust. Anyone dealing with the Trust may rely on a certificate by a
Trustee or an officer of the Trust as to the authenticity of the Declaration of
Trust or any such amendments or supplements and as to any matters in connection
with the Trust. This Declaration may be executed in any number of counterparts,
each of which shall be deemed an original.
Section 7. Derivative Actions. As expressly provided in The Delaware
Act, Shareholders have the right to bring a derivative action if they meet the
express requirements of Delaware law. In addition to the requirements under
Delaware law, however, no derivative action may be brought by Shareholders
unless Shareholders owning not less than one-third of the Outstanding Shares of
all Series of the Trust, or of the affected Series or Classes of the Trust, as
the case may be, join in the bringing of the derivative action.
Section 8. Applicable Law. This Declaration and the Trust created
hereunder are governed by and construed and administered according to The
Delaware Act and the applicable laws of the State of Delaware; provided,
however, that there shall not be applicable to the Trust, the Trustees or this
Declaration (a) the provisions of Section 3540 of Title 12 of the Delaware
22
<PAGE>
Code,or (b) any provisions of the laws (statutory or common) of the State of
Delaware (other than the Delaware Act) pertaining to trusts which relate to or
regulate (i) the filing with any court or governmental body or agency of trustee
accounts or schedules of trustee fees and charges, (ii) affirmative requirements
to post bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding of trust assets, or (vii) the establishment of fiduciary or
other standards of responsibilities or limitations on the acts or powers of
trustees, which are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this
Declaration. The Trust shall be of the type commonly called a Delaware business
trust, and, without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions.
Section 9. Amendments. Because this Declaration does not confer any
independent rights to Shareholders not expressly granted under Delaware law or
the 1940 Act, this Declaration may be amended without Shareholder approval, and
all Shareholders purchase Shares with notice that this Declaration may be so
amended unless expressly required under the 1940 Act. The Trustees may, without
any Shareholder vote, amend or otherwise supplement this Declaration by making
an amendment, a trust instrument supplemental hereto or an amended and restated
declaration of trust; provided, that Shareholders shall have the right to vote
on any amendment if expressly required under the 1940 Act or other applicable
law, or submitted to them by the Trustees in their discretion.
Section 10. Fiscal Year. The fiscal year of the Trust or specific
Series within the Trust shall end on a specific date as determined by the
Trustees in this Declaration or by resolution or other written instrument. The
Trustees may change the fiscal year of the Trust, or any Series of the Trust
without Shareholder approval.
Section 11. Severability. The provisions of this Declaration are
severable. If the Trustees determine, with the advice of counsel, that any
provision hereof conflicts with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration; provided, however, that such determination shall not
affect any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination. If any
provision hereof shall be held invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall attach only to such provision only in
such jurisdiction and shall not affect any other provision of this Declaration.
Section 12. Principal Office. The principal office of the Trust
shall be located in Little Rock, Arkansas, or such other location as the
Trustees may from time to time determine.
23
<PAGE>
Section 13. Inspection of the Books. Except as expressly required
under the 1940 Act or conferred under other applicable law, Shareholders shall
have no right to inspect the books of the Trust except as the Trustees may
expressly authorize. The Trustees may authorize that the books of the Trust be
open to inspection by Shareholders under the conditions and regulations that
they deem desirable.
24
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the Trustees, have executed this
Declaration as of the date first above written.
___________________________________
Robert C. Brown,
as Trustee and not individually
___________________________________
Donald H. Burkhardt,
as Trustee and not individually
___________________________________
Jack S. Euphrat,
as Trustee and not individually
___________________________________
Thomas S. Goho,
as Trustee and not individually
___________________________________
Peter G. Gordon,
as Trustee and not individually
___________________________________
W. Rodney Hughes,
as Trustee and not individually
___________________________________
Richard M. Leach,
as Trustee and not individually
___________________________________
J.Tucker Morse
as Trustee and not individually
25
<PAGE>
___________________________________
Timothy J. Penny,
as Trustee and not individually
___________________________________
Donald C. Willeke,
as Trustee and not individually
26
<PAGE>
Exhibit 99.B(d)(1)
WELLS FARGO FUNDS TRUST
INVESTMENT ADVISORY AGREEMENT
This AGREEMENT is made as of this ___ day of September___, 1999, between
Wells Fargo Funds Trust (the "Trust"), a business trust organized under the laws
of the State of Delaware with its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201 and Wells Fargo Bank, N.A. (the "Adviser"),
a banking association organized under the laws of the United States of America
with its principal place of business at 420 Montgomery Street, 12th Floor, San
Francisco, California, 94104.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "1940 Act") as an open-end management investment company and is
authorized to issue interests (as defined in the Trust's Trust Instrument), in
separate series;
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust listed on Schedule A hereto as such
Schedule may be amended or supplemented from time to time by mutual agreement
(each a "Fund" and collectively the "Funds"), and the Adviser is willing to
provide those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust and the Adviser agree as follows:
Section 1. The Trust; Delivery of Documents. The Trust is engaged in the
business of investing and reinvesting its assets in securities of the type and
in accordance with the limitations specified in its Trust Instrument, By-Laws
(if any) and Registration Statement filed with the Securities and Exchange
Commission (the "Commission") under the 1940 Act and the Securities Act of 1933
(the "Securities Act"), including any representations made in the prospectus and
statement of additional information relating to the Funds contained therein and
as may be supplemented from time to time, all in such manner and to such extent
as may from time to time be authorized by the Trust's Board of Trustees (the
"Board"). The Board is authorized to issue any unissued shares in any number of
additional classes or series. The Trust has delivered copies of the documents
listed in this Section to the Adviser and will from time to time furnish the
Adviser with any amendments thereof.
Section 2. Investment Adviser; Appointment. The Trust hereby employs
Adviser, subject to the direction and control of the Board, to manage the
investment and reinvestment of the assets in the Funds and, without limiting the
generality of the foregoing, to provide the other services specified in Section
3 hereof.
Section 3. Duties of the Adviser.
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets for the Funds. Among other
things, the Adviser shall make all decisions with respect to the allocation of
the Funds' investments in various securities or other
1
<PAGE>
assets, in investment styles and, if applicable, in other investment companies
or pooled vehicles in which a Fund may invest. To carry out such decisions, the
Adviser is hereby authorized , as agent and attorney-in-fact for the Trust, for
the account of, at the risk of and in the name of the Trust, to place orders and
issue instructions with respect to those transactions of the Funds. In all
purchases, sales and other transactions in securities for the Funds, the Adviser
is authorized to exercise full discretion and act for the Trust in the same
manner and with the same force and effect as the Trust might or could do with
respect to such purchases, sales or other transactions, as well as with respect
to all other things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each regular meeting thereof
all material changes in the Funds since the prior report, and will also keep the
Board informed of important developments affecting the Trust, each Fund and the
Adviser, and on its own initiative will furnish the Board from time to time with
such information as the Adviser may believe appropriate, whether concerning the
individual companies whose securities are held by a Fund, the industries in
which they engage, or the economic, social or political conditions prevailing in
each country in which a Fund maintains investments. The Adviser will also
furnish the Board with such statistical and analytical information with respect
to securities in the Funds as the Adviser may believe appropriate or as the
Board reasonably may request. In making purchases and sales of securities for
the Funds, the Adviser will comply with the policies set from time to time by
the Board as well as the limitations imposed by the Trust's Trust Instrument,
By-Laws (if any) and Registration Statement under the 1940 Act and the
Securities Act, the limitations in the 1940 Act and in the Internal Revenue Code
of 1986, as amended, applicable to the Trust and the investment objectives,
policies and restrictions of each Fund.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be appropriate or necessary to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be imposed on the
Trust in any such respect.
(d) The Adviser shall maintain records relating to portfolio transactions
and the placing and allocation of brokerage orders as are required to be
maintained by the Trust under the 1940 Act. The Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Commission and the Internal Revenue
Service. The books and records pertaining to the Trust which are in possession
of the Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Adviser's normal business hours. Upon the reasonable request of
the Trust, copies of any such books and records shall be provided promptly by
the Adviser to the Trust or the Trust's authorized representatives.
2
<PAGE>
(e) With respect to a Fund, the Adviser shall have no duties or obligations
pursuant to this Agreement, during any period during which the Fund invests all
(or substantially all) of its investment assets in a registered, open-end
management investment company, or separate series thereof, in accordance with
Section 12(d)(1)(E) under the 1940 Act.
Section 4. Delegation of Responsibilities. The Adviser may carry out any of
its obligations under this Agreement by employing, subject to supervision by the
Adviser, one or more Sub-Adviser(s) who are registered as investment advisers
pursuant to the Investment Advisers Act of 1940 or who are exempt from
registration thereunder ("Sub-Advisers"). Each Sub-Adviser's employment will be
evidenced by a separate written agreement approved by the Board and, if required
under the 1940, Act by the shareholders of the Fund (unless the Commission or
its staff has given authorization or issued an interpretation dispensing with
the requirement of shareholder approval). The Adviser shall not be liable
hereunder for any act or omission of any Sub-Adviser, except for failure to
exercise good faith in the employment of the Sub-Adviser and for failure to
exercise appropriate supervision of such Sub-Adviser, and as may otherwise be
agreed in writing. The Adviser shall be solely responsible for compensating any
Sub-Adviser for services rendered under any Sub-Advisory Agreement. The Adviser
may, from time to time and at any time, terminate any Sub-Adviser and reassume
the responsibilities assigned to such Sub-Adviser with respect to any Fund
without obtaining the approval of the shareholders of the Fund.
Section 5. Control by Board. Any investment activities undertaken by the
Adviser pursuant to this Agreement, as well as any other activities undertaken
by the Adviser on behalf of the Funds, shall at all times be subject to the
direction and control of the Board.
Section 6. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Adviser shall at all times comply with:
(a) all applicable provisions of the 1940 Act, and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as it may
be amended from time to time, under the Securities Act and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as it may be
amended from time to time;
(d) the provisions of any By-laws of the Trust, if adopted and as they may
be amended from time to time, or resolutions of the Board that may be adopted
from time to time;
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Trust or the Funds; and
(f) any other applicable provisions of state or federal law.
3
<PAGE>
Section 7. Broker-Dealer Relationships. In connection with the purchase
and sale of securities for the Funds, the Adviser is responsible for broker-
dealer selection and negotiation of brokerage commission rates. The Adviser's
primary consideration in effecting a security transaction will be to obtain the
best price and execution. In selecting a broker-dealer to execute each
particular transaction for a Fund, the Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker-
dealer to the Fund on a continuing basis. Accordingly, the price to the Fund in
any transaction may be less favorable than that available from another broker-
dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Board may
from time to time determine, the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of having caused a Fund to pay a broker or dealer that provides
brokerage and research services to the Adviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Adviser with
respect to the Fund and to other clients of the Adviser. The Adviser is further
authorized to allocate the orders placed by it on behalf of the Funds to brokers
and dealers who also provide research or statistical material, or other services
to the Funds or to the Adviser. Such allocation shall be in such amounts and
proportions as the Adviser shall determine and the Adviser will report on said
allocations regularly to the Board, indicating the brokers to whom such
allocations have been made and the basis therefor.
Section 8. Expenses of the Fund. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Trust include, but are not limited to, brokerage
commissions, taxes, legal, auditing or governmental fees, the cost of preparing
share certificates, custodian, transfer agent and shareholder service agent
costs, expense of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to trustees and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
Section 9. Compensation.
(a) As compensation for the advisory services provided under this
Agreement, the Trust shall pay the Adviser fees, payable monthly, at the annual
rates indicated on Schedule A hereto, as such Schedule may be amended or
supplemented from time to time;
(b) Except as provided in the following paragraph, no fee shall be payable
hereunder with respect to a Fund during any period in which the Fund invests all
(or substantially all) of its
4
<PAGE>
investment assets in a single registered, open-end management investment
company, or separate series thereof, in accordance with Section 12(d)(1)(E)
under the 1940 Act;
(c) The adviser shall receive a fee of as set forth in Schedule A for asset
allocation services if a Fund invests some of its investment assets in
one or more registered, open-end management investment companies, or separate
series thereof, in each case, in accordance with Section 12(d)(1)(h) under the
Act, the rules thereunder or an exemptive order issued by the Commission
exempting the Fund from the provisions of Section 12(d)(1)(A) under the Act (a
"Fund of Funds structure")
(d) To the extent the Board determines that a Fund should invest a portion
of its assets directly in portfolio securities, rather than in a portfolio of
Wells Fargo Core Trust (Delaware) or other portfolio, with respect to those
assets the Fund will pay the Adviser the same fee that the portfolio was paying
its adviser (the fees of each portfolio will be disclosed in the proxy statement
and prospectus).
Section 10. Standard of Care. The Trust shall expect of the Adviser, and
the Adviser will give the Trust the benefit of, the Adviser's best judgment and
efforts in rendering its services to the Trust, and as an inducement to the
Adviser's undertaking these services at the compensation level specified, the
Adviser shall not be liable hereunder for any mistake in judgment. In the
absence of willful misfeasance, bad faith, negligence or reckless disregard of
obligations or duties hereunder on the part of the Adviser or any of its
officers, directors, employees or agents, the Adviser shall not be subject to
liability to the Trust or to any shareholders of the Trust for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
Section 11. Non-Exclusivity. The services of the Adviser to the Funds are
not to be deemed to be exclusive, and the Adviser shall be free to render
investment advisory or other services to others (including other investment
companies) and to engage in other activities. It is understood and agreed that
officers or directors of the Adviser may serve as officers and directors of the
Trust, and that officers or directors of the Trust may serve as officers or
directors of the Adviser, to the extent that such services may be permitted by
law, and that the officers and directors of the Adviser are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or from serving as partners, officers, directors or trustees of any
other firm or trust, including other investment advisory companies.
Section 12. Records. The Adviser shall, with respect to orders the Adviser
places for the purchase and sale of portfolio securities of the Funds, maintain
or arrange for the maintenance of the documents and records required pursuant to
Rule 31a-1 under the 1940 Act as well as such records as the Funds'
administrator reasonably requests to be maintained, including, but not limited
to, trade tickets and confirmations for portfolio trades. All such records shall
be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1 or any successor rule. All such records will be the
property of the Funds and will be available for inspection and use by the Funds.
The Adviser will promptly notify the Funds' Administrator if it experiences any
difficulty in maintaining the records in an accurate and complete manner.
5
<PAGE>
Section 13. Term and Approval. This Agreement shall become effective with
respect to a Fund after approved in accordance with the requirements of the 1940
Act, and executed by the Adviser and the Trust, and shall thereafter continue
from year to year, provided that the continuation of the Agreement is
specifically approved in accordance with the requirements of the 1940 Act, which
currently requires that the continuation be approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of "a majority
of the outstanding voting securities" of the Fund (as defined in Section
2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's Directors who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Directors of the Trust), by
votes cast in person at a meeting specifically called for such purpose.
Section 14. Termination. As required under the 1940 Act, this Agreement may
be terminated with respect to a Fund at any time, without the payment of any
penalty, by vote of the Trust's Board of Trustees or by vote of a majority of a
Fund's outstanding voting securities, or by the Adviser, on sixty (60) days'
written notice to the other party. The notice provided for herein may be waived
by the party entitled to receipt thereof. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" for purposes of
this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act, as
it may be interpreted by the Commission or its staff in interpretive releases,
or applied by the Commission staff in no-action letters issued under the 1940
Act.
Section 15. Indemnification by the Adviser. The Trust shall not be
responsible for, and the Adviser shall indemnify and hold the Trust or any Fund
of the Trust harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to the willful misfeasance, bad faith, negligent acts or reckless
disregard of obligations or duties on the part of the Adviser or any of its
officers, directors, employees or agents.
Section 16. Indemnification by the Trust. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of duties hereunder on
the part of the Adviser or any of its officers, directors, employees or agents,
the Trust hereby agrees to indemnify and hold harmless the Adviser against all
claims, actions, suits or proceedings at law or in equity whether brought by a
private party or a governmental department, commission, board, bureau, agency or
instrumentality of any kind, arising from the advertising, solicitation, sale,
purchase or pledge of securities, whether of the Funds or other securities,
undertaken by the Funds, their officers, directors, employees or affiliates,
resulting from any violations of the securities laws, rules, regulations,
statutes and codes, whether federal or of any state, by the Funds, their
officers, directors, employees or affiliates. Federal and state securities laws
impose liabilities under certain circumstances on persons who act in good faith,
and nothing herein shall constitute a waiver or limitation of any rights which a
Fund may have and which may not be waived under any applicable federal and state
securities laws.
6
<PAGE>
Section 17. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
shall be c/o Stephens Inc., 111 Center Street, Suite 300, Little Rock, Arkansas
72201, Attention R. Greg Feltus, and that of the Adviser shall be 525 Market
Street, 12th Floor, San Francisco, California 94163, Attention Michael J.
Hogan.
Section 18. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission,
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the Commission, such provision shall be
deemed to incorporate the effect of such rule, regulation or order. The duties
and obligations of the parties under this Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 19. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. If shareholder approval of
an amendment is required under the 1940 Act, no such amendment shall become
effective until approved by a vote of the majority of the outstanding shares of
the affected Funds. Otherwise, a written amendment of this Agreement is
effective upon the approval of the Board of Trustees and the Adviser.
Section 20. Wells Fargo Name. The Adviser and the Trust each agree that
the name "Wells Fargo," which comprises a component of the Trust's name, is a
property right of the parent of the Adviser. The Trust agrees and consents that:
(I) it will use the words "Wells Fargo" as a component of its corporate name,
the name of any series or class, or all of the above, and for no other purpose;
(ii) it will not grant to any third party the right to use the name "Wells
Fargo" for any purpose; (iii) the Adviser or any corporate affiliate of the
Adviser may use or grant to others the right to use the words "Wells Fargo," or
any combination or abbreviation thereof, as all or a portion of a corporate or
business name or for any commercial purpose, other than a grant of such right to
another registered investment company not advised by the Adviser or one of its
affiliates; and (iv) in the event that the Adviser or an affiliate thereof is no
longer acting as investment adviser to any Fund or class of a Fund, the Trust
shall, upon request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing the words "Wells
Fargo" and following such change, shall not use the words "Wells Fargo," or any
combination thereof, as a part of its corporate name or for any other commercial
purpose, and shall use its best efforts to cause its trustees, officers and
shareholders to take any and all actions that the Adviser may request to effect
the foregoing and to reconvey to the Adviser any and all rights to such words.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO FUNDS TRUST
on behalf of the Funds
By: /s/
-------------------------------------
R. Greg Feltus, President
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/
-------------------------------------
Michael J. Hogan
Executive Vice President
By:___________________________________
C. David Messman
Vice President
8
<PAGE>
WELLS FARGO FUNDS TRUST
INVESTMENT ADVISORY AGREEMENT
SCHEDULE A
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Fee as % of Avg.
FUNDS Daily Net Asset
Value
------------------------------------------------------------------------
<S> <C>
Aggressive Balanced-Equity Fund 0.72
------------------------------------------------------------------------
Arizona Tax-Free Fund 0.40
------------------------------------------------------------------------
Asset Allocation Fund 0.80
------------------------------------------------------------------------
California Tax-Free Bond Fund 0.40
------------------------------------------------------------------------
California Tax-Free Income Fund 0.40
------------------------------------------------------------------------
California Tax-Free Money Market Fund 0.30
------------------------------------------------------------------------
California Tax-Free Money Market Trust 0.25
------------------------------------------------------------------------
Cash Investment Money Market Fund 0.10
------------------------------------------------------------------------
Colorado Tax-Free Fund 0.40
------------------------------------------------------------------------
Corporate Bond Fund 0.50
------------------------------------------------------------------------
Disciplined Growth Fund 0.75
------------------------------------------------------------------------
Diversified Bond Fund 0.50
------------------------------------------------------------------------
Diversified Equity Fund 0.72
------------------------------------------------------------------------
Diversified Small Cap Fund 0.72
------------------------------------------------------------------------
Equity Index Fund 0.25
------------------------------------------------------------------------
Equity Value Fund 0.75
------------------------------------------------------------------------
Government Money Market Fund 0.35
------------------------------------------------------------------------
Growth Balanced Fund 0.65
------------------------------------------------------------------------
Growth Equity Fund 0.97
------------------------------------------------------------------------
Growth Fund 0.75
------------------------------------------------------------------------
Income Equity Fund 0.75
------------------------------------------------------------------------
Income Fund 0.50
------------------------------------------------------------------------
Income Plus Fund 0.60
------------------------------------------------------------------------
Index Allocation Fund 0.80
------------------------------------------------------------------------
Index Fund 0.15
------------------------------------------------------------------------
Intermediate Government Income Fund 0.50
------------------------------------------------------------------------
International Equity Fund 1.00
------------------------------------------------------------------------
International Fund 1.00
------------------------------------------------------------------------
Large Company Growth Fund 0.75
------------------------------------------------------------------------
Limited Term Government Income Fund 0.50
------------------------------------------------------------------------
Limited Term Tax-Free Fund 0.40
------------------------------------------------------------------------
Minnesota Intermediate Tax-Free Fund 0.40
------------------------------------------------------------------------
Minnesota Tax-Free Fund 0.40
------------------------------------------------------------------------
Minnesota Tax-Free Money Market Fund 0.30
------------------------------------------------------------------------
Moderate Balanced Fund 0.60
------------------------------------------------------------------------
Money Market Fund 0.40
------------------------------------------------------------------------
Money Market Trust 0.25
------------------------------------------------------------------------
National Tax-Free Institutional Money Market Fund 0.10
------------------------------------------------------------------------
National Tax-Free Money Market Fund 0.25
------------------------------------------------------------------------
National Tax-Free Money Market Trust 0.25
------------------------------------------------------------------------
Oregon Tax-Free Fund 0.40
------------------------------------------------------------------------
Overland Express Sweep Fund 0.45
------------------------------------------------------------------------
Prime Investment Money Market Fund 0.10
------------------------------------------------------------------------
Small Cap Fund 0.90
------------------------------------------------------------------------
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Fee as % of Avg.
Daily Net Asset
FUNDS Value
------------------------------------------------------------------------
<S> <C>
Small Cap Opportunities Fund 0.90
------------------------------------------------------------------------
Small Cap Value Fund 0.90
------------------------------------------------------------------------
Small Company Growth Fund 0.90
------------------------------------------------------------------------
Stable Income Fund 0.50
------------------------------------------------------------------------
Strategic Income Fund 0.52
------------------------------------------------------------------------
Tax-Free Income Fund 0.40
------------------------------------------------------------------------
Treasury Plus Institutional Money Market Fund 0.10
------------------------------------------------------------------------
Treasury Plus Money Market Fund 0.35
------------------------------------------------------------------------
100% Treasury Money Market Fund 0.35
------------------------------------------------------------------------
Variable Rate Government Fund 0.50
------------------------------------------------------------------------
Wealthbuilder II Growth Balanced Portfolio 0.35
------------------------------------------------------------------------
Wealthbuilder II Growth and Income Portfolio 0.35
------------------------------------------------------------------------
Wealthbuilder II Growth Portfolio 0.35
------------------------------------------------------------------------
</TABLE>
Approved by Board of Trustees: March 26, 1999
A-2
<PAGE>
Exhibit 99.B(d)(2)(i)
SUB-ADVISORY CONTRACT
WELLS FARGO BANK, N.A.
525 Market Street
San Francisco, CA 94163
September __, 1999
Barclays Global Fund Advisors
45 Fremont, 17th Floor
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement by and among Wells Fargo Bank, N.A. (the
"Adviser"), Wells Fargo Funds Trust (the "Trust"), on behalf of each Fund listed
on attached Appendix I as it may be amended from time to time (each, a "Fund"
and collectively, the "Funds"), and Barclays Global Fund Advisors (the "Sub-
Adviser") as follows:
1. The Trust is a registered open-end management investment company
currently consisting of a number of investment portfolios, but which may from
time to time consist of a greater or lesser number of investment portfolios. The
Trust proposes to engage in the business of investing and reinvesting the assets
of the Funds in the manner and in accordance with the investment objective and
restrictions specified in the Trust's Registration Statement, as amended from
time to time (the "Registration Statement"), filed by the Trust under the
Investment Company Act of 1940 (the "Act") and the Securities Act of 1933.
Copies of the Registration Statement have been furnished to the Adviser. Any
amendments to the Registration Statement shall be furnished to the Adviser
promptly.
2. The Trust has engaged the Adviser to manage the investing and
reinvesting of the Funds' assets and to provide the advisory services specified
elsewhere in the Investment Advisory Agreement between the Trust and the
Adviser, dated as of the date hereof, subject to the overall supervision of the
Board of Trustees of the Trust. Pursuant to Administration between the Trust,
on behalf of the Funds, and the Administrator (the "Administrator"), the Trust
has engaged the Administrator to provide the administration services specified
therein.
3. (a) The Adviser hereby employs the Sub-Adviser to perform for
the Funds certain sub-advisory services and the Sub-Adviser hereby accepts such
employment. The Adviser shall retain the authority to establish and modify,
from time to time, the investment strategies and approaches to be followed by
the Sub-Adviser, subject, in all respects, to the supervision and direction of
the Trust's Board of Trustees and subject to compliance with the investment
objective, policies and restrictions set forth in the Registration Statement.
(b) Subject to the overall supervision and control of the Adviser and
the Trust, the Sub-Adviser shall be responsible for investing and reinvesting
the Funds' assets in a manner consistent with the investment strategies and
approaches referenced in subparagraph (a), above.
<PAGE>
In this regard, the Sub-Adviser shall be responsible for implementing and
monitoring the performance of the investment model employed with respect to a
Fund, in accordance with the investment objective, policies and restrictions set
forth in the Registration Statement, the Act, and the provisions of the Internal
Revenue Code of 1986 relating to investment companies, and shall furnish to the
Adviser periodic reports on the investment activity and performance of the
Funds. The Sub-Adviser shall also furnish such additional reports and
information as the Adviser and the Trust's Board of Trustees and officers shall
reasonably request.
(c) The Sub-Adviser shall, at its expense, employ or associate with
itself such persons as the Sub-Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Adviser shall be responsible for fees paid to the Sub-Adviser for
its services thereunder. The Sub-Adviser agrees that it shall have no claim
against the Trust or the Funds respecting compensation under this contract. In
consideration of the services to be rendered by the Sub-Adviser under this
contract, the Adviser shall pay the Sub-Adviser monthly fees at the rates
specified on Appendix I hereto. If the fee payable to the Sub-Adviser pursuant
to this Paragraph 4 begins to accrue on a day after the first day of any month
or if this contract terminates before the end of any month, the fee for the
period from the effective date to the end of the month, or from the beginning of
that month to the termination date, shall be prorated according to the
proportion that such period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating the monthly fee, the value of
a Fund's net assets shall be computed in the manner specified in the
Registration Statement and the Trust's Declaration of Trust for the computation
of the value of such Fund's net assets in connection with the determination of
the net asset value of Fund shares.
5. The Sub-Adviser shall give the Trust the benefit of the Sub-Adviser's
best judgment and efforts in rendering services under this contract. As
consideration and as an inducement to the Sub-Adviser's undertaking to render
these services, the Trust and the Adviser agree that the Sub-Adviser shall not
be liable under this contract for any mistake in judgment or in any other event
whatsoever except for lack of good faith, provided that nothing in this contract
shall be deemed to protect or purport to protect the Sub-Adviser against any
liability to the Adviser, the Trust or its shareholders to which the Sub-Adviser
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Sub-Adviser's duties under this contract or
by reason of reckless disregard of its obligations and duties thereunder.
6. This contract shall become effective as of its execution date and
shall thereafter continue in effect, provided that this contract shall continue
in effect for a period of more than two years from the date hereof only so long
as the continuance is specifically approved at least annually (a) by the vote of
a majority of a Fund's outstanding voting securities (as defined in the Act) or
by the Trust's Board of Trustees and (b) by the vote, cast in person at a
meeting called specifically for the purpose of continuing this Sub-Advisory
Contract, of a majority of the Trust's Trustees who are not parties to this
contract or "interested persons" (as defined in the Act) of any such party. This
contract may be terminated, upon 60 days' written notice to the Sub-Adviser, by
the Company, without the payment of any penalty, by a vote of a majority of such
Fund's outstanding voting securities (as defined in the Act) or by a vote of a
majority of the
2
<PAGE>
Trust's entire Board of Trustees. The Sub-Adviser may terminate this contract on
60 days' written notice to the Trust. This contract shall terminate
automatically in the event of its assignment (as defined in the Act).
7. Except to the extent necessary to perform the Sub-Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Sub-Adviser, or any affiliate of the Sub-Adviser, or
any employee of the Sub-Adviser, to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, firm, individual or association.
8. The Trust shall own and control all records generated on behalf of the
Trust as a result of services provided under this contract. In addition, the
Trust shall have the right to inspect, audit, and/or copy all records pertaining
to the performance of services under this contract.
9. The Sub-Adviser and the Trust each agree that the name "Wells Fargo,"
which comprises a component of the Trust's name, is a property right of the
parent of the Adviser. The Trust agrees and consents that: (i) it will use the
name "Wells Fargo" as a component of its corporate name, the name of any fund or
class or both, and for no other purpose; (ii) it will not grant to any third
party the right to use the name "Wells Fargo" for any purpose; (iii) the Adviser
or any corporate affiliate of the Adviser may use or grant to others the right
to use the name "Wells Fargo," or any combination or abbreviation thereof, as
all or a portion of a corporate or business name or for any commercial purpose,
other than a grant of such right to another registered investment company not
advised by the Adviser or one of its affiliates; and (iv) in the event that the
Adviser or an affiliate thereof is no longer acting as investment adviser to any
fund or class, the Trust shall, upon request by the Adviser, promptly take such
action as may be necessary to change its corporate name to one not containing
the name "Wells Fargo," and following such change, shall not use the name "Wells
Fargo," or any combination thereof, as a part of its corporate name or for any
other commercial purpose, and shall use its best efforts to cause its directors,
officers, and shareholders to take any and all actions that the Adviser may
request to effect the foregoing and to reconvey to the Adviser any and all
rights to such word.
10. This contract shall be governed by and construed in accordance with
the laws of the State of California.
3
<PAGE>
If the foregoing correctly sets forth the agreement by and among the
Trust, the Adviser and the Sub-Adviser, please so indicate by signing and
returning to the Trust the enclosed copy hereof.
Very truly yours,
WELLS FARGO BANK, N.A.
By: ____________________________
Name: Michael J. Hogan
Title: Executive Vice President
By: ____________________________
Name: C. David Messman
Title: Vice President
AGREED to as of the date set forth above.
BARCLAYS GLOBAL FUND ADVISORS
By:_____________________________
Stephen E. Rogers
Principal
ACCEPTED as of the date set forth above.
WELLS FARGO FUNDS TRUST,
on behalf of each Fund listed on
attached Appendix I
By:_____________________________
Richard H. Blank, Jr.
Secretary
4
<PAGE>
APPENDIX I
Sub-advisory fees shall be paid monthly on the first business day of each
month, at the annual rates specified below of each Fund's average daily value
(as determined on each day that such value is determined for the Fund at the
time set forth in the Prospectus for determining net asset value per share)
during the preceding month.
Fund Investment Advisory Fee
---- -----------------------
Asset Allocation Fund 0.15% of first $900 million
0.10% over $900 million
Index Allocation Fund 0.15%
Approved by Board of Trustees: March 26, 1999.
5
<PAGE>
Exhibit 99.B(d)(2)(ii)
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO FUNDS TRUST, WELLS FARGO
BANK, N.A. AND GALLIARD CAPITAL MANAGEMENT, INC.
This AGREEMENT is made as of this ___ day of September, 1999, between Wells
Fargo Funds Trust (the "Trust"), a business trust organized under the laws of
the State of Delaware with its principal place of business at 111 Center Street,
Little Rock, Arkansas 72201, Wells Fargo Bank, N.A. (the "Adviser"), a banking
association organized under the laws of the United States of America with its
principal place of business at 420 Montgomery Street, San Francisco, California
94104, and Galliard Capital Management, Inc., a corporation organized under the
laws of the State of Minnesota, with its principal place of business at 800
LaSalle Avenue, Suite 2060, Minneapolis, Minnesota 55479 (the "Sub-Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "1940 Act") as an open-end, series management investment
company; and
WHEREAS, the Trust and the Adviser desire that the Sub-Adviser perform
investment advisory services for each of the series of the Trust listed in
Appendix A hereto as it may be amended from time to time (each a "Fund" and
collectively the "Funds"), and the Sub-Adviser is willing to perform those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust, the Adviser and Sub-Adviser agrees as follows:
Section 1. The Trust; Delivery of Documents. The Trust is engaged in the
business of investing and reinvesting its assets in securities of the type and
in accordance with the limitations specified in its Trust Instrument, By-Laws
(if any) and Registration Statement filed with the Securities and Exchange
Commission (the "Commission") under the 1940 Act and the Securities Act of 1933
(the "Securities Act"), including any representations made in the prospectus and
statement of additional information relating to the Funds contained therein and
as may be supplemented from time to time, all in such manner and to such extent
as may from time to time be authorized by the Trust's Board of Trustees (the
"Board"). The Board is authorized to issue any unissued shares in any number of
additional classes or series. The Trust has delivered copies of the documents
listed in this Section to the Sub-Adviser and will from time to time furnish the
Sub-Adviser with any amendments thereof.
1
<PAGE>
Section 2. Appointment of Sub-Adviser. Subject to the direction and
control of the Board, the Adviser manages the investment and reinvestment of
the assets of the Funds and provides for certain management and services as
specified in the Investment Advisory Agreement between the Trust and the Adviser
with respect to the Funds.
Subject to the direction and control of the Board, the Sub-Adviser shall
manage the investment and reinvestment of the assets of the Funds, and without
limiting the generality of the foregoing, shall provide the management and other
services specified below, all in such manner and to such extent as may be
directed from time to time by the Adviser.
Section 3. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets for the Funds. To carry out
such decisions, the Sub-Adviser is hereby authorized, as agent and attorney-in-
fact for the Trust, for the account of, at the risk of and in the name of the
Trust, to place orders and issue instructions with respect to those transactions
of the Funds. In all purchases, sales and other transactions in securities for
the Funds, the Sub-Adviser is authorized to exercise full discretion and act for
the Trust in the same manner and with the same force and effect as the Trust
might or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Sub-Adviser will report to the Board at each regular meeting
thereof all material changes in the Funds since the prior report, and will also
keep the Board informed of important developments affecting the Trust, the Funds
and the Sub-Adviser, and on its own initiative will furnish the Board from time
to time with such information as the Sub-Adviser may believe appropriate,
whether concerning the individual companies whose securities are held by a Fund,
the industries in which they engage, or the economic, social or political
conditions prevailing in each country in which the Fund maintains investments.
The Sub-Adviser will also furnish the Board with such statistical and analytical
information with respect to securities in the Funds as the Sub-Adviser may
believe appropriate or as the Board reasonably may request. In making purchases
and sales of securities for the Funds, the Sub-Adviser will comply with the
policies set from time to time by the Board as well as the limitations imposed
by the Trust's Trust Instrument, By-Laws (if any), Registration Statement under
the Act and the Securities Act, the limitations in the Act and in the Internal
Revenue Code of 1986, as amended applicable to the Trust and the investment
objectives, policies and restrictions of the Funds.
(c) The Sub-Adviser may from time to time employ or associate with such
persons as the Sub-Adviser believes to be appropriate or necessary to assist in
the execution of the Sub-Adviser's duties hereunder, the cost of performance of
such duties to be borne and paid by the Sub-Adviser. No obligation may be
imposed on the Trust in any such respect.
2
<PAGE>
(d) The Sub-Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Sub-Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Sub-Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Securities and Exchange Commission
and the Internal Revenue Service. The books and records pertaining to the Trust
which are in possession of the Sub-Adviser shall be the property of the Trust.
The Trust, or the Trust's authorized representatives (including the Adviser),
shall have access to such books and records at all times during the Sub-
Adviser's normal business hours. Upon the reasonable request of the Trust,
copies of any such books and records shall be provided promptly by the Sub-
Adviser to the Trust or the Trust's authorized representatives.
Section 4. Control by Board. As is the case with respect to the Adviser
under the Investment Advisory Agreement, any investment activities undertaken by
the Sub-Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Adviser on behalf of the Funds, shall at all times be
subject to the direction and control the Trust's Board.
Section 5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times comply
with:
(a) all applicable provisions of the 1940 Act, and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as it may
be amended from time to time, under the Securities Act and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as it may be
amended from time to time;
(d) the provisions of any By-laws of the Trust, if adopted and as it may be
amended from time to time, or resolutions of the Board as may be adopted from
time to time;
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Trust or the Funds;
(f) any other applicable provisions of state or federal law; and
In addition, any code of ethics adopted by the Sub-Advisers in compliance
with Rule 17j-1 under the 1940 Act shall include policies, prohibitions and
procedures which substantially conform to the recommendations regarding personal
investing approved by
3
<PAGE>
the Board of Governors of the Investment Company Institute on June 30, 1994, as
such recommendations may be amended from time to time, and that comply with any
amendments to Rule 17j-1 under the 1940 Act.
Section 6. Broker-Dealer Relationships. The Sub-Adviser is responsible for
the purchase and sale of securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Sub-Adviser's primary
consideration in effecting a security transaction will be to obtain the best
price and execution. In selecting a broker-dealer to execute each particular
transaction for a Fund, the Sub-Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker-
dealer to the Fund on a continuing basis. Accordingly, the price to the Fund in
any transaction may be less favorable than that available from another broker-
dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Trust's
Board of Trustees may from time to time determine, the Sub-Adviser shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of having caused a Fund to pay a broker
or dealer that provides brokerage and research services to the Sub-Adviser an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Sub-Adviser with respect to the Fund and to other clients of the Sub-
Adviser. The Sub-Adviser is further authorized to allocate the orders placed by
it on behalf of the Funds to brokers and dealers who also provide research or
statistical material, or other services to the Funds or to the Sub-Adviser.
Such allocation shall be in such amounts and proportions as the Sub-Adviser
shall determine and the Sub-Adviser will report on said allocations regularly to
the Board of Trustees of the Trust indicating the brokers to whom such
allocations have been made and the basis therefor.
Section 7. Expenses of the Fund. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Trust include, but are not limited to, brokerage
commissions, taxes, legal, auditing or governmental fees, the cost of preparing
share certificates, custodian, transfer agent and shareholder service agent
costs, expense of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to trustees and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
4
<PAGE>
Section 8. Compensation. As compensation for the sub-advisory services
provided under this Agreement, the Adviser shall pay the Sub-Adviser fees,
payable monthly, the annual rates indicated on Schedule A hereto, as such
Schedule may be amended or supplemented from time to time. It is understood
that the Adviser shall be responsible for the Sub-Adviser's fee for its services
hereunder, and the Sub-Adviser agrees that it shall have no claim against the
Trust or the Funds with respect to compensation under this Agreement.
Section 9. Standard of Care. The Trust and Adviser shall expect of the
Sub-Adviser, and the Sub-Adviser will give the Trust and the Adviser the benefit
of, the Sub-Adviser's best judgment and efforts in rendering its services to the
Trust, and as an inducement to the Sub-Adviser's undertaking these services at
the compensation level specified, the Sub-Adviser shall not be liable hereunder
for any mistake in judgment. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of obligations or duties hereunder on the part
of the Sub-Adviser or any of its officers, directors, employees or agents, the
Sub-Adviser shall not be subject to liability to the Trust or to any
shareholders in the Trust for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security.
Section 10. Non-Exclusivity. The services of the Sub-Adviser to the Adviser
and the Trust are not to be deemed to be exclusive, and the Sub-Adviser shall be
free to render investment advisory and administrative or other services to
others (including other investment companies) and to engage in other activities.
It is understood and agreed that officers or directors of the Sub-Adviser are
not prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
Section 11. Records. The Sub-Adviser shall, with respect to orders the
Sub-Adviser places for the purchase and sale of portfolio securities of the
Funds, maintain or arrange for the maintenance of the documents and records
required pursuant to Rule 31a-1 under the 1940 Act as well as trade tickets and
confirmations of portfolio trades and such other records as the Adviser or the
Funds' Administrator reasonably requests to be maintained. All such records
shall be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1 or any successor rule. All such records will be the
property of the Funds, and will be available for inspection and use by the Funds
and their authorized representatives (including the Adviser). The Sub-Adviser
shall promptly, upon the Trust's request, surrender to the Funds those records
which are the property of the Trust or any Fund. The Sub-Adviser will promptly
notify the Funds' Administrator if it experiences any difficulty in maintaining
the records in an accurate and complete manner.
Section 12. Term and Approval. This Agreement shall become effective with
respect to a Fund after it is approved in accordance with the express
requirements of the 1940 Act, and executed by the Trust, Adviser and Sub-Adviser
and shall thereafter
5
<PAGE>
continue from year to year, provided that the continuation of the Agreement is
approved in accordance with the requirements of the 1940 Act, which currently
requires that the continuation be approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of "a
majority of the outstanding voting securities" of the Fund (as defined in
Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's Trustees who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Trustees of the Trust), by
votes cast in person at a meeting specifically called for such purpose.
Section 13. Termination. As required under the 1940 Act, this Agreement
may be terminated with respect to a Fund at any time, without the payment of any
penalty, by vote of the Trust's Board of Trustees or by vote of a majority of a
Fund's outstanding voting securities, or by the Adviser or Sub-Adviser, on sixty
(60) days' written notice to the other party. The notice provided for herein may
be waived by the party entitled to receipt thereof. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for purposes of this paragraph having the meaning defined in Section 2(a)(4) of
the 1940 Act, as it may be interpreted by the Commission or its staff in
interpretive releases, or applied by the Commission staff in no-action letters,
issued under the 1940 Act.
Section 14. Indemnification by the Sub-Adviser. The Trust shall not be
responsible for, and the Sub-Adviser shall indemnify and hold the Trust or any
Fund of the Trust harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to the willful misfeasance, bad faith, negligent acts or reckless
disregard of obligations or duties of the Sub-Adviser or any of its officers,
directors, employees or agents.
Section 15. Indemnification by the Trust. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of duties hereunder on
the part of the Sub-Adviser or any of its officers, directors, employees or
agents, the Trust hereby agrees to indemnify and hold harmless the Sub-Adviser
against all claims, actions, suits or proceedings at law or in equity whether
brought by a private party or a governmental department, commission, board,
bureau, agency or instrumentality of any kind, arising from the advertising,
solicitation, sale, purchase or pledge of securities, whether of the Funds or
other securities, undertaken by the Funds, their officers, directors, employees
or affiliates, resulting from any violations of the securities laws, rules,
regulations, statutes and codes, whether federal or of any state, by the Funds,
their officers, directors, employees or affiliates. Federal and state
securities laws impose liabilities under certain circumstances on persons who
act in good faith, and nothing herein shall constitute a waiver or limitation of
any rights which a Fund may have and which may not be waived under any
applicable federal and state securities laws.
6
<PAGE>
Section 16. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other party at
such address as such other party may designate for the receipt of such notice.
Until further notice to the other party, it is agreed that the address of the
Trust shall be c/o Stephens Inc., 111 Center Street, Suite 300, Little Rock,
Arkansas 72201, Attention R. Greg Feltus, and that of the Adviser shall be 420
Market Street, San Francisco, California 94104, Attention: Michael J. Hogan, and
that of the Sub-Adviser shall be [blank].
Section 17. Questions of Interpretation. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission, or
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
this Agreement is revised by rule, regulation or order of the Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. The duties and obligations of the parties under this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
Section 18. Amendment. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. If shareholder approval of an amendment is required
under the 1940 Act, no such amendment shall become effective until approved by a
vote of the majority of the outstanding shares of the affected Funds.
Otherwise, a written amendment of this Agreement is effective upon the approval
of the Board of Trustees, the Adviser and the Sub-Adviser.
Section 19. Wells Fargo Name. The Sub-Adviser and the Trust each agree
that the name "Wells Fargo," which comprises a component of the Trust's name, is
a property right of the parent of the Adviser. The Trust agrees and consents
that: (i) it will use the words "Wells Fargo" as a component of its corporate
name, the name of any series or class, or all of the above, and for no other
purpose; (ii) it will not grant to any third party the right to use the name
"Wells Fargo" for any purpose; (iii) the Adviser or any corporate affiliate of
the Adviser may use or grant to others the right to use the words "Wells Fargo,"
or any combination or abbreviation thereof, as all or a portion of a corporate
or business name or for any commercial purpose, other than a grant of such right
to another registered investment company not advised by the Adviser or one of
its affiliates; and (iv) in the event that the Adviser or an affiliate thereof
is no longer acting as investment adviser to any Fund or class of a Fund, the
Trust shall, upon request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing the words "Wells
Fargo" and following such change, shall not use the words "Wells Fargo," or any
combination thereof, as a part of its corporate name or for any other commercial
purpose, and shall use its best efforts to cause its trustees, officers
7
<PAGE>
and shareholders to take any and all actions that the Adviser may request to
effect the foregoing and to reconvey to the Adviser any and all rights to such
words.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO FUNDS TRUST
on behalf of the Funds
By: /s/
--------------------------------------
R. Greg Feltus, President
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/
--------------------------------------
Michael J. Hogan
Executive Vice President
By:______________________________________
C. David Messman
Vice President
GALLIARD CAPITAL MANAGEMENT, INC.
on behalf of the Sub-Adviser
By: /s/
--------------------------------------
9
<PAGE>
Appendix A
Aggressive Balanced-Equity Fund
Diversified Bond Fund
Growth Balanced Fund
Moderate Balanced Fund
Stable Income Fund
Strategic Income Fund
Approved by Board of Trustees: March 26, 1999
10
<PAGE>
SCHEDULE A
WELLS FARGO FUNDS TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the ____ day of September, 1999, as
amended ____________, by and between Wells Fargo Bank, N.A. (the "Adviser") and
Galliard Capital Management, Inc. (the "Sub-Adviser") and
WHEREAS, the parties and Wells Fargo Funds Trust (the "Trust") have entered
into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement") whereby the
Sub-Adviser provides investment management advice to each series of the Trust as
listed in Schedule A to the Sub-Advisory Agreement (each a "Fund" and
collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid to
the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be paid to the Sub-
Adviser under the Sub-Advisory Agreement shall be calculated as follows on a
monthly basis by applying the following annual rates per Fund:
for assets formerly invested in Stable Income Portfolio:
a. 0.04% on the first $1,500 million;
b. 0.05% on the next $500 million;
c. 0.045% on the next $500 million;
d. 0.04% on the next $500 million; and
e. 0.03% on all sums in excess of $3,000 million.
for assets formerly invested in Managed Fixed Income Portfolio:
a. 0.10% on the first $100 million;
b. 0.08% on the next $100 million;
c. 0.06% on all sums in excess of $200 million.
for assets formerly invested in Strategic Value Bond Portfolio:
a. 0.13% on the first $100 million;
b. 0.10% on the next $100 million;
c. 0.08% on all sums in excess of $200 million.
11
<PAGE>
provided, that no fee shall be payable hereunder with respect to a Fund during
any period in which the Fund invests all (or substantially all) of its
investment assets in a registered, open-end, management investment company, or
separate series thereof, in accordance with and reliance upon Section
12(d)(1)(E) under the Act.
The net assets under management against which the foregoing fees are to be
applied are the net assets as of the last day of the month. If this fee
agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this agreement is in effect shall be subject to a pro rata adjustment
based on the number of days elapsed in the current month as a percentage of the
total number of days in such month. During any period when the determination of
net asset value is suspended, the net asset value for the last day prior to such
suspension shall for this purpose be deemed to be the net asset value at the
close of the month.
The foregoing fee schedule shall remain in effect until changed in writing
by the parties.
WELLS FARGO BANK, N.A.
_____________________________
By: Michael J. Hogan
Executive Vice President
_____________________________
By: C. David Messman
Vice President
GALLIARD CAPITAL MANAGEMENT, INC.
_____________________________
By: [Officer]
12
<PAGE>
Exhibit 99.B(d)(2)(iii)
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO FUNDS TRUST, WELLS FARGO
BANK, N.A. AND PEREGRINE CAPITAL MANAGEMENT, INC.
This AGREEMENT is made as of this ___ day of September, 1999, between Wells
Fargo Funds Trust (the "Trust"), a business trust organized under the laws of
the State of Delaware with its principal place of business at 111 Center Street,
Little Rock, Arkansas 72201, Wells Fargo Bank, N.A. (the "Adviser"), a banking
association organized under the laws of the United States of America with its
principal place of business at 420 Montgomery Street, San Francisco, California
94104, and Peregrine Capital Management, Inc., a corporation organized under the
laws of the State of Minnesota with its principal place of business at 800
LaSalle Avenue, Minneapolis, Minnesota 55402 (the "Sub-Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "1940 Act") as an open-end, series management investment
company; and
WHEREAS, the Trust and the Adviser desire that the Sub-Adviser perform
investment advisory services for each of the series of the Trust listed in
Appendix A hereto as it may be amended from time to time (each a "Fund" and
collectively the "Funds"), and the Sub-Adviser is willing to perform those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust, the Adviser and Sub-Adviser agrees as follows:
Section 1. The Trust; Delivery of Documents. The Trust is engaged in the
business of investing and reinvesting its assets in securities of the type and
in accordance with the limitations specified in its Trust Instrument, By-Laws
(if any) and Registration Statement filed with the Securities and Exchange
Commission (the "Commission") under the 1940 Act and the Securities Act of 1933
(the "Securities Act"), including any representations made in the prospectus and
statement of additional information relating to the Funds contained therein and
as may be supplemented from time to time, all in such manner and to such extent
as may from time to time be authorized by the Trust's Board of Trustees (the
"Board"). The Board is authorized to issue any unissued shares in any number of
additional classes or series. The Trust has delivered copies of the documents
listed in this Section to the Sub-Adviser and will from time to time furnish the
Sub-Adviser with any amendments thereof.
1
<PAGE>
Section 2. Appointment of Sub-Adviser. Subject to the direction and
control of the Board, the Adviser manages the investment and reinvestment of
the assets of the Funds and provides for certain management and services as
specified in the Investment Advisory Agreement between the Trust and the Adviser
with respect to the Funds.
Subject to the direction and control of the Board, the Sub-Adviser shall
manage the investment and reinvestment of the assets of the Funds, and without
limiting the generality of the foregoing, shall provide the management and other
services specified below, all in such manner and to such extent as may be
directed from time to time by the Adviser.
Section 3. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets for the Funds. To carry out such
decisions, the Sub-Adviser is hereby authorized, as agent and attorney-in-fact
for the Trust, for the account of, at the risk of and in the name of the Trust,
to place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities for the
Funds, the Sub-Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.
(b) The Sub-Adviser will report to the Board at each regular meeting
thereof all material changes in the Funds since the prior report, and will also
keep the Board informed of important developments affecting the Trust, the Funds
and the Sub-Adviser, and on its own initiative will furnish the Board from time
to time with such information as the Sub-Adviser may believe appropriate,
whether concerning the individual companies whose securities are held by a Fund,
the industries in which they engage, or the economic, social or political
conditions prevailing in each country in which the Fund maintains investments.
The Sub-Adviser will also furnish the Board with such statistical and analytical
information with respect to securities in the Funds as the Sub-Adviser may
believe appropriate or as the Board reasonably may request. In making purchases
and sales of securities for the Funds, the Sub-Adviser will comply with the
policies set from time to time by the Board as well as the limitations imposed
by the Trust's Trust Instrument, By-Laws (if any), Registration Statement under
the Act and the Securities Act, the limitations in the Act and in the Internal
Revenue Code of 1986, as amended applicable to the Trust and the investment
objectives, policies and restrictions of the Funds.
(c) The Sub-Adviser may from time to time employ or associate with such
persons as the Sub-Adviser believes to be appropriate or necessary to assist in
the execution of the Sub-Adviser's duties hereunder, the cost of performance of
such duties to be borne and paid by the Sub-Adviser. No obligation may be
imposed on the Trust in any such respect.
2
<PAGE>
(d) The Sub-Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Sub-Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Sub-Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Securities and Exchange Commission
and the Internal Revenue Service. The books and records pertaining to the Trust
which are in possession of the Sub-Adviser shall be the property of the Trust.
The Trust, or the Trust's authorized representatives (including the Adviser),
shall have access to such books and records at all times during the Sub-
Adviser's normal business hours. Upon the reasonable request of the Trust,
copies of any such books and records shall be provided promptly by the Sub-
Adviser to the Trust or the Trust's authorized representatives.
Section 4. Control by Board. As is the case with respect to the Adviser
under the Investment Advisory Agreement, any investment activities undertaken by
the Sub-Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Adviser on behalf of the Funds, shall at all times be
subject to the direction and control the Trust's Board.
Section 5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times comply
with:
(a) all applicable provisions of the 1940 Act, and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as it may
be amended from time to time, under the Securities Act and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as it may be
amended from time to time;
(d) the provisions of any By-laws of the Trust, if adopted and as it may
be amended from time to time, or resolutions of the Board as may be adopted from
time to time;
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Trust or the Funds;
(f) any other applicable provisions of state or federal law; and
In addition, any code of ethics adopted by the Sub-Advisers in compliance
with Rule 17j-1 under the 1940 Act shall include policies, prohibitions and
procedures which substantially conform to the recommendations regarding personal
investing approved by
3
<PAGE>
the Board of Governors of the Investment Company Institute on June 30, 1994, as
such recommendations may be amended from time to time, and that comply with any
amendments to Rule 17j-1 under the 1940 Act.
Section 6. Broker-Dealer Relationships. The Sub-Adviser is responsible for
the purchase and sale of securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Sub-Adviser's primary
consideration in effecting a security transaction will be to obtain the best
price and execution. In selecting a broker-dealer to execute each particular
transaction for a Fund, the Sub-Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker-
dealer to the Fund on a continuing basis. Accordingly, the price to the Fund in
any transaction may be less favorable than that available from another broker-
dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Trust's
Board of Trustees may from time to time determine, the Sub-Adviser shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of having caused a Fund to pay a broker
or dealer that provides brokerage and research services to the Sub-Adviser an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Sub-Adviser with respect to the Fund and to other clients of the Sub-
Adviser. The Sub-Adviser is further authorized to allocate the orders placed by
it on behalf of the Funds to brokers and dealers who also provide research or
statistical material, or other services to the Funds or to the Sub-Adviser.
Such allocation shall be in such amounts and proportions as the Sub-Adviser
shall determine and the Sub-Adviser will report on said allocations regularly to
the Board of Trustees of the Trust indicating the brokers to whom such
allocations have been made and the basis therefor.
Section 7. Expenses of the Fund. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Trust include, but are not limited to, brokerage
commissions, taxes, legal, auditing or governmental fees, the cost of preparing
share certificates, custodian, transfer agent and shareholder service agent
costs, expense of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to trustees and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
4
<PAGE>
Section 8. Compensation. As compensation for the sub-advisory services
provided under this Agreement, the Adviser shall pay the Sub-Adviser fees,
payable monthly, the annual rates indicated on Schedule A hereto, as such
Schedule may be amended or supplemented from time to time. It is understood
that the Adviser shall be responsible for the Sub-Adviser's fee for its services
hereunder, and the Sub-Adviser agrees that it shall have no claim against the
Trust or the Funds with respect to compensation under this Agreement.
Section 9. Standard of Care. The Trust and Adviser shall expect of the
Sub-Adviser, and the Sub-Adviser will give the Trust and the Adviser the benefit
of, the Sub-Adviser's best judgment and efforts in rendering its services to the
Trust, and as an inducement to the Sub-Adviser's undertaking these services at
the compensation level specified, the Sub-Adviser shall not be liable hereunder
for any mistake in judgment. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of obligations or duties hereunder on the part
of the Sub-Adviser or any of its officers, directors, employees or agents, the
Sub-Adviser shall not be subject to liability to the Trust or to any
shareholders in the Trust for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security.
Section 10. Non-Exclusivity. The services of the Sub-Adviser to the Adviser
and the Trust are not to be deemed to be exclusive, and the Sub-Adviser shall be
free to render investment advisory and administrative or other services to
others (including other investment companies) and to engage in other activities.
It is understood and agreed that officers or directors of the Sub-Adviser are
not prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
Section 11. Records. The Sub-Adviser shall, with respect to orders the
Sub-Adviser places for the purchase and sale of portfolio securities of the
Funds, maintain or arrange for the maintenance of the documents and records
required pursuant to Rule 31a-1 under the 1940 Act as well as trade tickets and
confirmations of portfolio trades and such other records as the Adviser or the
Funds' Administrator reasonably requests to be maintained. All such records
shall be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1 or any successor rule. All such records will be the
property of the Funds, and will be available for inspection and use by the Funds
and their authorized representatives (including the Adviser). The Sub-Adviser
shall promptly, upon the Trust's request, surrender to the Funds those records
which are the property of the Trust or any Fund. The Sub-Adviser will promptly
notify the Funds' Administrator if it experiences any difficulty in maintaining
the records in an accurate and complete manner.
Section 12. Term and Approval. This Agreement shall become effective with
respect to a Fund after it is approved in accordance with the express
requirements of the 1940 Act, and executed by the Trust, Adviser and Sub-Adviser
and shall thereafter
5
<PAGE>
continue from year to year, provided that the continuation of the Agreement is
approved in accordance with the requirements of the 1940 Act, which currently
requires that the continuation be approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of "a
majority of the outstanding voting securities" of the Fund (as defined in
Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's Trustees who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Trustees of the Trust), by
votes cast in person at a meeting specifically called for such purpose.
Section 13. Termination. As required under the 1940 Act, this Agreement may
be terminated with respect to a Fund at any time, without the payment of any
penalty, by vote of the Trust's Board of Trustees or by vote of a majority of a
Fund's outstanding voting securities, or by the Adviser or Sub-Adviser, on sixty
(60) days' written notice to the other party. The notice provided for herein may
be waived by the party entitled to receipt thereof. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for purposes of this paragraph having the meaning defined in Section 2(a)(4) of
the 1940 Act, as it may be interpreted by the Commission or its staff in
interpretive releases, or applied by the Commission staff in no-action letters,
issued under the 1940 Act.
Section 14. Indemnification by the Sub-Adviser. The Trust shall not be
responsible for, and the Sub-Adviser shall indemnify and hold the Trust or any
Fund of the Trust harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to the willful misfeasance, bad faith, negligent acts or reckless
disregard of obligations or duties of the Sub-Adviser or any of its officers,
directors, employees or agents.
Section 15. Indemnification by the Trust. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of duties hereunder on
the part of the Sub-Adviser or any of its officers, directors, employees or
agents, the Trust hereby agrees to indemnify and hold harmless the Sub-Adviser
against all claims, actions, suits or proceedings at law or in equity whether
brought by a private party or a governmental department, commission, board,
bureau, agency or instrumentality of any kind, arising from the advertising,
solicitation, sale, purchase or pledge of securities, whether of the Funds or
other securities, undertaken by the Funds, their officers, directors, employees
or affiliates, resulting from any violations of the securities laws, rules,
regulations, statutes and codes, whether federal or of any state, by the Funds,
their officers, directors, employees or affiliates. Federal and state
securities laws impose liabilities under certain circumstances on persons who
act in good faith, and nothing herein shall constitute a waiver or limitation of
any rights which a Fund may have and which may not be waived under any
applicable federal and state securities laws.
6
<PAGE>
Section 16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
shall be c/o Stephens Inc., 111 Center Street, Suite 300, Little Rock, Arkansas
72201, Attention R. Greg Feltus, and that of the Adviser shall be 420 Market
Street, San Francisco, California 94104, Attention: Michael J. Hogan, and that
of the Sub-Adviser shall be [blank].
Section 17. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission, or
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
this Agreement is revised by rule, regulation or order of the Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. The duties and obligations of the parties under this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
Section 18. Amendment. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. If shareholder approval of an amendment is required
under the 1940 Act, no such amendment shall become effective until approved by a
vote of the majority of the outstanding shares of the affected Funds.
Otherwise, a written amendment of this Agreement is effective upon the approval
of the Board of Trustees, the Adviser and the Sub-Adviser.
Section 19. Wells Fargo Name. The Sub-Adviser and the Trust each agree that
the name "Wells Fargo," which comprises a component of the Trust's name, is a
property right of the parent of the Adviser. The Trust agrees and consents that:
(i) it will use the words "Wells Fargo" as a component of its corporate name,
the name of any series or class, or all of the above, and for no other purpose;
(ii) it will not grant to any third party the right to use the name "Wells
Fargo" for any purpose; (iii) the Adviser or any corporate affiliate of the
Adviser may use or grant to others the right to use the words "Wells Fargo," or
any combination or abbreviation thereof, as all or a portion of a corporate or
business name or for any commercial purpose, other than a grant of such right to
another registered investment company not advised by the Adviser or one of its
affiliates; and (iv) in the event that the Adviser or an affiliate thereof is no
longer acting as investment adviser to any Fund or class of a Fund, the Trust
shall, upon request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing the words "Wells
Fargo" and following such change, shall not use the words "Wells Fargo," or any
combination thereof, as a part of its corporate name or for any other commercial
purpose, and shall use its best efforts to cause its trustees, officers
7
<PAGE>
and shareholders to take any and all actions that the Adviser may request to
effect the foregoing and to reconvey to the Adviser any and all rights to such
words.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO CORE TRUST
on behalf of the Funds
By: /s/
----------------------------
R. Greg Feltus, President
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/
----------------------------
Michael J. Hogan
Executive Vice President
By: ___________________________
C. David Messman
Vice President
PEREGRINE CAPITAL MANAGEMENT, INC.
on behalf of the Sub-Adviser
By: /s/
---------------------------
8
<PAGE>
Appendix A
Aggressive-Balanced Equity Fund
Diversified Bond Fund
Diversified Equity Fund
Diversified Small Cap Fund
Growth Balanced Fund
Growth Equity Fund
Large Company Growth Fund
Moderate Balanced Fund
Small Company Growth Fund
Strategic Income Fund
Approved by Board of Trustees: March 26, 1999.
9
<PAGE>
SCHEDULE A
WELLS FARGO FUNDS TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the ____ day of September, 1999, as
amended ____________, by and between Wells Fargo Bank, N.A. (the "Adviser") and
Peregrine Capital Management, Inc. (the "Sub-Adviser") and
WHEREAS, the parties and Wells Fargo Funds Trust (the "Trust") have entered
into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement") whereby the
Sub-Adviser provides investment management advice to each series of the Trust as
listed in Appendix A to the Sub-Advisory Agreement (each a "Fund" and
collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid to
the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be paid to the Sub-
Adviser under the Sub-Advisory Agreement shall be calculated as follows on a
monthly basis by applying the following annual rates per Fund:
for assets formerly invested in Large Company Growth Portfolio:
a. 0.36% on the first $25 million;
b. 0.29% on the next $25 million;
c. 0.24% on the next $225 million;
d. 0.15% on all sums in excess of $275 million.
for assets formerly invested in Positive Return Bond Portfolio:
a. 0.21% on the first $10 million;
b. 0.15% on the next $15 million;
c. 0.10% on all sums in excess of $25 million.
for assets formerly invested in Small Company Growth Portfolio:
a. 0.58% on the first $50 million;
b. 0.48% on the next $130 million;
c. 0.42% on the next $160 million;
d. 0.32% on all sums in excess of $340 million.
10
<PAGE>
for assets formerly invested in the Small Company Value Portfolio:
a. 0.32% on the first $175 million;
b. 0.48% on all sums in excess of $175 million.
provided, that no fee shall be payable hereunder with respect to a Fund during
any period in which the Fund invests all (or substantially all) of its
investment assets in a registered, open-end, management investment company, or
separate series thereof, in accordance with and reliance upon Section
12(d)(1)(E) under the Act.
The net assets under management against which the foregoing fees are to be
applied are the net assets as of the last day of the month. If this fee
agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this agreement is in effect shall be subject to a pro rata adjustment
based on the number of days elapsed in the current month as a percentage of the
total number of days in such month. During any period when the determination of
net asset value is suspended, the net asset value for the last day prior to such
suspension shall for this purpose be deemed to be the net asset value at the
close of the month.
The foregoing fee schedule shall remain in effect until changed in writing
by the parties.
WELLS FARGO BANK, N.A.
____________________________
By: Michael J. Hogan
Executive Vice President
____________________________
By: C. David Messman
Vice President
PEREGRINE CAPITAL MANAGEMENT, INC.
____________________________
By: [Officer]
[Title of Officer]
11
<PAGE>
Exhibit 99.B(d)(2)(iv)
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO FUNDS TRUST, WELLS FARGO
BANK, N.A. AND SHRODER CAPITAL
MANAGEMENT INTERNATIONAL, INC.
This AGREEMENT is made as of this ___ day of September, 1999, between Wells
Fargo Funds Trust (the "Trust"), a business trust organized under the laws of
the State of Delaware with its principal place of business at 111 Center Street,
Little Rock, Arkansas 72201, Wells Fargo Bank, N.A. (the "Adviser"), a banking
association organized under the laws of the United States of America with its
principal place of business at 420 Montgomery Street, San Francisco, California
94104, and Schroder Capital Management International, Inc., a corporation
organized under the laws of the State of _____, with its principal place of
business at _______________ (the "Sub-Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "1940 Act") as an open-end, series management investment
company; and
WHEREAS, the Trust and the Adviser desire that the Sub-Adviser perform
investment advisory services for each of the series of the Trust listed in
Appendix A hereto as it may be amended from time to time (each a "Fund" and
collectively the "Funds"), and the Sub-Adviser is willing to perform those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust, the Adviser and Sub-Adviser agrees as follows:
Section 1. The Trust; Delivery of Documents. The Trust is engaged in the
business of investing and reinvesting its assets in securities of the type and
in accordance with the limitations specified in its Trust Instrument, By-Laws
(if any) and Registration Statement filed with the Securities and Exchange
Commission (the "Commission") under the 1940 Act and the Securities Act of 1933
(the "Securities Act"), including any representations made in the prospectus and
statement of additional information relating to the Funds contained therein and
as may be supplemented from time to time, all in such manner and to such extent
as may from time to time be authorized by the Trust's Board of Trustees (the
"Board"). The Board is authorized to issue any unissued shares in any number of
additional classes or series. The Trust has delivered copies of the documents
listed in this Section to the Sub-Adviser and will from time to time furnish the
Sub-Adviser with any amendments thereof.
1
<PAGE>
Section 2. Appointment of Sub-Adviser. Subject to the direction and
control of the Board, the Adviser manages the investment and reinvestment of the
assets of the Funds and provides for certain management and services as
specified in the Investment Advisory Agreement between the Trust and the Adviser
with respect to the Funds.
Subject to the direction and control of the Board, the Sub-Adviser shall
manage the investment and reinvestment of the assets of the Funds, and without
limiting the generality of the foregoing, shall provide the management and other
services specified below, all in such manner and to such extent as may be
directed from time to time by the Adviser.
Section 3. Duties of the Sub-adviser.
(a) The Sub-Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets for the Funds. To carry out
such decisions, the Sub-Adviser is hereby authorized, as agent and attorney-in-
fact for the Trust, for the account of, at the risk of and in the name of the
Trust, to place orders and issue instructions with respect to those transactions
of the Funds. In all purchases, sales and other transactions in securities for
the Funds, the Sub-Adviser is authorized to exercise full discretion and act for
the Trust in the same manner and with the same force and effect as the Trust
might or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Sub-Adviser will report to the Board at each regular meeting
thereof all material changes in the Funds since the prior report, and will also
keep the Board informed of important developments affecting the Trust, the Funds
and the Sub-Adviser, and on its own initiative will furnish the Board from time
to time with such information as the Sub-Adviser may believe appropriate,
whether concerning the individual companies whose securities are held by a Fund,
the industries in which they engage, or the economic, social or political
conditions prevailing in each country in which the Fund maintains investments.
The Sub-Adviser will also furnish the Board with such statistical and analytical
information with respect to securities in the Funds as the Sub-Adviser may
believe appropriate or as the Board reasonably may request. In making purchases
and sales of securities for the Funds, the Sub-Adviser will comply with the
policies set from time to time by the Board as well as the limitations imposed
by the Trust's Trust Instrument, By-Laws (if any), Registration Statement under
the Act and the Securities Act, the limitations in the Act and in the Internal
Revenue Code of 1986, as amended applicable to the Trust and the investment
objectives, policies and restrictions of the Funds.
(c) The Sub-Adviser may from time to time employ or associate with such
persons as the Sub-Adviser believes to be appropriate or necessary to assist in
the execution of the Sub-Adviser's duties hereunder, the cost of performance of
such duties to be borne and paid by the Sub-Adviser. No obligation may be
imposed on the Trust in any such respect.
2
<PAGE>
(d) The Sub-Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Sub-Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Sub-Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Securities and Exchange Commission
and the Internal Revenue Service. The books and records pertaining to the Trust
which are in possession of the Sub-Adviser shall be the property of the Trust.
The Trust, or the Trust's authorized representatives (including the Adviser),
shall have access to such books and records at all times during the Sub-
Adviser's normal business hours. Upon the reasonable request of the Trust,
copies of any such books and records shall be provided promptly by the Sub-
Adviser to the Trust or the Trust's authorized representatives.
Section 4. Control by Board. As is the case with respect to the Adviser
under the Investment Advisory Agreement, any investment activities undertaken by
the Sub-Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Adviser on behalf of the Funds, shall at all times be
subject to the direction and control the Trust's Board.
Section 5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times comply
with:
(a) all applicable provisions of the 1940 Act, and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as it may
be amended from time to time, under the Securities Act and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as it may be
amended from time to time;
(d) the provisions of any By-laws of the Trust, if adopted and as it may be
amended from time to time, or resolutions of the Board as may be adopted from
time to time;
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Trust or the Funds;
(f) any other applicable provisions of state or federal law; and
In addition, any code of ethics adopted by the Sub-Advisers in compliance
with Rule 17j-1 under the 1940 Act shall include policies, prohibitions and
procedures which substantially conform to the recommendations regarding personal
investing approved by
3
<PAGE>
the Board of Governors of the Investment Company Institute on June 30, 1994, as
such recommendations may be amended from time to time, and that comply with any
amendments to Rule 17j-1 under the 1940 Act.
Section 6. Broker-Dealer Relationships. The Sub-Adviser is responsible for
the purchase and sale of securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Sub-Adviser's primary
consideration in effecting a security transaction will be to obtain the best
price and execution. In selecting a broker-dealer to execute each particular
transaction for a Fund, the Sub-Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker-
dealer to the Fund on a continuing basis. Accordingly, the price to the Fund in
any transaction may be less favorable than that available from another broker-
dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Trust's
Board of Trustees may from time to time determine, the Sub-Adviser shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of having caused a Fund to pay a broker
or dealer that provides brokerage and research services to the Sub-Adviser an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Sub-Adviser with respect to the Fund and to other clients of the Sub-
Adviser. The Sub-Adviser is further authorized to allocate the orders placed by
it on behalf of the Funds to brokers and dealers who also provide research or
statistical material, or other services to the Funds or to the Sub-Adviser.
Such allocation shall be in such amounts and proportions as the Sub-Adviser
shall determine and the Sub-Adviser will report on said allocations regularly to
the Board of Trustees of the Trust indicating the brokers to whom such
allocations have been made and the basis therefor.
Section 7. Expenses of the Fund. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Trust include, but are not limited to, brokerage
commissions, taxes, legal, auditing or governmental fees, the cost of preparing
share certificates, custodian, transfer agent and shareholder service agent
costs, expense of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to trustees and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
4
<PAGE>
Section 8. Compensation. As compensation for the sub-advisory services
provided under this Agreement, the Adviser shall pay the Sub-Adviser fees,
payable monthly, the annual rates indicated on Schedule A hereto, as such
Schedule may be amended or supplemented from time to time. It is understood
that the Adviser shall be responsible for the Sub-Adviser's fee for its services
hereunder, and the Sub-Adviser agrees that it shall have no claim against the
Trust or the Funds with respect to compensation under this Agreement.
Section 9. Standard of Care. The Trust and Adviser shall expect of the
Sub-Adviser, and the Sub-Adviser will give the Trust and the Adviser the benefit
of, the Sub-Adviser's best judgment and efforts in rendering its services to the
Trust, and as an inducement to the Sub-Adviser's undertaking these services at
the compensation level specified, the Sub-Adviser shall not be liable hereunder
for any mistake in judgment. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of obligations or duties hereunder on the part
of the Sub-Adviser or any of its officers, directors, employees or agents, the
Sub-Adviser shall not be subject to liability to the Trust or to any
shareholders in the Trust for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security.
Section 10. Non-Exclusivity. The services of the Sub-Adviser to the
Adviser and the Trust are not to be deemed to be exclusive, and the Sub-Adviser
shall be free to render investment advisory and administrative or other services
to others (including other investment companies) and to engage in other
activities. It is understood and agreed that officers or directors of the Sub-
Adviser are not prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as partners, officers,
directors or trustees of any other firm or trust, including other investment
advisory companies.
Section 11. Records. The Sub-Adviser shall, with respect to orders the
Sub-Adviser places for the purchase and sale of portfolio securities of the
Funds, maintain or arrange for the maintenance of the documents and records
required pursuant to Rule 31a-1 under the 1940 Act as well as trade tickets and
confirmations of portfolio trades and such other records as the Adviser or the
Funds' Administrator reasonably requests to be maintained. All such records
shall be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1 or any successor rule. All such records will be the
property of the Funds, and will be available for inspection and use by the Funds
and their authorized representatives (including the Adviser). The Sub-Adviser
shall promptly, upon the Trust's request, surrender to the Funds those records
which are the property of the Trust or any Fund. The Sub-Adviser will promptly
notify the Funds' Administrator if it experiences any difficulty in maintaining
the records in an accurate and complete manner.
Section 12. Term and Approval. This Agreement shall become effective with
respect to a Fund after it is approved in accordance with the express
requirements of the 1940 Act, and executed by the Trust, Adviser and Sub-Adviser
and shall thereafter
5
<PAGE>
continue from year to year, provided that the continuation of the Agreement is
approved in accordance with the requirements of the 1940 Act, which currently
requires that the continuation be approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of "a majority
of the outstanding voting securities" of the Fund (as defined in Section
2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's Trustees who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Trustees of the Trust), by
votes cast in person at a meeting specifically called for such purpose.
Section 13. Termination. As required under the 1940 Act, this Agreement
may be terminated with respect to a Fund at any time, without the payment of any
penalty, by vote of the Trust's Board of Trustees or by vote of a majority of a
Fund's outstanding voting securities, or by the Adviser or Sub-Adviser, on sixty
(60) days' written notice to the other party. The notice provided for herein may
be waived by the party entitled to receipt thereof. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for purposes of this paragraph having the meaning defined in Section 2(a)(4) of
the 1940 Act, as it may be interpreted by the Commission or its staff in
interpretive releases, or applied by the Commission staff in no-action letters,
issued under the 1940 Act.
Section 14. Indemnification by the Sub-Adviser. The Trust shall not be
responsible for, and the Sub-Adviser shall indemnify and hold the Trust or any
Fund of the Trust harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to the willful misfeasance, bad faith, negligent acts or reckless
disregard of obligations or duties of the Sub-Adviser or any of its officers,
directors, employees or agents.
Section 15. Indemnification by the Trust. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of duties hereunder on
the part of the Sub-Adviser or any of its officers, directors, employees or
agents, the Trust hereby agrees to indemnify and hold harmless the Sub-Adviser
against all claims, actions, suits or proceedings at law or in equity whether
brought by a private party or a governmental department, commission, board,
bureau, agency or instrumentality of any kind, arising from the advertising,
solicitation, sale, purchase or pledge of securities, whether of the Funds or
other securities, undertaken by the Funds, their officers, directors, employees
or affiliates, resulting from any violations of the securities laws, rules,
regulations, statutes and codes, whether federal or of any state, by the Funds,
their officers, directors, employees or affiliates. Federal and state
securities laws impose liabilities under certain circumstances on persons who
act in good faith, and nothing herein shall constitute a waiver or limitation of
any rights which a Fund may have and which may not be waived under any
applicable federal and state securities laws.
6
<PAGE>
Section 16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
shall be c/o Stephens Inc., 111 Center Street, Suite 300, Little Rock, Arkansas
72201, Attention R. Greg Feltus, and that of the Adviser shall be 420 Market
Street, San Francisco, California 94104, Attention: Michael J. Hogan, and that
of the Sub-Adviser shall be [BLANK].
Section 17. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission, or
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
this Agreement is revised by rule, regulation or order of the Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. The duties and obligations of the parties under this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
Section 18. Amendment. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. If shareholder approval of an amendment is required
under the 1940 Act, no such amendment shall become effective until approved by a
vote of the majority of the outstanding shares of the affected Funds.
Otherwise, a written amendment of this Agreement is effective upon the approval
of the Board of Trustees, the Adviser and the Sub-Adviser.
Section 19. Wells Fargo Name. The Sub-Adviser and the Trust each agree
that the name "Wells Fargo," which comprises a component of the Trust's name, is
a property right of the parent of the Adviser. The Trust agrees and consents
that: (i) it will use the words "Wells Fargo" as a component of its corporate
name, the name of any series or class, or all of the above, and for no other
purpose; (ii) it will not grant to any third party the right to use the name
"Wells Fargo" for any purpose; (iii) the Adviser or any corporate affiliate of
the Adviser may use or grant to others the right to use the words "Wells Fargo,"
or any combination or abbreviation thereof, as all or a portion of a corporate
or business name or for any commercial purpose, other than a grant of such right
to another registered investment company not advised by the Adviser or one of
its affiliates; and (iv) in the event that the Adviser or an affiliate thereof
is no longer acting as investment adviser to any Fund or class of a Fund, the
Trust shall, upon request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing the words "Wells
Fargo" and following such change, shall not use the words "Wells Fargo," or any
combination thereof, as a part of its corporate name or for any other commercial
purpose, and shall use its best efforts to cause its trustees, officers
7
<PAGE>
and shareholders to take any and all actions that the Adviser may request to
effect the foregoing and to reconvey to the Adviser any and all rights to such
words.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO FUNDS TRUST
on behalf of the Funds
By: /s/
------------------------------------
R. Greg Feltus, President
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/
------------------------------------
Michael J. Hogan
Executive Vice President
By:_____________________________________
C. David Messman
Vice President
SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL, INC.
on behalf of the Sub-Adviser
By: /s/
------------------------------------
8
<PAGE>
Appendix A
Aggressive-Balanced Equity Fund
Diversified Equity Fund
Growth Balanced Fund
International Fund
Moderate Balanced Fund
Small Cap Opportunities Fund
Strategic Income Fund
Approved by Board of Trustees: March 26, 1999
9
<PAGE>
SCHEDULE A
WELLS FARGO FUNDS TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the ____ day of September, 1999, as
amended ____________, by and between Wells Fargo Bank, N.A. (the "Adviser") and
Schroder Capital Management International, Inc. (the "Sub-Adviser") and
WHEREAS, the parties and Wells Fargo Funds Trust (the "Trust") have
entered into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement")
whereby the Sub-Adviser provides investment management advice to each series of
the Trust as listed in Schedule A to the Sub-Advisory Agreement (each a "Fund"
and collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid
to the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be paid to the Sub-
Adviser under the Sub-Advisory Agreement shall be calculated as follows on a
monthly basis by applying annual rate of 0.60% of the assets of the Small Cap
Opportunities Fund.
The parties further agree that the fees to be paid to the Sub-Adviser
under the Sub-Advisory Agreement shall be calculated as follows on a monthly
basis by applying the following annual rates for the Aggressive-Balanced Equity
Fund, Diversified Equity Fund, Growth Balanced Fund, International Fund,
Moderate Balanced Fund, and the Strategic Income Fund:
for assets formerly invested in the International Portfolio:
a. 0.45% of the first $100 million;
b. 0.35% of the next $100 million;
c. 0.20% of the next $400 million;
d. 0.185% of the sums in excess of $600 million.
provided, that no fee shall be payable hereunder with respect to a
Fund during any period in which the Fund invests all (or substantially all) of
its investment assets in a registered, open-end, management investment company,
or separate series thereof, in accordance with and reliance upon Section
12(d)(1)(E) under the Act.
The net assets under management against which the foregoing fees are
to be applied are the net assets as of the last day of the month. If this fee
agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a
10
<PAGE>
month, compensation for that part of the month this agreement is in effect shall
be subject to a pro rata adjustment based on the number of days elapsed in the
current month as a percentage of the total number of days in such month. During
any period when the determination of net asset value is suspended, the net asset
value for the last day prior to such suspension shall for this purpose be deemed
to be the net asset value at the close of the month.
The foregoing fee schedule shall remain in effect until changed in writing
by the parties.
WELLS FARGO BANK, N.A.
_______________________________
By: Michael J. Hogan
Executive Vice President
_______________________________
By: C. David Messman
Vice President
SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL, INC.
_______________________________
By: [Officer]
[Title of Officer]
11
<PAGE>
Exhibit 99.B(d)(2)(v)
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO FUNDS TRUST, WELLS FARGO
BANK, N.A. AND SMITH ASSET MANAGEMENT, L.P.
This AGREEMENT is made as of this ___ day of September, 1999, between Wells
Fargo Funds Trust (the "Trust"), a business trust organized under the laws of
the State of Delaware with its principal place of business at 111 Center Street,
Little Rock, Arkansas 72201, Wells Fargo Bank, N.A. (the "Adviser"), a banking
association organized under the laws of the United States of America with its
principal place of business at 420 Montgomery Street, San Francisco, California
94104, and Smith Asset Management, L.P., a limited partnership with its
principal place of business of 300 Crescent Court, Suite 750, Dallas, Texas
75201 (the "Sub-Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "1940 Act") as an open-end, series management investment
company; and
WHEREAS, the Trust and the Adviser desire that the Sub-Adviser perform
investment advisory services for each of the series of the Trust listed in
Appendix A hereto as it may be amended from time to time (each a "Fund" and
collectively the "Funds"), and the Sub-Adviser is willing to perform those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust, the Adviser and Sub-Adviser agrees as follows:
Section 1. The Trust; Delivery of Documents. The Trust is engaged in the
business of investing and reinvesting its assets in securities of the type and
in accordance with the limitations specified in its Trust Instrument, By-Laws
(if any) and Registration Statement filed with the Securities and Exchange
Commission (the "Commission") under the 1940 Act and the Securities Act of 1933
(the "Securities Act"), including any representations made in the prospectus and
statement of additional information relating to the Funds contained therein and
as may be supplemented from time to time, all in such manner and to such extent
as may from time to time be authorized by the Trust's Board of Trustees (the
"Board"). The Board is authorized to issue any unissued shares in any number of
additional classes or series. The Trust has delivered copies of the documents
listed in this Section to the Sub-Adviser and will from time to time furnish the
Sub-Adviser with any amendments thereof.
1
<PAGE>
Section 2. Appointment of Sub-Adviser. Subject to the direction and
control of the Board, the Adviser manages the investment and reinvestment of the
assets of the Funds and provides for certain management and services as
specified in the Investment Advisory Agreement between the Trust and the Adviser
with respect to the Funds.
Subject to the direction and control of the Board, the Sub-Adviser shall
manage the investment and reinvestment of the assets of the Funds, and without
limiting the generality of the foregoing, shall provide the management and other
services specified below, all in such manner and to such extent as may be
directed from time to time by the Adviser.
Section 3. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets for the Funds. To carry out such
decisions, the Sub-Adviser is hereby authorized, as agent and attorney-in-fact
for the Trust, for the account of, at the risk of and in the name of the Trust,
to place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities for the
Funds, the Sub-Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.
(b) The Sub-Adviser will report to the Board at each regular meeting
thereof all material changes in the Funds since the prior report, and will also
keep the Board informed of important developments affecting the Trust, the Funds
and the Sub-Adviser, and on its own initiative will furnish the Board from time
to time with such information as the Sub-Adviser may believe appropriate,
whether concerning the individual companies whose securities are held by a Fund,
the industries in which they engage, or the economic, social or political
conditions prevailing in each country in which the Fund maintains investments.
The Sub-Adviser will also furnish the Board with such statistical and analytical
information with respect to securities in the Funds as the Sub-Adviser may
believe appropriate or as the Board reasonably may request. In making purchases
and sales of securities for the Funds, the Sub-Adviser will comply with the
policies set from time to time by the Board as well as the limitations imposed
by the Trust's Trust Instrument, By-Laws (if any), Registration Statement under
the Act and the Securities Act, the limitations in the Act and in the Internal
Revenue Code of 1986, as amended applicable to the Trust and the investment
objectives, policies and restrictions of the Funds.
(c) The Sub-Adviser may from time to time employ or associate with such
persons as the Sub-Adviser believes to be appropriate or necessary to assist in
the execution of the Sub-Adviser's duties hereunder, the cost of performance of
such duties to be borne and paid by the Sub-Adviser. No obligation may be
imposed on the Trust in any such respect.
2
<PAGE>
(d) The Sub-Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Sub-Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Sub-Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Securities and Exchange Commission
and the Internal Revenue Service. The books and records pertaining to the Trust
which are in possession of the Sub-Adviser shall be the property of the Trust.
The Trust, or the Trust's authorized representatives (including the Adviser),
shall have access to such books and records at all times during the Sub-
Adviser's normal business hours. Upon the reasonable request of the Trust,
copies of any such books and records shall be provided promptly by the Sub-
Adviser to the Trust or the Trust's authorized representatives.
Section 4. Control by Board. As is the case with respect to the Adviser
under the Investment Advisory Agreement, any investment activities undertaken by
the Sub-Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Adviser on behalf of the Funds, shall at all times be
subject to the direction and control the Trust's Board.
Section 5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times comply
with:
(a) all applicable provisions of the 1940 Act, and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as it may
be amended from time to time, under the Securities Act and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as it may be
amended from time to time;
(d) the provisions of any By-laws of the Trust, if adopted and as it may
be amended from time to time, or resolutions of the Board as may be adopted from
time to time;
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Trust or the Funds;
(f) any other applicable provisions of state or federal law; and
In addition, any code of ethics adopted by the Sub-Advisers in compliance
with Rule 17j-1 under the 1940 Act shall include policies, prohibitions and
procedures which substantially conform to the recommendations regarding personal
investing approved by
3
<PAGE>
the Board of Governors of the Investment Company Institute on June 30, 1994, as
such recommendations may be amended from time to time, and that comply with any
amendments to Rule 17j-1 under the 1940 Act.
Section 6. Broker-Dealer Relationships. The Sub-Adviser is responsible for
the purchase and sale of securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Sub-Adviser's primary
consideration in effecting a security transaction will be to obtain the best
price and execution. In selecting a broker-dealer to execute each particular
transaction for a Fund, the Sub-Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker-
dealer to the Fund on a continuing basis. Accordingly, the price to the Fund in
any transaction may be less favorable than that available from another broker-
dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Trust's
Board of Trustees may from time to time determine, the Sub-Adviser shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of having caused a Fund to pay a broker
or dealer that provides brokerage and research services to the Sub-Adviser an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Sub-Adviser with respect to the Fund and to other clients of the Sub-
Adviser. The Sub-Adviser is further authorized to allocate the orders placed by
it on behalf of the Funds to brokers and dealers who also provide research or
statistical material, or other services to the Funds or to the Sub-Adviser. Such
allocation shall be in such amounts and proportions as the Sub-Adviser shall
determine and the Sub-Adviser will report on said allocations regularly to the
Board of Trustees of the Trust indicating the brokers to whom such allocations
have been made and the basis therefor.
Section 7. Expenses of the Fund. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Trust include, but are not limited to, brokerage
commissions, taxes, legal, auditing or governmental fees, the cost of preparing
share certificates, custodian, transfer agent and shareholder service agent
costs, expense of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to trustees and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
4
<PAGE>
Section 8. Compensation. As compensation for the sub-advisory services
provided under this Agreement, the Adviser shall pay the Sub-Adviser fees,
payable monthly, the annual rates indicated on Schedule A hereto, as such
Schedule may be amended or supplemented from time to time. It is understood that
the Adviser shall be responsible for the Sub-Adviser's fee for its services
hereunder, and the Sub-Adviser agrees that it shall have no claim against the
Trust or the Funds with respect to compensation under this Agreement.
Section 9. Standard of Care. The Trust and Adviser shall expect of the
Sub-Adviser, and the Sub-Adviser will give the Trust and the Adviser the benefit
of, the Sub-Adviser's best judgment and efforts in rendering its services to the
Trust, and as an inducement to the Sub-Adviser's undertaking these services at
the compensation level specified, the Sub-Adviser shall not be liable hereunder
for any mistake in judgment. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of obligations or duties hereunder on the part
of the Sub-Adviser or any of its officers, directors, employees or agents, the
Sub-Adviser shall not be subject to liability to the Trust or to any
shareholders in the Trust for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security.
Section 10. Non-Exclusivity. The services of the Sub-Adviser to the
Adviser and the Trust are not to be deemed to be exclusive, and the Sub-Adviser
shall be free to render investment advisory and administrative or other services
to others (including other investment companies) and to engage in other
activities. It is understood and agreed that officers or directors of the Sub-
Adviser are not prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as partners, officers,
directors or trustees of any other firm or trust, including other investment
advisory companies.
Section 11. Records. The Sub-Adviser shall, with respect to orders the
Sub-Adviser places for the purchase and sale of portfolio securities of the
Funds, maintain or arrange for the maintenance of the documents and records
required pursuant to Rule 31a-1 under the 1940 Act as well as trade tickets and
confirmations of portfolio trades and such other records as the Adviser or the
Funds' Administrator reasonably requests to be maintained. All such records
shall be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1 or any successor rule. All such records will be the
property of the Funds, and will be available for inspection and use by the Funds
and their authorized representatives (including the Adviser). The Sub-Adviser
shall promptly, upon the Trust's request, surrender to the Funds those records
which are the property of the Trust or any Fund. The Sub-Adviser will promptly
notify the Funds' Administrator if it experiences any difficulty in maintaining
the records in an accurate and complete manner.
Section 12. Term and Approval. This Agreement shall become effective with
respect to a Fund after it is approved in accordance with the express
requirements of the 1940 Act, and executed by the Trust, Adviser and Sub-Adviser
and shall thereafter
5
<PAGE>
continue from year to year, provided that the continuation of the Agreement is
approved in accordance with the requirements of the 1940 Act, which currently
requires that the continuation be approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of "a
majority of the outstanding voting securities" of the Fund (as defined in
Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's Trustees who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Trustees of the Trust), by
votes cast in person at a meeting specifically called for such purpose.
Section 13. Termination. As required under the 1940 Act, this Agreement
may be terminated with respect to a Fund at any time, without the payment of any
penalty, by vote of the Trust's Board of Trustees or by vote of a majority of a
Fund's outstanding voting securities, or by the Adviser or Sub-Adviser, on sixty
(60) days' written notice to the other party. The notice provided for herein may
be waived by the party entitled to receipt thereof. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for purposes of this paragraph having the meaning defined in Section 2(a)(4) of
the 1940 Act, as it may be interpreted by the Commission or its staff in
interpretive releases, or applied by the Commission staff in no-action letters,
issued under the 1940 Act.
Section 14. Indemnification by the Sub-Adviser. The Trust shall not be
responsible for, and the Sub-Adviser shall indemnify and hold the Trust or any
Fund of the Trust harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to the willful misfeasance, bad faith, negligent acts or reckless
disregard of obligations or duties of the Sub-Adviser or any of its officers,
directors, employees or agents.
Section 15. Indemnification by the Trust. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of duties hereunder on
the part of the Sub-Adviser or any of its officers, directors, employees or
agents, the Trust hereby agrees to indemnify and hold harmless the Sub-Adviser
against all claims, actions, suits or proceedings at law or in equity whether
brought by a private party or a governmental department, commission, board,
bureau, agency or instrumentality of any kind, arising from the advertising,
solicitation, sale, purchase or pledge of securities, whether of the Funds or
other securities, undertaken by the Funds, their officers, directors, employees
or affiliates, resulting from any violations of the securities laws, rules,
regulations, statutes and codes, whether federal or of any state, by the Funds,
their officers, directors, employees or affiliates. Federal and state securities
laws impose liabilities under certain circumstances on persons who act in good
faith, and nothing herein shall constitute a waiver or limitation of any rights
which a Fund may have and which may not be waived under any applicable federal
and state securities laws.
6
<PAGE>
Section 16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
shall be c/o Stephens Inc., 111 Center Street, Suite 300, Little Rock, Arkansas
72201, Attention R. Greg Feltus, and that of the Adviser shall be 420 Market
Street, San Francisco, California 94104, Attention: Michael J. Hogan, and that
of the Sub-Adviser shall be [blank].
Section 17. Questions of Interpretation. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission, or
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
this Agreement is revised by rule, regulation or order of the Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. The duties and obligations of the parties under this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
Section 18. Amendment. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. If shareholder approval of an amendment is required
under the 1940 Act, no such amendment shall become effective until approved by a
vote of the majority of the outstanding shares of the affected Funds. Otherwise,
a written amendment of this Agreement is effective upon the approval of the
Board of Trustees, the Adviser and the Sub-Adviser.
Section 19. Wells Fargo Name. The Sub-Adviser and the Trust each agree that
the name "Wells Fargo," which comprises a component of the Trust's name, is a
property right of the parent of the Adviser. The Trust agrees and consents that:
(i) it will use the words "Wells Fargo" as a component of its corporate name,
the name of any series or class, or all of the above, and for no other purpose;
(ii) it will not grant to any third party the right to use the name "Wells
Fargo" for any purpose; (iii) the Adviser or any corporate affiliate of the
Adviser may use or grant to others the right to use the words "Wells Fargo," or
any combination or abbreviation thereof, as all or a portion of a corporate or
business name or for any commercial purpose, other than a grant of such right to
another registered investment company not advised by the Adviser or one of its
affiliates; and (iv) in the event that the Adviser or an affiliate thereof is no
longer acting as investment adviser to any Fund or class of a Fund, the Trust
shall, upon request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing the words "Wells
Fargo" and following such change, shall not use the words "Wells Fargo," or any
combination thereof, as a part of its corporate name or for any other commercial
purpose, and shall use its best efforts to cause its trustees, officers
7
<PAGE>
and shareholders to take any and all actions that the Adviser may request to
effect the foregoing and to reconvey to the Adviser any and all rights to such
words.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO FUNDS TRUST
on behalf of the Funds
By: /s/
-----------------------------
R. Greg Feltus, President
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: ______________________________
Michael J. Hogan
Executive Vice President
By:____________________________
C. David Messman
Vice President
SMITH ASSET MANAGEMENT, L.P.
on behalf of the Sub-Adviser
By: /s/
----------------------------
8
<PAGE>
Appendix A
Disciplined Growth Fund
Small Cap Value Fund
Aggressive-Balanced Equity Fund
Diversified Equity Fund
Diversified Small Cap Fund
Growth Balanced Fund
Growth Equity Fund
Moderate Balanced Fund
Strategic Income Fund
Approved by Board of Trustees: March 26, 1999
9
<PAGE>
SCHEDULE A
WELLS FARGO FUNDS TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the ____ day of September, 1999, as
amended ____________, by and between Wells Fargo Bank, N.A. (the "Adviser") and
Smith Asset Management, L.P. (the "Sub-Adviser") and
WHEREAS, the parties and Wells Fargo Funds Trust (the "Trust") have entered
into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement") whereby the
Sub-Adviser provides investment management advice to each series of the Trust as
listed in Schedule A to the Sub-Advisory Agreement (each a "Fund" and
collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid to
the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be paid to the Sub-
Adviser under the Sub-Advisory Agreement shall be calculated as follows on a
monthly basis by applying annual rate of percentage of the assets of the Funds
listed below.
for assets formerly invested in the Disciplined Growth Portfolio:
a. 0.35% of the first $175 million;
b. 0.30% of the next $50 million;
c. 0.25% of the next $275 million; and
d. 0.20% of the sums in excess of $500 million.
for assets formerly invested in the Small Cap Value Portfolio:
a. 0.45% of the first $110 million;
b. 0.40% of the next $40 million;
c. 0.30% of the next $150 million; and
d. 0.25% of the sums in excess of $500 million.
provided, that no fee shall be payable hereunder with respect to a Fund during
any period in which the Fund invests all (or substantially all) of its
investment assets in a registered, open-end, management investment company, or
separate series thereof, in accordance with and reliance upon Section
12(d)(1)(E) under the Act.
The net assets under management against which the foregoing fees are to be
applied are the net assets as of the last day of the month. If this fee
agreement becomes
10
<PAGE>
effective subsequent to the first day of a month or shall terminate before the
last day of a month, compensation for that part of the month this agreement is
in effect shall be subject to a pro rata adjustment based on the number of days
elapsed in the current month as a percentage of the total number of days in such
month. During any period when the determination of net asset value is suspended,
the net asset value for the last day prior to such suspension shall for this
purpose be deemed to be the net asset value at the close of the month.
The foregoing fee schedule shall remain in effect until changed in writing
by the parties.
WELLS FARGO BANK, N.A.
____________________________
By: Michael J. Hogan
Executive Vice President
____________________________
By: C. David Messman
Vice President
SMITH ASSET MANAGEMENT, L.P.
___________________________________
By: [Officer]
[Title of Officer]
11
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO FUNDS TRUST, WELLS FARGO
BANK, N.A. AND WELLS CAPITAL MANAGEMENT, INC.
This AGREEMENT is made as of this ___ day of September, 1999, between Wells
Fargo Funds Trust (the "Trust"), a business trust organized under the laws of
the State of Delaware with its principal place of business at 111 Center Street,
Little Rock, Arkansas 72201, Wells Fargo Bank, N.A. (the "Adviser"), a banking
association organized under the laws of the United States of America with its
principal place of business at 420 Montgomery Street, San Francisco, California
94104, and Wells Capital Management, Inc., a corporation organized under the
laws of the State of _____, with its principal place of business at
_______________ (the "Sub-Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "1940 Act") as an open-end, series management investment
company; and
WHEREAS, the Trust and the Adviser desire that the Sub-Adviser perform
investment advisory services for each of the series of the Trust listed in
Appendix A hereto as it may be amended from time to time (each a "Fund" and
collectively the "Funds"), and the Sub-Adviser is willing to perform those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust, the Adviser and Sub-Adviser agrees as follows:
Section 1. The Trust; Delivery of Documents. The Trust is engaged in the
business of investing and reinvesting its assets in securities of the type and
in accordance with the limitations specified in its Trust Instrument, By-Laws
(if any) and Registration Statement filed with the Securities and Exchange
Commission (the "Commission") under the 1940 Act and the Securities Act of 1933
(the "Securities Act"), including any representations made in the prospectus and
statement of additional information relating to the Funds contained therein and
as may be supplemented from time to time, all in such manner and to such extent
as may from time to time be authorized by the Trust's Board of Trustees (the
"Board"). The Board is authorized to issue any unissued shares in any number of
additional classes or series. The Trust has delivered copies of the documents
listed in this Section to the Sub-Adviser and will from time to time furnish the
Sub-Adviser with any amendments thereof.
1
<PAGE>
Section 2. Appointment of Sub-Adviser. Subject to the direction and control
of the Board, the Adviser manages the investment and reinvestment of the assets
of the Funds and provides for certain management and services as specified in
the Investment Advisory Agreement between the Trust and the Adviser with respect
to the Funds.
Subject to the direction and control of the Board, the Sub-Adviser shall
manage the investment and reinvestment of the assets of the Funds, and without
limiting the generality of the foregoing, shall provide the management and other
services specified below, all in such manner and to such extent as may be
directed from time to time by the Adviser.
Section 3. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets for the Funds. To carry out such
decisions, the Sub-Adviser is hereby authorized, as agent and attorney-in-fact
for the Trust, for the account of, at the risk of and in the name of the Trust,
to place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities for the
Funds, the Sub-Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.
(b) The Sub-Adviser will report to the Board at each regular meeting
thereof all material changes in the Funds since the prior report, and will also
keep the Board informed of important developments affecting the Trust, the Funds
and the Sub-Adviser, and on its own initiative will furnish the Board from time
to time with such information as the Sub-Adviser may believe appropriate,
whether concerning the individual companies whose securities are held by a Fund,
the industries in which they engage, or the economic, social or political
conditions prevailing in each country in which the Fund maintains investments.
The Sub-Adviser will also furnish the Board with such statistical and analytical
information with respect to securities in the Funds as the Sub-Adviser may
believe appropriate or as the Board reasonably may request. In making purchases
and sales of securities for the Funds, the Sub-Adviser will comply with the
policies set from time to time by the Board as well as the limitations imposed
by the Trust's Trust Instrument, By-Laws (if any), Registration Statement under
the Act and the Securities Act, the limitations in the Act and in the Internal
Revenue Code of 1986, as amended applicable to the Trust and the investment
objectives, policies and restrictions of the Funds.
(c) The Sub-Adviser may from time to time employ or associate with such
persons as the Sub-Adviser believes to be appropriate or necessary to assist in
the execution of the Sub-Adviser's duties hereunder, the cost of performance of
such duties to be borne and paid by the Sub-Adviser. No obligation may be
imposed on the Trust in any such respect.
2
<PAGE>
(d) The Sub-Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Sub-Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Sub-Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Securities and Exchange Commission
and the Internal Revenue Service. The books and records pertaining to the Trust
which are in possession of the Sub-Adviser shall be the property of the Trust.
The Trust, or the Trust's authorized representatives (including the Adviser),
shall have access to such books and records at all times during the Sub-
Adviser's normal business hours. Upon the reasonable request of the Trust,
copies of any such books and records shall be provided promptly by the Sub-
Adviser to the Trust or the Trust's authorized representatives.
Section 4. Control by Board. As is the case with respect to the Adviser
under the Investment Advisory Agreement, any investment activities undertaken by
the Sub-Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Adviser on behalf of the Funds, shall at all times be
subject to the direction and control the Trust's Board.
Section 5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times comply
with:
(a) all applicable provisions of the 1940 Act, and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as it may
be amended from time to time, under the Securities Act and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as it may be
amended from time to time;
(d) the provisions of any By-laws of the Trust, if adopted and as it may be
amended from time to time, or resolutions of the Board as may be adopted from
time to time;
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Trust or the Funds;
(f) any other applicable provisions of state or federal law; and
In addition, any code of ethics adopted by the Sub-Advisers in compliance
with Rule 17j-1 under the 1940 Act shall include policies, prohibitions and
procedures which substantially conform to the recommendations regarding personal
investing approved by
3
<PAGE>
the Board of Governors of the Investment Company Institute on June 30, 1994, as
such recommendations may be amended from time to time, and that comply with any
amendments to Rule 17j-1 under the 1940 Act.
Section 6. Broker-Dealer Relationships. The Sub-Adviser is responsible for
the purchase and sale of securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Sub-Adviser's primary
consideration in effecting a security transaction will be to obtain the best
price and execution. In selecting a broker-dealer to execute each particular
transaction for a Fund, the Sub-Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker-
dealer to the Fund on a continuing basis. Accordingly, the price to the Fund in
any transaction may be less favorable than that available from another broker-
dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Trust's
Board of Trustees may from time to time determine, the Sub-Adviser shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of having caused a Fund to pay a broker
or dealer that provides brokerage and research services to the Sub-Adviser an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Sub-Adviser with respect to the Fund and to other clients of the Sub-
Adviser. The Sub-Adviser is further authorized to allocate the orders placed by
it on behalf of the Funds to brokers and dealers who also provide research or
statistical material, or other services to the Funds or to the Sub-Adviser. Such
allocation shall be in such amounts and proportions as the Sub-Adviser shall
determine and the Sub-Adviser will report on said allocations regularly to the
Board of Trustees of the Trust indicating the brokers to whom such allocations
have been made and the basis therefor.
Section 7. Expenses of the Fund. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Trust include, but are not limited to, brokerage
commissions, taxes, legal, auditing or governmental fees, the cost of preparing
share certificates, custodian, transfer agent and shareholder service agent
costs, expense of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to trustees and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
4
<PAGE>
Section 8. Compensation. As compensation for the sub-advisory services
provided under this Agreement, the Adviser shall pay the Sub-Adviser fees,
payable monthly, the annual rates indicated on Schedule A hereto, as such
Schedule may be amended or supplemented from time to time. It is understood that
the Adviser shall be responsible for the Sub-Adviser's fee for its services
hereunder, and the Sub-Adviser agrees that it shall have no claim against the
Trust or the Funds with respect to compensation under this Agreement.
Section 9. Standard of Care. The Trust and Adviser shall expect of the
Sub-Adviser, and the Sub-Adviser will give the Trust and the Adviser the benefit
of, the Sub-Adviser's best judgment and efforts in rendering its services to the
Trust, and as an inducement to the Sub-Adviser's undertaking these services at
the compensation level specified, the Sub-Adviser shall not be liable hereunder
for any mistake in judgment. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of obligations or duties hereunder on the part
of the Sub-Adviser or any of its officers, directors, employees or agents, the
Sub-Adviser shall not be subject to liability to the Trust or to any
shareholders in the Trust for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security.
Section 10. Non-Exclusivity. The services of the Sub-Adviser to the Adviser
and the Trust are not to be deemed to be exclusive, and the Sub-Adviser shall be
free to render investment advisory and administrative or other services to
others (including other investment companies) and to engage in other activities.
It is understood and agreed that officers or directors of the Sub-Adviser are
not prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
Section 11. Records. The Sub-Adviser shall, with respect to orders the Sub-
Adviser places for the purchase and sale of portfolio securities of the Funds,
maintain or arrange for the maintenance of the documents and records required
pursuant to Rule 31a-1 under the 1940 Act as well as trade tickets and
confirmations of portfolio trades and such other records as the Adviser or the
Funds' Administrator reasonably requests to be maintained. All such records
shall be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1 or any successor rule. All such records will be the
property of the Funds, and will be available for inspection and use by the Funds
and their authorized representatives (including the Adviser). The Sub-Adviser
shall promptly, upon the Trust's request, surrender to the Funds those records
which are the property of the Trust or any Fund. The Sub-Adviser will promptly
notify the Funds' Administrator if it experiences any difficulty in maintaining
the records in an accurate and complete manner.
Section 12. Term and Approval. This Agreement shall become effective with
respect to a Fund after it is approved in accordance with the express
requirements of the 1940 Act, and executed by the Trust, Adviser and Sub-Adviser
and shall thereafter
5
<PAGE>
continue from year to year, provided that the continuation of the Agreement is
approved in accordance with the requirements of the 1940 Act, which currently
requires that the continuation be approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of "a majority
of the outstanding voting securities" of the Fund (as defined in Section
2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's Trustees who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Trustees of the Trust), by
votes cast in person at a meeting specifically called for such purpose.
Section 13. Termination. As required under the 1940 Act, this Agreement may
be terminated with respect to a Fund at any time, without the payment of any
penalty, by vote of the Trust's Board of Trustees or by vote of a majority of a
Fund's outstanding voting securities, or by the Adviser or Sub-Adviser, on sixty
(60) days' written notice to the other party. The notice provided for herein may
be waived by the party entitled to receipt thereof. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for purposes of this paragraph having the meaning defined in Section 2(a)(4) of
the 1940 Act, as it may be interpreted by the Commission or its staff in
interpretive releases, or applied by the Commission staff in no-action letters,
issued under the 1940 Act.
Section 14. Indemnification by the Sub-Adviser. The Trust shall not be
responsible for, and the Sub-Adviser shall indemnify and hold the Trust or any
Fund of the Trust harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to the willful misfeasance, bad faith, negligent acts or reckless
disregard of obligations or duties of the Sub-Adviser or any of its officers,
directors, employees or agents.
Section 15. Indemnification by the Trust. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of duties hereunder on
the part of the Sub-Adviser or any of its officers, directors, employees or
agents, the Trust hereby agrees to indemnify and hold harmless the Sub-Adviser
against all claims, actions, suits or proceedings at law or in equity whether
brought by a private party or a governmental department, commission, board,
bureau, agency or instrumentality of any kind, arising from the advertising,
solicitation, sale, purchase or pledge of securities, whether of the Funds or
other securities, undertaken by the Funds, their officers, directors, employees
or affiliates, resulting from any violations of the securities laws, rules,
regulations, statutes and codes, whether federal or of any state, by the Funds,
their officers, directors, employees or affiliates. Federal and state securities
laws impose liabilities under certain circumstances on persons who act in good
faith, and nothing herein shall constitute a waiver or limitation of any rights
which a Fund may have and which may not be waived under any applicable federal
and state securities laws.
6
<PAGE>
Section 16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
shall be c/o Stephens Inc., 111 Center Street, Suite 300, Little Rock, Arkansas
72201, Attention R. Greg Feltus, and that of the Adviser shall be 420 Market
Street, San Francisco, California 94104, Attention: Michael J. Hogan, and that
of the Sub-Adviser shall be [Blank].
Section 17. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission, or
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
this Agreement is revised by rule, regulation or order of the Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. The duties and obligations of the parties under this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
Section 18. Amendment. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. If shareholder approval of an amendment is required
under the 1940 Act, no such amendment shall become effective until approved by a
vote of the majority of the outstanding shares of the affected Funds. Otherwise,
a written amendment of this Agreement is effective upon the approval of the
Board of Trustees, the Adviser and the Sub-Adviser.
7
<PAGE>
Section 19. Wells Fargo Name. The Sub-Adviser and the Trust each agree that
the name "Wells Fargo," which comprises a component of the Trust's name, is a
property right of the parent of the Adviser. The Trust agrees and consents that:
(i) it will use the words "Wells Fargo" as a component of its corporate name,
the name of any series or class, or all of the above, and for no other purpose;
(ii) it will not grant to any third party the right to use the name "Wells
Fargo" for any purpose; (iii) the Adviser or any corporate affiliate of the
Adviser may use or grant to others the right to use the words "Wells Fargo," or
any combination or abbreviation thereof, as all or a portion of a corporate or
business name or for any commercial purpose, other than a grant of such right to
another registered investment company not advised by the Adviser or one of its
affiliates; and (iv) in the event that the Adviser or an affiliate thereof is no
longer acting as investment adviser to any Fund or class of a Fund, the Trust
shall, upon request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing the words "Wells
Fargo" and following such change, shall not use the words "Wells Fargo," or any
combination thereof, as a part of its corporate name or for any other commercial
purpose, and shall use its best efforts to cause its trustees, officers and
shareholders to take any and all actions that the Adviser may request to effect
the foregoing and to reconvey to the Adviser any and all rights to such words.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be executed
in duplicate by their respective officers on the day and year first written
above.
WELLS FARGO FUNDS TRUST
on behalf of the Funds
By: /s/
-----------------------------------------
R. Greg Feltus, President
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/
-----------------------------------------
Michael J. Hogan
Executive Vice President
By: _________________________________________
C. David Messman
Vice President
WELLS CAPITAL MANAGEMENT
on behalf of the Sub-Adviser
By: /s/
-----------------------------------------
9
<PAGE>
Appendix A
----------
Aggressive Balanced Equity Fund
Arizona Tax-Free Fund
California Tax-Free Bond Fund
California Tax-Free Income Fund
California Tax-Free Money Market Fund
California Tax-Free Money Market Trust
Cash Investment Money Market Fund
Colorado Tax-Free Fund
Corporate Bond Fund
Equity Index Fund
Equity Value Fund
Government Money Market Fund
Growth Balanced Fund
Growth Equity Fund
Income Fund
Index Fund
Intermediate Government Income Fund
International Equity Fund
Limited Term Government Income Fund
Limited Term Tax-Free Fund
Minnesota Intermediate Tax-Free Fund
Minnesota Tax-Free Fund
Moderate Balanced Fund
Money Market Fund
Money Market Trust
National Tax-Free Institutional Money Market
National Tax-Free Money Market Fund
National Tax-Free Money Market Trust
Oregon Tax-Free Fund
Overland Express Sweep Fund
Prime Investment Money Market Fund
Small Cap Fund
Strategic Income Fund
Tax-Free Income Fund
Treasury Plus Institutional Money Market Fu
Treasury Plus Money Market Fund
100% Treasury Money Market Fund
Variable Rate Government Fund
Approved by Board of Trustees: March 26, 1999.
10
<PAGE>
SCHEDULE A
WELLS FARGO FUNDS TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the ____ day of September, 1999, as
amended ____________, by and between Wells Fargo Bank, N.A. (the "Adviser") and
Wells Capital Management, Inc. (the "Subadviser") and
WHEREAS, the parties and Wells Fargo Funds Trust (the "Trust") have entered
into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement") whereby the
Sub-Adviser provides investment management advice to each series of the Trust as
listed in Schedule A to the Sub-Advisory Agreement (each a "Fund" and
collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid to
the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be to the Sub-Adviser
under the Sub-Advisory Agreement shall be calculated as follows on a monthly
basis by applying the following annual rates listed for each Fund listed in
Appendix A, and for the Income Equity Fund, Index Fund, Aggressive-Balanced
Equity Fund, Diversified Equity Fund, Diversified Small Cap Fund, Growth
Balanced Fund, Growth Equity Fund, Strategic Income Fund, and Moderate Balanced
Fund:
for the assets formerly invested in the Index Portfolio
a. 0.02%.
for the assets formerly invested in Income Equity Portfolio
a. 0.25% on the first $200 million;
b. 0.20% on the next $200 million;
c. 0.15% on all sums in excess of $400 million.
for the assets formerly invested in International Equity Portfolio
a. 0.35% on the first $400 million;
b. 0.25% on the next $400 million;
c. 0.15% on all sums in excess of $800 million.
for the assets formerly invested in Small Cap Index Portfolio
a. 0.02%
11
<PAGE>
provided, that no fee shall be payable hereunder with respect to any of the
Funds listed above during any period in which the Fund invests all (or
substantially all) of its investment assets in a registered, open-end,
management investment com, or separate series thereof, in accordance with and
reliance upon Section 12(d)(1)(E) under the Act.
The net assets under management against which the foregoing fees are to be
applied are the net assets as of the first business day of the month. If this
fee agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this agreement is in effect shall be subject to a pro rata adjustment
based on the number of days elapsed in the current month as a percentage of the
total number of days in such month. If the determination of the net asset value
is suspended as of the first business day of the month, the net asset value for
the last day prior to such suspension shall for this purpose be deemed to be the
net asset value on the first business day of the month.
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/
--------------------------------
Michael J. Hogan
Executive Vice President
By:________________________________
C. David Messman
Vice President
WELLS CAPITAL MANAGEMENT
on behalf of the Sub-Adviser
By: /s/
-------------------------------
12
<PAGE>
Appendix A
----------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Fee as % of Avg. Daily
Funds Trust Funds Net Asset Value
---------------------------------------------------------------------------------------
<S> <C> <C>
Arizona Tax-Free Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
California Tax-Free Bond Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
California Tax-Free Income Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
California Tax-Free Money Market Fund 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
California Tax-Free Money Market Trust 0-1000M 0.05
more than 1000M 0.04
more than 800M 0.10
---------------------------------------------------------------------------------------
Cash Investment Money Market Fund 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
Colorado Tax-Free Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
Corporate Bond Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
Equity Index Fund 0.02
---------------------------------------------------------------------------------------
Equity Value Fund 0-200M 0.25
200-400M 0.20
more than 400M 0.15
---------------------------------------------------------------------------------------
Government Money Market Fund 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
Growth Fund 0-400M 0.25
400-800M 0.20
more than 800M 0.15
---------------------------------------------------------------------------------------
Income Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
Intermediate Government Income Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
International Equity Fund 0-400M 0.35
400-800M 0.25
more than 800M 0.15
---------------------------------------------------------------------------------------
Limited Term Government Income Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Fee as % of Avg. Daily
Funds Trust Funds Net Asset Value
---------------------------------------------------------------------------------------
<S> <C> <C>
Limited Term Tax-Free Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
Minnesota Intermediate Tax-Free Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
Minnesota Tax-Free Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
Money Market Fund 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
Money Market Trust 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
National Tax-Free Institutional Money Market Fund 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
National Tax-Free Money Market Fund 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
National Tax-Free Money Market Trust 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
Oregon Tax-Free Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
Overland Express Sweep Fund 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
Prime Investment Money Market Fund 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
Small Cap Fund 0-200M 0.25
200-400M 0.20
.400M 0.15
---------------------------------------------------------------------------------------
Income Plus Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
Tax-Free Income Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
Treasury Plus Institutional Money Market Fund 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
Treasury Plus Money Market Fund 0-1000M 0.05
more than 1000M 0.04
---------------------------------------------------------------------------------------
100% Treasury Money Market Fund 0-1000M 0.05
more than 1000M 0.04
Variable Rate Government Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
---------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
DISTRIBUTION AGREEMENT
Wells Fargo Funds Trust
111 Center Street
Little Rock, Arkansas 72201
THIS AGREEMENT is made as of this ___ day of September, 1999, by and
between Wells Fargo Funds Trust, a Delaware business trust (the "Trust") and
Stephens Inc., an Arkansas corporation (the "Distributor").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain the Distributor to render distribution
services to the Trust's investment portfolios listed on Appendix A [to follow]
(individually, a "Fund" and collectively, the "Funds"), and the Distributor is
willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. As the Trust's agent, the Distributor shall be the exclusive
distributor for the shares of the Fund registered under the Securities Act of
1933 (the "1933 Act"). In addition to providing all share distribution services
for the Funds, the Distributor will maintain a service desk dedicated to the
Funds, and will maintain and preserve all records of the Funds, including
financial and corporate records.
2. The Trust shall sell through the Distributor, as the Trust's agent,
and deliver, upon the terms set forth herein, Fund shares that the Distributor
orders from the Trust and for which the Distributor has received and confirmed
unconditional purchase orders. All orders from the Distributor shall be subject
to acceptance and confirmation by the Trust. The Trust shall have the right, at
its election, to deliver either shares issued upon original issue or treasury
shares.
3. As the Trust's agent, the Distributor may sell and distribute Fund
shares in such manner not inconsistent with the provisions hereof as the
Distributor may determine from time to time. In that connection the Distributor
shall comply with all laws, rules and regulations applicable to it, including,
without limiting the generality of the foregoing, all applicable rules or
regulations under the 1933 Act, the 1940 Act and of any securities association
registered under the Securities Exchange Act of 1934 (the "1934 Act").
4. The Trust reserves the right to sell Fund shares to purchasers to
the extent that it or the transfer agent for Fund shares receives purchase
applications therefor. The Distributor's right to accept purchase orders for
Fund shares or to make sales thereof shall not apply to Fund shares that may be
offered by the Trust to shareholders for the reinvestment of cash distributed to
1
<PAGE>
shareholders by the Trust or Fund shares that may otherwise be offered by the
Trust to shareholders, unless the Distributor is otherwise notified by the
Trust.
5. All shares offered for sale and sold by the Distributor shall be
offered for sale and sold by the Distributor to or through securities dealers or
banks and other depository institutions having agreements with the Distributor
("Selling Agents") upon the terms and conditions set forth in paragraph 7(b)
hereof or to investors at the price per share (the "offering price", which is
the net asset value per share plus the applicable sales charge, if any)
specified and determined as provided in the Prospectus (the "Prospectus")
included in the Trust's Registration Statement, as amended from time to time,
under the 1933 Act and the 1940 Act (the "Registration Statement"), relating to
the offering of its shares for sale. If the offering price is not an exact
multiple of one cent, it shall be adjusted to the nearest full cent. The Trust
shall determine and furnish promptly to the Distributor a statement of the
offering price at least once on each day on which the Prospectus states the
Trust is required to determine the Trust's net asset value for the purpose of
pricing purchase orders. Each offering price shall become effective at the time
and shall remain in effect during the period specified in the statement. Each
such statement shall show the basis of its computation. For purposes of
establishing the offering price, the Trust shall consider a purchase order to
have been presented to it at the time it was originally entered by the
Distributor for transmission to it, provided the original purchase order and the
Distributor's fulfilling order to the Trust are appropriately time stamped or
evidenced to show the time of original entry and that the Distributor's
fulfilling order to the Trust is received by the Trust within a time deemed by
it to be reasonable after the purchase order was originally entered. Purchases
of shares shall be made for full and fractional shares, carried to the third
decimal place.
6. Ownership of Fund shares sold hereunder shall be registered in such
names and denominations as are specified in writing to the Trust or to its agent
designated for the purpose. No certificates for shares of the Fund will be
issued.
7. (a) The Distributor shall from time to time employ or associate with
it such persons as it believes necessary to assist it in carrying out its
obligations under this agreement. The compensation of such persons shall be
paid by the Distributor.
(b) The Distributor shall have the right to enter into selling
agreements with Selling Agents of its choice for the sale or marketing of Fund
shares at the offering price and upon the terms and conditions set forth in the
Prospectus. The initial form of selling agreement is attached hereto as
Appendix B. The Distributor may amend those agreements, or modify the form of
agreement, only upon approval of the Trust.
(c) The Distributor shall pay all expenses incurred in connection
with its qualification as a dealer or broker under Federal or state laws.
(d) The Distributor shall pay for all expenses incurred in
connection with (i) printing and distributing such number of copies of the
Prospectus as the Distributor deems necessary for use in connection with
offering Fund shares to prospective investors, (ii) preparing, printing and
distributing any other literature and advertising deemed appropriate by the
Distributor for use in connection with offering Fund shares for sale and (iii)
all other expenses
2
<PAGE>
incurred in connection with the sale of Fund shares as contemplated by this
agreement, except as otherwise specifically provided in this agreement. In
addition, it is understood and agreed that, so long as a plan of distribution of
the Fund adopted pursuant to Rule 12b-1 of the 1940 Act (the "Plan") continues
in effect, any expenses incurred by the Distributor hereunder may be paid from
amounts received by it from the Fund under the Plan. So long as the Plan
continues in effect, the Distributor shall be entitled to receive reimbursement
from the Trust under the Plan for actual expenses incurred in connection with
the Fund to the extent such expenses are reimbursable under the Plan. The
Treasurer of the Trust shall provide to the Board of Trustees of the Trust and
the Board of Trustees shall review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were made.
(e) The Trust shall pay all expenses incurred in connection with (i)
the preparation, printing and distribution to stockholders of the Prospectus and
reports and other communications to Fund shareholders; (ii) registrations of
Fund shares under the 1933 Act and the Fund under the 1940 Act; (iii) amendments
to the Registration Statement; (iv) qualification of Fund shares for sale in
jurisdictions designated by the Distributor; (v) qualification of the Trust as a
dealer or broker under the laws of jurisdictions designated by the Distributor;
(vi) qualification of the Trust as a foreign corporation authorized to do
business in any jurisdiction if the Distributor determines that such
qualification is necessary or desirable for the purpose of facilitating sales of
Fund shares; (vii) maintaining facilities for the issue and transfer of Fund
shares; (viii) supplying information, prices and other data to be furnished by
the Trust under this agreement; and (ix) original issue taxes or transfer taxes
applicable to the sale or delivery of Fund shares.
(f) The Trust shall execute all documents and furnish any
information which may be reasonably necessary in connection with the
qualification of Fund shares of the Trust for sale in a jurisdiction designated
by the Distributor.
(g) The Trust shall pay to the Distributor the amount that is
payable pursuant to, and in accordance with, the Distribution Plan applicable to
a Fund or class of shares of a Fund, or the maximum amount payable under
applicable laws, regulations and rules, whichever is less. The actual amount
payable with respect to such Fund in any month is to be determined by mutual
agreement.
8. The Trust shall furnish the Distributor from time to time, for use
in connection with the sale of Fund shares, such written information with
respect to the Trust as the Distributor may reasonably request. In each case
such written information shall be signed by an authorized officer of the Trust.
The Trust represents and warrants that such information, when signed by one of
its officers, shall be true and correct. The Trust shall also furnish to the
Distributor copies of its reports to its stockholders and such additional
information regarding the Trust's financial condition as the Distributor may
reasonably request from time to time.
9. The Registration Statement and the Prospectus have been or will be,
as the case may be, prepared in conformity with the 1933 Act, the 1940 Act and
the rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "SEC"). The Trust represents and warrants to the
Distributor that the Registration Statement and the Prospectus contain or will
contain all statements required to be stated therein in accordance with
3
<PAGE>
the 1933 Act, the 1940 Act and the Rules and Regulations, that all statements of
fact contained or to be contained therein are or will be true and correct at the
time indicated or the effective date, as the case may be, and that neither the
Registration Statement nor the Prospectus, when it shall become effective under
the 1933 Act or be authorized for use, shall include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of Fund
shares. The Trust shall from time to time file such amendment or amendments to
the Registration Statement and the Prospectus as, in the light of future
developments, shall, in the opinion of the Trust's counsel, be necessary in
order to have the Registration Statement and the Prospectus at all times contain
all material facts required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of Fund shares. If the Trust
shall not file such amendment or amendments within 15 days after receipt by the
Trust of a written request from the Distributor to do so, the Distributor may,
at its option, terminate this agreement immediately. The Trust shall not file
any amendment to the Registration Statement or the Prospectus without giving the
Distributor reasonable notice thereof in advance, provided that nothing in this
agreement shall in any way limit the Trust's right to file at any time such
amendments to the Registration Statement or the Prospectus as the Trust may deem
advisable. The Trust represents and warrants to the Distributor that any
amendment to the Registration Statement or the Prospectus filed hereafter by the
Trust will, when it becomes effective under the 1933 Act, contain all statements
required to be stated therein in accordance with the 1933 Act, the 1940 Act and
the Rules and Regulations, that all statements of fact contained therein will,
when the same shall become effective, be true and correct, and that no such
amendment, when it becomes effective, will include an untrue statement of a
material fact or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of Fund shares.
10. Subject to the provisions of paragraph 7, the Trust shall prepare
and furnish to the Distributor from time to time such number of copies of the
most recent form of the Prospectus filed with the SEC as the Distributor may
reasonably request. The Trust authorizes the Distributor and Selling Agents to
use the Prospectus, in the form furnished to the Distributor from time to time,
in connection with the sale of Fund shares. The Trust shall indemnify, defend
and hold harmless the Distributor, its officers and partners and any person who
controls the Distributor within the meaning of the 1933 Act, from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Distributor, its officers or
partners or any such controlling person, may incur under the 1933 Act, the 1940
Act, other statutes, the common law or otherwise, arising out of or based upon
any alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus or arising out of or based upon any alleged omission
to state a material fact required to be stated in either thereof or necessary to
make the statements in either thereof not misleading. Notwithstanding the
foregoing, this indemnity agreement, to the extent that it might require
indemnity of any person who is an officer or partner of the Distributor and who
is also a director of the Trust, shall not inure to the benefit of such officer
or partner unless a court of competent jurisdiction shall determine, or it shall
have been determined by controlling precedent, that such result would not be
against public policy as expressed in the 1933 Act or the 1940 Act, and in no
event shall anything contained herein be so construed as to protect the
Distributor against any liability to the Trust or its stockholders to which the
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith or negligence in the performance of its duties or by reason of its
reckless
4
<PAGE>
disregard of its obligations and duties under this agreement. This indemnity
agreement is expressly conditioned upon the Trust's being notified of any action
brought against the Distributor, its officers or partners or any such
controlling person, which notification shall be given by letter or by telegram
addressed to the Trust at its principal office in Little Rock, Arkansas, and
sent to the Trust by the person against whom such action is brought within ten
days after the summons or other first legal process shall have been served. The
failure to notify the Trust of any such action shall not relieve the Trust from
any liability which it may have to the person against whom such action is
brought by reason of any such alleged untrue statement or omission otherwise
than on account of the indemnity agreement contained in this paragraph. The
Trust shall be entitled to assume the defense of any suit brought to enforce any
such claim, demand or liability, but, in such case, the defense shall be
conducted by counsel chosen by the Trust and approved by the Distributor. If the
Trust elects to assume the defense of any such suit and retain counsel approved
by the Distributor, the defendant or defendants in such suit shall bear the fees
and expenses of any additional counsel retained by any of them, but in case the
Trust does not elect to assume the defense of any such suit, or in case the
Distributor does not approve of counsel chosen by the Trust, the Trust will
reimburse the Distributor, its officers and partners or the controlling person
or persons named as defendant or defendants in such suit, for the fees and
expenses of any counsel retained by the Distributor or them. In addition, The
Distributor shall have the right to employ one separate counsel to represent it,
its officers and partners and any such controlling person who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Distributor against the Trust hereunder if in the reasonable judgment of
the Distributor it is advisable because of existing or potential differing
interests between the Distributor, its officers and partners or such controlling
person and the Trust in the conduct of the defense of such action, for the
Distributor, its officers and partners or such controlling person to be
represented by separate counsel, in which event the fees and expenses of such
separate counsel shall be borne by the Trust. This indemnity agreement and the
Trust's representations and warranties in this agreement shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of the Distributor, its officers and partners or any such controlling
person and shall survive the delivery of any shares as provided in this
agreement. This indemnity agreement shall inure exclusively to the benefit of
the Distributor and its successors, the Distributor's officers and partners and
their respective estates and any such controlling persons and their successors
and estates. The Trust shall promptly notify the Distributor of the commencement
of any litigation or proceedings against it in connection with the issue and
sale of any Fund shares.
11. The Distributor agrees to indemnify, defend and hold harmless the
Trust, its officers and directors and any person who controls the Trust within
the meaning of the 1933 Act, from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in connection
therewith) which the Trust, its officers or directors or any such controlling
person, may incur under the 1933 Act, the 1940 Act, other statutes, the common
law or otherwise, but only to the extent that such liability or expense incurred
by the Trust, its officers or directors or such controlling person resulting
from such claims or demands shall arise out of or be based upon (a) any alleged
untrue statement of a material fact contained in information furnished in
writing by the Distributor to the Trust specifically for use in the Registration
Statement or the Prospectus or shall arise out of or be based upon any alleged
omission required to be stated in the Registration Statement or the Prospectus
or necessary to make such information not misleading,
5
<PAGE>
(b) any alleged act or omission on the Distributor's part as the Trust's agent
that has not been expressly authorized by the Trust in writing, or (c) any
alleged willful misfeasance, bad faith or negligence in the performance of the
Distributor's obligations and duties under the Agreement or by reason of its
alleged reckless disregard thereof. This indemnity agreement is expressly
conditioned upon the Distributor's being notified of any action brought against
the Trust, its officers and directors or any such controlling person, which
notification shall be given by letter or telegram, addressed to the Distributor
at its principal office in Little Rock, Arkansas, and sent to the Distributor by
the person against whom such action is brought, within 10 days after the summons
or other first legal process shall have been served. The failure to notify the
Distributor of any such action shall not relieve the Distributor from any
liability which it may have to the Trust, its officers or directors or such
controlling person by reason of any such alleged misstatement or omission on the
Distributor's part otherwise than on account of the indemnity agreement
contained in this paragraph. The Distributor shall have a right to control the
defense of such action with counsel of its own choosing and approved by the
Trust if such action is based solely upon such alleged misstatement or omission
on the Distributor's part, and in any other event the Trust, its officers and
directors or such controlling person shall each have the right to participate in
the defense or preparation of the defense of any such action at their own
expense.
12. No Fund shares shall be sold through the Distributor or by the Trust
under this agreement and no orders for the purchase of Fund shares shall be
confirmed or accepted by the Trust if and so long as the effectiveness of the
Registration Statement shall be suspended under any of the provisions of the
1933 Act. Nothing contained in this paragraph 12 shall in any way restrict,
limit or have any application to or bearing upon the Trust's obligation to
redeem Fund shares from any shareholder in accordance with the provisions of its
Declaration of Trust. The Trust will use its best efforts at all times to have
Fund shares effectively registered under the 1933 Act.
13. The Trust agrees to advise the Distributor immediately:
(a) of any request by the SEC for amendments to the Registration
Statement or the Prospectus or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the Prospectus
under the 1933 Act or the initiation of any proceedings for that purpose;
(c) of the happening of any material event that makes untrue any
statement made in the Registration Statement or the Prospectus or that requires
the making of a change in either thereof in order to make the statements therein
not misleading; and
(d) of any action of the SEC with respect to any amendments to the
Registration Statement or the Prospectus that may from time to time be filed
within the SEC under the 1933 Act or the 1940 Act.
14. Insofar as they concern the Trust, the Trust shall comply with all
applicable laws, rules and regulations, including, without limiting the
generality of the foregoing, all rules or
6
<PAGE>
regulations made or adopted pursuant to the 1933 Act, the 1940 Act or by any
securities association registered under the 1934 Act.
15. The Distributor may, if it desires and at its own cost and expense,
appoint or employ agents to assist it in carrying out its obligations under this
agreement, but no such appointment or employment shall relieve the Distributor
of any of its responsibilities or obligations to the Trust under this agreement.
16. The following provisions shall apply with respect to the sale by
Distributor of Class B Shares of any Fund, notwithstanding any other provision
herein to the contrary:
(a) Distributor shall have the obligation to pay all applicable
dealer allowances ("B Share Allowances") to which Selling Agents are entitled to
receive in connection with the sale of Class B Shares, including any such B
Share Allowances, or portions thereof, to which registered representatives of
Distributor are entitled to receive.
(b) To the extent that Distributor engages and uses a third-party to
finance its obligation to pay B Share Allowances as set forth in this section,
Distributor shall have the right to assign to such third-party all or any
portion of Distributor's right hereunder to receive fees in connection with the
sale of Class B Shares and to direct the Company, upon written notice, to make
direct payment of these fees to such party, free and clear of any rights to
offset or claims of the Trust or any Fund against Distributor.
(c) The Trust acknowledges that, under the applicable Distribution
Plan for Class B Shares of the Funds, any payments that the Funds make to
Distributor with respect to Class B Shares shall continue, in accordance with,
and subject to, the applicable terms relating to the Class B Shares, regardless
of whether Distributor is acting as the principal underwriter for the Trust (and
affected Funds); provided that the Distribution Plan for the Class B Shares has
not been terminated or modified in a way which affects the payment of such
amounts.
17. Subject to the provisions of paragraph 9, this agreement shall
continue in effect until such time as there shall remain no shares registered
under the 1933 Act, provided that this agreement shall continue in effect for a
period of more than one year from the date hereof only so long as such
continuance is specifically approved at least annually in accordance with the
1940 Act and the rules thereunder. This agreement shall terminate automatically
in the event of its assignment (as defined in the 1940 Act). This agreement
may, in any event, be terminated at any time, without the payment of any
penalty, by the Trust upon 60 days' written notice to the Distributor or by the
Distributor at any time after the second anniversary of the effective date of
this agreement on 60 days' written notice to the Trust.
18. Nothing in this Agreement shall require the Trust to take any action
contrary to any provision of its Declaration of Trust or to any applicable
statute or regulation.
19. Miscellaneous.
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Trust or the Distributor shall be
sufficiently given if addressed to
7
<PAGE>
that party and received by it at its office set forth below or at such other
place as it may from time to time designate in writing.
To the Trust:
Wells Fargo Funds Trust
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank, Secretary
With a copy to:
Wells Fargo Bank, N.A.
525 Market Street, 12/th/ Floor
San Francisco, CA 94105
Attention: C. David Messman, Vice President and Senior Counsel
To the Distributor:
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank, Senior Vice President
(b) This Agreement shall extend to and be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be subject to assignment (as that term is defined
under the 1940 Act).
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and which collectively shall be
deemed to constitute only one agreement.
(e) If any provision of this Agreement is declared to be
prohibited or unenforceable, the remaining provisions of this Agreement shall
continue to be valid and fully enforceable.
In witness whereof, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
8
<PAGE>
WELLS FARGO FUNDS TRUST
By: ______________________________
Richard H. Blank
Chief Operating Officer
STEPHENS INC.
By: ______________________________
R. Greg Feltus
Executive Vice President
9
<PAGE>
Appendix A
Funds of Wells Fargo Funds Trust Covered by This Agreement
1. Aggressive Balanced-Equity Fund
2. Arizona Tax-Free Fund
3. Asset Allocation Fund
4. California Tax-Free Bond Fund
5. California Tax-Free Income Fund
6. California Tax-Free Money Market Fund
7. California Tax-Free Money Market Trust
8. Cash Investment Money Market Fund
9. Colorado Tax-Free Fund
10. Corporate Bond Fund
11. Disciplined Growth Fund
12. Diversified Bond Fund
13. Diversified Equity Fund
14. Diversified Small Cap Fund
15. Equity Index Fund
16. Equity Value Fund
17. Government Money Market Fund
18. Growth Balanced Fund
19. Growth Equity Fund
20. Growth Fund
21. Income Equity Fund
22. Income Fund
23. Income Plus Fund
24. Index Allocation Fund
25. Index Fund
26. Intermediate Government Income Fund
27. International Equity Fund
28. International Fund
29. Large Company Growth Fund
30. LifePath Opportunity Fund
31. LifePath 2010 Fund
32. LifePath 2020 Fund
33. LifePath 2030 Fund
34. LifePath 2040 Fund
35. Limited Term Tax-Free Fund
36. Limited Term Government Income Fund
37. Minnesota Intermediate Tax-Free Fund
38. Minnesota Tax-Free Fund
39. Moderate Balanced Fund
40. Money Market Fund
41. Money Market Trust
42. National Tax-Free Institutional Money Market Fund
43. National Tax-Free Money Market Fund
44. National Tax-Free Money Market Trust
45. Oregon Tax-Free Fund
46. Overland Express Sweep Fund
47. Prime Investment Money Market Fund
48. Small Cap Fund
49. Small Cap Opportunities Fund
50. Small Cap Value Fund
51. Small Company Growth Fund
52. Stable Income Fund
10
<PAGE>
53. Strategic Income Fund
54. Tax-Free Income Fund
55. Treasury Plus Institutional Money Market Fund
56. Treasury Plus Money Market Fund
57. 100% Treasury Money Market Fund
58. Variable Rate Government Fund
59. Wealthbuilder II Growth & Income Portfolio
60. Wealthbuilder II Growth Balanced Portfolio
61. Wealthbuilder II Growth Portfolio
Approved by Board of Trustees: March 26, 1999
11
<PAGE>
Appendix B
Form of Selling Group Agreement
STEPHENS INC.
111 Center Street
Little Rock, Arkansas 72201
WELLS FARGO FUNDS TRUST
________________________________
________________________________
________________________________
Ladies and Gentlemen:
We are the exclusive distributor of the shares of capital stock of the
several portfolios (each a "Fund" and collectively the "Funds") of Wells Fargo
Funds Trust (the "Trust"), a Delaware business trust, pursuant to the terms of a
Distribution Agreement between us and the Trust. We invite you to participate
in the distribution of the shares of capital stock of certain of the Funds (as
identified to you from time to time) ("Shares") on the following terms:
1. You represent and warrant that you are either (a) a registered broker
or dealer pursuant to the Securities Exchange Act of 1934 ("1934 Act"),
and a member of the National Association of Securities Dealers, Inc. (the
"NASD"), and that you will maintain such registration and membership and
abide by the Rules of Fair Practice, the Constitution and By-Laws of the
NASD and all other rules and regulations that are now or may become
applicable to you and your activities hereunder; or (b) a bank exempt
from registration as a broker-dealer under the federal securities laws,
and that you will conduct your activities hereunder and otherwise in a
manner so as to remain exempt from such registration and in compliance
with the provisions of the Glass-Steagall Act and all other rules and
regulations that are now or may become applicable to you and your
activities hereunder.
2. You represent and warrant that you are registered or qualified to act
as a broker or dealer (or are exempt from being required to register or
qualify as such) in the states or other jurisdictions where you transact
business. You agree that you will maintain such registrations or
qualifications in full force and effect throughout the term of this
Agreement (and if an exemption becomes no longer available, to
immediately so qualify or register). You agree to comply with all
applicable federal, state and local laws, including, without limiting the
generality of the foregoing, the Securities Act of 1933, the 1934 Act and
the Investment Company Act of 1940, and all applicable rules or
regulations thereunder. You agree to offer and sell Shares only in the
states and other jurisdictions in which we have indicated that such
offers and sales can be made and in which you are qualified to so act.
You further agree not to
12
<PAGE>
offer or sell Shares outside the several states, territories and
possessions of the United States.
3. You agree to offer and sell Shares of the Funds to your customers only
at the applicable public offering price (which is the net asset value per
share plus the applicable sales load, if any) then in effect as described
in the respective Fund's then currently effective prospectus, including
any supplements or amendments thereto ("Prospectus"). You may establish
and charge reasonable service fees to your clients for processing
exchange or redemption orders for Shares, provided you disclose the fees
to your clients.
4. Purchase orders for Shares ("Purchase Orders") received from you and
accepted by us will be executed at the applicable public offering price
next determined after our receipt and acceptance of such Purchase Order,
in accordance with the Prospectuses. All Purchase Orders must meet the
applicable minimum initial and subsequent investment requirements as
described and set forth in the Prospectuses. You agree to date and time
stamp all orders received by you and to promptly forward all Purchase
Orders to us or the Trust's Transfer Agent in time for processing at the
public offering price next determined after receipt by you. You agree
that you will not withhold Purchase Orders or purchase shares in
anticipation of receiving Purchase Orders from customers. The procedures
applicable to the handling of Purchase Orders shall be subject to such
instructions as may be issued by us from time to time.
5. All Purchase Orders are subject to acceptance by us and confirmation
by the Trust or its Transfer Agent. We reserve the right in our sole
discretion to reject any Purchase Order, including contingent or
conditional Purchase Orders, in whole or in part. We also reserve the
right in our discretion without notice to you to suspend sales or
withdraw the offering of Shares, in whole or in part, or to cancel this
Agreement.
6. You agree to purchase Shares only through us or from your customers.
Purchases through us shall be made only for the purpose of covering
Purchase Orders already received from your customers or for your bona
fide investment. Purchases from your customers, if any, shall be at a
price that is not less than the applicable net asset value quoted by the
Trust at the time of such purchase as determined in the manner set forth
in the Prospectuses. All transactions in Shares shall be subject to the
terms and provisions set forth in the Prospectuses.
7. Shares purchased hereunder will not be issued in certificated form
except where permitted by the applicable Prospectus, upon written request
by you or your customer, and only when payment and proper registration or
transfer instructions have been received by the Trust or its Transfer
Agent.
8. If a customer's account with a Fund is established without the
customer signing an Account Application, you represent that the
instructions relating to the registration and shareholder options
selected (whether on the Account Application, in some other
13
<PAGE>
document or orally) are in accordance with the customer's instructions,
and you shall be responsible to the Trust, its Transfer Agent and us for
any losses, claims, damages or expenses resulting from acting upon such
instructions.
9. If payment for Shares purchased hereunder is not received or made
within the applicable time period specified in the governing Prospectus,
or if you cancel any order at any time after our acceptance of the
Purchase Order, we reserve the right to cancel the sale (or, at our
option, to redeem the Shares), in which case you shall be responsible to
the Trust, its Transfer Agent and us for any losses, claims, damages or
expenses resulting from your failure to make payment or cancellation as
aforesaid.
10. You have no authority whatsoever to act as agent for, partner of or
participant in a joint venture with the Trust or us or any other member
of the Selling Group, and nothing in this Agreement shall constitute
either of us the agent of the other or shall constitute you or the Trust
the agent of each other. In all transactions in the Shares, you are
acting as principal or as agent for your customer and we are acting as
agent for the Trust and not as principal. We are not responsible for
registering or qualifying the Shares for sale in any jurisdiction. We
also are not responsible for the issuance, form, validity, enforceability
or value of the Trust's Shares.
11. No person is authorized to act for us or to make any representations
concerning the Trust or its Shares except those contained in the
Prospectuses and the Statements of Additional Information, and in sales
literature issued by us supplemental to the Prospectuses and Statements
of Additional Information ("Sales Literature"). In purchasing Shares
through us, you shall rely solely upon the representations contained in
the Prospectuses, the Statements of Additional Information and the Sales
Literature. We will furnish you, upon request, with a reasonable quantity
of copies of the Prospectuses, Statements of Additional Information,
Sales Literature and amendments and supplements thereto. You agree that
if and when we supply you with copies of any supplements to any
Prospectus, you will affix copies of such supplements to all such
Prospectuses in your possession, that thereafter you will distribute such
Prospectuses only with such supplements affixed, and that you will
present Purchase Orders only from persons who have received Prospectuses
with such supplements affixed. You agree not to use Sales Literature in
connection with the solicitation of Purchase Orders unless accompanied or
preceded by the relevant Prospectus.
12. As compensation, you shall be entitled to receive that portion of the
sales load assessed on the purchase of the Shares equal to the dealer
allowance, as set forth in the Prospectuses. Sales loads and dealer
allowances shall take into account volume discounts, rights of
accumulation, letters of intent, certain reinvestments of redemption
proceeds, certain reductions for designated persons or groups and
exchanges and any other arrangements for the reduction or elimination of
sales loads and dealer allowances, all as described in the Prospectuses.
You are responsible for obtaining from your customer such information as
you deem necessary to establish a reasonable basis for believing that the
customer is eligible for any claimed reductions in or elimination of
sales loads, and for obtaining from your customer requisite tax
14
<PAGE>
identification numbers and certifications. By transmitting Purchase
Orders to us or to the Trust's Transfer Agent, you shall be deemed to
have represented and warranted to us, the Trust, and its Transfer Agent
that you have a reasonable basis for believing, and do believe, that the
customer is eligible for such reduction or elimination and that, unless
you advise us otherwise, you have obtained the requisite tax
identification numbers and certifications.
13. As further compensation for distribution-related services performed
by you in connection with the distribution of Shares of certain of the
Funds which have distribution plans in effect under Rule 12b-1 under the
1940 Act that provide for compensation for distribution-related services,
you also may receive a periodic fee based upon a percentage of the
average daily net asset value of Shares of the respective Funds
attributable to you, in accordance with the applicable Distribution Plans
as disclosed in the governing Prospectus.
14. If any Shares are repurchased or tendered for redemption by the Trust
within seven business days after acceptance by us or the Trust of the
Purchase Order for such Shares, you shall forfeit the right to and
promptly refund to us the full dealer allowance paid or reallowed to you
in connection with the original Purchase Order.
15. You agree to indemnify the Trust, its Transfer Agent and us for any
losses, claims, damages or expenses arising out of or in connection with
any wrongful act or omission by you, your representatives, agents or sub-
agents not in accordance with this Agreement, provided that such losses,
claims, damages or expenses were not caused by the indemnitees' willful
misfeasance, bad faith or gross negligence.
16. This Agreement shall become effective upon receipt by us of a signed
copy hereof, and shall cancel and supersede any and all prior Selling
Group Agreements or similar agreements or contracts relating to the
distribution of the Shares. Any amendments to this Agreement shall be
deemed accepted by you, and will take effect with respect to, and on the
date of, any orders placed by you after the date set forth in any notice
of amendment sent by us to you. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Arkansas.
17. This Agreement may be terminated upon written notice by either party
at any time, and shall automatically terminate upon its attempted
assignment by you, whether by operation of law or otherwise, or by us
otherwise than by operation of law. We reserve the right to cancel this
Agreement at any time without notice if any Shares are offered for sale
by you at less than the applicable public offering price as set forth in
the Prospectuses.
18. This Agreement is in all respects subject to statements regarding the
sale and repurchase or redemption of Shares made in the Prospectuses, and
to the Rules of Fair Practice of the NASD, which shall control and
override any provision to the contrary in this Agreement.
15
<PAGE>
19. All communications to us shall be sent to us by mail or by confirmed
telefacsimile at 111 Center Street, Little Rock, Arkansas 72201. Any
notice to you shall be duly given if sent by mail or by confirmed
telefacsimile to you at your address as set forth on the signature page
hereof. Any party that changes its address shall promptly notify the
other party in accordance with the terms of this paragraph.
Date: ____________
STEPHENS INC.
By: ________________________
Name: ______________________
Title: _____________________
The undersigned accepts this invitation to become a member of the Selling
Group and agrees to abide by the foregoing terms and conditions.
Date: _______________
Address:
Telephone:
Telefacsimile:
By: _______________________ By: ______________________
(Authorized Signature) (Authorized Signature)
Name: ___________________ Name: ________________
Title: _________________ Title: _______________
Please execute this Agreement in duplicate and return one copy to
Stephens Inc.
16
<PAGE>
Exhibit 99.B(g)(1)
CUSTODY AGREEMENT
Wells Fargo Funds Trust
111 Center Street
Little Rock, Arkansas 72201
This Agreement is made as of this 12/th/ day of December, 1997 (the
"Agreement"), by and between WELLS FARGO FUNDS TRUST (the "Trust"), on behalf of
the Funds listed on Appendix F hereto, as such Appendix may be revised from time
to time (each a "Fund" and, collectively, the "Funds"), and BARCLAYS GLOBAL
INVESTORS, N.A. (the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth, the
Trust and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meaning:
1. "Authorized Person" shall be deemed to include the treasurer, the
controller or any other person, whether or not any such person is an Officer or
employee of the Trust, duly authorized by the Board of Trustees ("Trustees") to
give Oral Instructions and Written Instructions on behalf of a Fund and listed
in the Certificate attached hereto as Appendix A or such other Certificate as
may be received from time to time by the Custodian.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency securities, its successor(s)
and its nominee(s).
3. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf of a
Fund by any two Officers of the Trust.
4. "Clearing Member" shall mean a registered broker-dealer that is a
member of a national securities exchange qualified to act as a custodian for an
investment company, or any broker-dealer reasonably believed by the Custodian to
be such a clearing member.
5. "Depository" shall mean The Depository Trust Company ("DTC"),
Participants Trust Company ("PTC"), and any other clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, its successor(s) and its nominee(s), provided the
Custodian has received a certified copy of a resolution of the Board of Trustees
specifically approving deposits in DTC, PTC or such other clearing agency. The
term "Depository" shall further mean and include any person authorized to act as
a depository pursuant to Section 17, Rule 17f-4 or Rule 17f-5 thereunder, under
the Investment Company Act of 1940, its successor(s) and its
<PAGE>
nominee(s), specifically identified in a certified copy of a resolution of the
Board of Trustees approving deposits therein by the Custodian.
6. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, or Clearing Member, or in the name of the Trust or a Fund for
the benefit of a broker, dealer, or Clearing Member, or otherwise, in accordance
with an agreement between the Trust on behalf of a Fund, the Custodian and a
broker, dealer, or Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or moneys of
a Fund shall be deposited and withdrawn from time to time in connection with
such transactions as a Fund may from time to time determine. Securities held in
the Book-Entry System or the Depository shall be deemed to have been deposited
in, or withdrawn from, a Margin Account upon the Custodian's effecting an
appropriate entry on its books and records.
7. "Money Market Securities" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to principal and interest
by the government of the United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers' acceptances, repurchase
and reverse repurchase agreements with respect to the same and bank time
deposits, where the purchase and sale of such securities normally requires
settlement in federal funds on the same date as such purchase or sale.
8. "Officers" shall be deemed to include the President, Vice President,
the Secretary, the Treasurer, the Controller, any Assistant Secretary, any
Assistant Treasurer or any other person or persons duly authorized by the
Trustees of the Trust to execute any Certificate, instruction, notice or other
instrument on behalf of a Fund and listed in the Certificate attached hereto as
Appendix B or such other Certificate as may be received by the Custodian from
time to time.
9. "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from an Authorized Person or from a person reasonably believed
by the Custodian to be an Authorized Person.
10. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which a Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
11. "Security" or "Securities" shall be deemed to include, without
limitation, Money Market Securities, Reverse Repurchase Agreements, common stock
and other instruments or rights having characteristics similar to common stocks,
preferred stocks, debt obligations issued by state or municipal governments and
by public authorities (including, without limitation, general obligations
bonds), bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or any property or assets.
12. "Segregated Security Account" shall mean an account maintained under
the terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or other
assets of a Fund shall be deposited and withdrawn from time to time in
accordance with Certificates received by the Custodian in connection with such
transactions as a Fund may from time to time determine.
13. "Shares" shall mean the shares of common stock of a Fund, each of
which, in the case of a Fund having Series, is allocated to a particular Series.
2
<PAGE>
14. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the authenticity of the sender
of such communication.
ARTICLE II
APPOINTMENT OF A CUSTODIAN
1. The Trust on behalf of a Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys at any time owned by a
Fund during the term of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees
to perform all the duties thereof as set forth in this Agreement.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in Article V, a Fund will deliver or
cause to be delivered to the Custodian all Securities and all moneys owned by
it, including cash received for the issuance of its Shares, at any time during
the term of this Agreement. The Custodian will not be responsible for such
Securities and such moneys until actually received by it. The Custodian will be
entitled to reverse any credits made on a Fund's behalf where such credits have
been previously made and moneys are not finally collected. A Fund shall deliver
to the Custodian a certified resolution of the Trustees of the Trust authorizing
and instructing the Custodian on a continuous and ongoing basis to deposit in
the Book-Entry System all Securities eligible for deposit therein and to utilize
the Book-Entry System to the extent possible 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 Securities collateral. Prior to a deposit of Securities of a Fund in
the Depository, a Fund shall deliver to the Custodian a certified resolution of
the Trustees of the Trust approving, authorizing and instructing the Custodian
on a continuous and ongoing basis until instructed to the contrary by a
Certificate actually received by the Custodian to deposit in the Depository all
Securities eligible for deposit therein and to utilize the Depository to the
extent possible 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 Securities collateral.
Securities and moneys of a Fund deposited in either the Book-Entry System or the
Depository will be represented in accounts which include only assets held by the
Custodian for customers, including, but not limited to, accounts in which the
Custodian acts in a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account in the name of a
Fund all moneys received by it for the account of a Fund, and shall disburse the
same only:
(a) In payment for Securities purchased, as provided in Article IV
hereof;
(b) In payment of dividends or distributions, as provided in Article
VIII hereof;
(c) In payment of original issue or other taxes, as provided in Article
IX hereof;
3
<PAGE>
(d) In payment for Shares redeemed by it, as provided in Article IX
hereof;
(e) Pursuant to Certificate(s) setting forth the name(s) and address(es)
of the person(s) to whom the payment is to be made, and the purpose for which
payment is to be made; or
(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article XII hereof.
3. Promptly after the close of business on each day, the Custodian
shall furnish a Fund with confirmations and a summary of all transfers to or
from the account of a Fund during said day. Where Securities are transferred to
the account of a Fund, the Custodian shall also by book-entry or otherwise
identify as belonging to a Fund a quantity of Securities in a fungible bulk of
Securities registered in the name of the Custodian (or its nominee) or shown on
the Custodian's account on the books of the Book-Entry System or the Depository.
The Custodian shall furnish a Fund at least monthly with a detailed statement of
the Securities and moneys held for a Fund under this Agreement.
4. Except as otherwise provided in Article V, all Securities held for a
Fund which are issued or issuable only in bearer form, except such Securities as
are held in the Book-Entry System, shall be held by the Custodian in that form;
all other Securities held for a Fund may be registered in the name of a Fund, in
the name of any duly appointed registered nominee of the Custodian as the
Custodian may from time to time determine, or in the name of the Book-Entry
System or the Depository or their successor(s) or their nominee(s). The Trust
agrees to 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 its registered nominee or in the name of the Book-Entry System or the
Depository, any Securities which it may hold for the account of a Fund and which
may from time to time be registered in the name of a Fund. The Custodian shall
hold all such Securities which are not held in the Book-Entry System or in the
Depository in a separate account in the name of a Fund physically segregated at
all times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to the
Securities therein deposited, shall, with respect to all Securities held for a
Fund in accordance with this Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may be amended at
any time by the Custodian upon five business days' prior notification to a Fund;
(c) Present for payment and collect the amount payable upon all
Securities which mature;
(d) Surrender Securities in temporary form for definitive Securities;
(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
4
<PAGE>
(f) Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of a Fund all
rights and similar securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments whereby
the authority of a Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for a Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for a Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
(d) Make such transfer or exchanges of the assets of a Fund and take
such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of a Fund; and
(e) Present for payment and collect the amount payable upon Securities
not described in preceding paragraph 5(b) of this Article which may be called as
specified in the Certificate.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase or sale (as applicable) of Securities by
a Fund, other than a purchase or sale of any Reverse Repurchase Agreement, a
Fund shall deliver to the Custodian (i) with respect to each purchase or sale of
Securities which are not Money Market Securities, a Certificate; and (ii) with
respect to each purchase or sale of Money Market Securities, a Certificate, Oral
Instructions or Written Instructions, specifying with respect to each such
purchase or sale: (a) the name of the issuer and the title of the Securities;
(b) the number of shares or the principal amount purchased or sold and accrued
interest, if any; (c) the date of purchase or sale and settlement date; (d) the
purchase or sale price per unit; (e) the total amount payable upon such purchase
or sale; (f) the name of the person from whom or the broker through whom the
purchase or sale was made, and the name of the clearing broker, if any; (g) in
the case of a purchase, the name of the broker to which payment is to be made;
and (h) in the case of a sale, the name of the broker to whom the Securities are
to be delivered. In the case of a purchase, the Custodian shall, upon receipt
of Securities purchased by or for a Fund, pay out of the moneys held for the
account of a Fund the total amount payable to the person from whom, or the
broker through whom, the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral Instructions or
Written Instructions. In the case of a sale, the Custodian shall deliver the
Securities upon receipt of the total amount payable to a Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions. Subject to the
foregoing, the Custodian may accept payment in such form as shall be
5
<PAGE>
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in securities.
ARTICLE V
SHORT SALES
1. Promptly after any short sale, a Fund shall deliver to the Custodian
a Certificate specifying: (a) the name of the issuer and the title of the
Security; (b) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (c) the dates of the sale and settlement; (d) the
sale price per unit; (e) the total amount credited to a Fund upon such sale, if
any (f) the amount of cash and/or the amount and kind of Securities, if any,
which are to be deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (g) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a Segregated Security
Account; and (h) the name of the broker through which such short sale was made.
The Custodian shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to a Fund upon such sale, if any,
as specified in the Certificate is held by such broker for the account of the
Custodian (or any nominee of the Custodian) as custodian of a Fund, issue a
receipt or make the deposits into the Margin Account and the Segregated Security
Account specified in the Certificate.
2. In connection with the closing-out of any short sale, a Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing-out: (a) the name of the issuer and the title of the Security; (b)
the number of shares or the principal amount, and accrued interest or dividends,
if any, required to effect such closing-out to be delivered to the broker; (c)
the dates of the closing-out and settlement; (d) the purchase price per unit;
(e) the net total amount payable to a Fund upon such closing-out; (f) the net
total amount payable to the broker upon such closing-out; (g) the amount of cash
and the amount and kind of Securities, if any, to be withdrawn, from the Margin
Account; (h) the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Segregated Security Account; and (i) the name of
the broker through which a Fund is effecting such closing-out. The Custodian
shall, upon receipt of the net total amount payable to a Fund upon such closing-
out and the return and/or cancellation of the receipts, if any, issued by the
Custodian with respect to the short sale being closed-out, pay out the moneys
held for the account of a Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Segregated
Security Account, as the same are specified in the Certificate.
ARTICLE VI
REVERSE REPURCHASE AGREEMENTS
1. Promptly after a Fund enters into a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, a Fund shall
deliver to the Custodian a Certificate, or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions or
Written Instructions specifying: (a) the total amount payable to a Fund in
connection with such Reverse Repurchase Agreement; (b) the broker or dealer
through or with which the Reverse Repurchase Agreement is entered; (c) the
amount and kind of Securities to be delivered by a Fund to such broker or
dealer; (d) the date of such Reverse Repurchase Agreement; and (e) the amount of
cash and/or the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable to a
Fund specified in the Certificate, Oral Instructions or Written Instructions
make the
6
<PAGE>
delivery to the broker or dealer, and the deposits, if any, to the Segregated
Security Account, specified in such Certificate, Oral Instructions or Written
Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
paragraph 1 of this Article VI, a Fund shall promptly deliver a Certificate or,
in the event such Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral Instructions or Written Instructions to the Custodian
specifying: (a) the Reverse Repurchase Agreement being terminated; (b) the
total amount payable by a Fund in connection with such termination; (c) the
amount and kind of Securities to be received by a Fund in connection with such
termination; (d) the date of termination; (e) the name of the broker or dealer
with or through which the Reverse Repurchase Agreement is to be terminated; and
(f) the amount of cash and/or the amount and kind of Securities to be withdrawn
from the Segregated Security Account. The Custodian shall, upon receipt of the
amount and kind of Securities to be received by a Fund specified in the
Certificate, Oral Instructions or Written Instructions, make the payment to the
broker or dealer, and the withdrawals, if any, from the Segregated Security
Account, specified in such Certificate, Oral Instructions or Written
Instructions.
ARTICLE VII
MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Segregated Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the amount of cash
and/or the amount and kind of Securities to be deposited in, or withdrawn from,
the Segregated Security Account. In the event that a Fund fails to specify in a
Certificate the name of the issuer, the title and the number of shares or the
principal amount of any particular Securities to be deposited by the Custodian
into, or withdrawn from, a Segregated Securities Account, the Custodian shall be
under no obligation to make any such deposit or withdrawal and shall so notify a
Fund.
2. The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein.
5. On each business day, the Custodian shall furnish a Fund with a
statement with respect to a Fund's Margin Account in which money or Securities
are held specifying as of the close of business on the previous business day:
(a) the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker or dealer specified in the name of a Margin
Account a copy of the statement furnished a Fund with respect to such Margin
Account.
6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account, the Custodian
shall furnish a Fund with a statement with respect
7
<PAGE>
to a Fund's Collateral Account specifying the amount of cash and/or the amount
and kind of Securities held therein. No later than the close of business next
succeeding the delivery to a Fund of such statement, a Fund shall furnish the
Custodian with a Certificate or Written Instructions specifying the then market
value of the Securities described in such statement.
ARTICLE VIII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. A Fund shall furnish the Custodian with a copy of the resolution of
the Trustees, certified by the Secretary or any Assistant Secretary, either (i)
setting forth the date of the declaration of a dividend or distribution, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders of
record as of that date and the total amount payable to the Dividend Agent of a
Fund on the payment date, or (ii) authorizing the declaration of dividends and
distributions on a daily basis or some other periodic basis and authorizing the
Custodian to rely on Oral Instructions, Written Instructions or a Certificate
setting forth the date of the declaration of such dividend or distribution, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders of
record as of that date and the total amount payable to the Dividend Agent on the
payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions or Certificate, the Custodian shall pay out
the moneys held for the account of a Fund the total amount payable to the
Dividend Agent of a Fund.
ARTICLE IX
SALE AND REDEMPTION OF SHARES
1. Whenever a Fund shall sell any of its Shares, it shall deliver to the
Custodian a Certificate duly specifying the number of Shares sold, trade date,
price and the amount of money to be received by the Custodian for the sale of
such Shares.
2. Upon receipt of such money from the Transfer Agent or a co-transfer
agent, the Custodian shall credit such money to the account of a Fund.
3. Upon issuance of any of a Fund's Shares in accordance with the
foregoing provisions of this Article IX, the Custodian shall pay, out of the
money held for the account of a Fund, all original issue or other taxes required
to be paid by a Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever a Fund shall redeem any of
its Shares, it shall furnish the Custodian with a Certificate specifying the
number of Shares redeemed and the amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent or co-transfer agent of an
advice setting forth the number of Shares received by the Transfer Agent or co-
transfer agent for redemption, and that such Shares are valid and in good form
for redemption, the Custodian shall make payment to the Transfer Agent or co-
transfer agent, as the case may be, out of the moneys held for the account of a
Fund of the total amount specified in the Certificate issued pursuant to
paragraph 4 of this Article IX.
8
<PAGE>
6. Notwithstanding the above provisions regarding the redemption of any
of a Fund's Shares, whenever its Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by a Fund, the
Custodian, unless otherwise instructed by a Certificate, shall, upon receipt of
an advice from a Fund or its agent setting forth that the redemption is in good
form for redemption in accordance with the check redemption procedure, honor the
check presented as part of such check redemption privilege out of the money held
in the account of a Fund for such purposes.
ARTICLE X
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of a Fund which results in an overdraft because the moneys held by the
Custodian for the account of a Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a Certificate or
Oral Instructions issued pursuant to Article IV, or which results in an
overdraft for some other reason, or if a Fund is, for any other reason, indebted
to the Custodian (except a borrowing for investment or for temporary or
emergency purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this Article X), such
overdraft or indebtedness shall be deemed to be a loan made by the Custodian to
a Fund payable on demand and shall bear interest from the date incurred at a
rate per annum (based on a 360-day year for the actual number of days involved)
equal to 1/2% over the Custodian's prime commercial lending rate in effect from
time to time, such rate to be adjusted on the effective date of any change in
such prime commercial lending rate but in no event to be less than 6% per annum.
Any such overdraft or indebtedness shall be reduced by an amount equal to the
total of all amounts due a Fund which have not been collected by the Custodian
on behalf of a Fund when due because of the failure of the Custodian to make
timely demand or presentment for payment. In addition, the Trust on behalf of a
Fund hereby agrees that the Custodian shall have a continuing lien and security
interest in and to any property at any time held by it for the benefit of a Fund
or in which a Fund may have an interest which is then in the Custodian's
possession or control or in possession or control of any third party acting on
the Custodian's behalf. The Trust authorizes the Custodian, in its sole
discretion, at any time to charge any such overdraft or indebtedness together
with interest due thereon against any balance of account standing to a Fund's
credit on the Custodian's books.
2. A Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities as collateral for such borrowings, a notice or
undertaking in the form currently employed by any such bank setting forth the
amount which such bank will loan to a Fund against delivery of a stated amount
of collateral. A Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such borrowing: (a) the name of the bank; (b)
the amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by a Fund, or other loan
agreement; (c) the time and date, if known, on which the loan is to be entered
into; (d) the date on which the loan becomes due and payable; (e) the total
amount payable to a Fund on the borrowing date; (f) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal of any
particular Securities; and (g) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and a Fund's prospectus.
The Custodian shall deliver on the borrowing date specified in a Certificate the
specified collateral and the executed promissory note, if any, against delivery
by the lending bank of the total amount of the loan payable, provided that the
same conforms to the total amounts payable as set forth in the Certificate. The
Custodian may, at the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights
9
<PAGE>
therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. A Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it. In the event that a Fund fails to specify in a Certificate the name of the
issuer, the title and number of shares or the principal amount of any particular
Securities to be delivered as collateral by the Custodian, the Custodian shall
not be under any obligation to deliver any Securities.
ARTICLE XI
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. If a Fund is permitted by the terms of the Trust's Declaration of
Trust and as disclosed in a Fund's most recent and currently effective
prospectus to lend its portfolio Securities, within twenty-four (24) hours after
each loan of portfolio Securities a Fund shall deliver or cause to be delivered
to the Custodian a Certificate specifying with respect to each such loan; (a)
the name of the issuer and the title of the Securities; (b) the number of shares
or the principal amount loaned; (c) the date of loan and delivery; (d) the total
amount to be delivered to the Custodian against the loan of the Securities,
including the amount of cash collateral and the premium, if any, separately
identified; and (e) the name of the broker, dealer or financial institution to
which the loan was made. The Custodian shall deliver the Securities thus
designated to the broker, dealer or financial institution to which the loan was
made upon receipt of the total amount designated as to be delivered against the
loan of Securities. The Custodian may accept payment in connection with a
delivery otherwise than through the Book-Entry System or Depository only in the
form of a certified or bank cashier's check payable to the order of a Fund or
the Custodian drawn on New York Clearing House funds and may deliver Securities
in accordance with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by a Fund,
it shall deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan termination and return of Securities:
(a) the name of the issuer and the title of the Securities to be returned; (b)
the number of shares or the principal amount to be returned; (c) the date of
termination; (d) the total amount to be delivered by the Custodian (including
the cash collateral for such Securities minus any offsetting credits as
described in said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of a Fund, the total amount payable
upon such return of Securities as set forth in the Certificate.
10
<PAGE>
ARTICLE XII
THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including attorney's fees, resulting
from its action or omission to act or otherwise, either hereunder or under any
Margin Account Agreement, except for any such loss or damage arising out of its
own negligence or willful misconduct. The Custodian may, with respect to
questions of law arising hereunder or under any Margin Account Agreement, apply
for and obtain the advice and opinion of counsel to a Fund or of its own
counsel, at the expense of a Fund, and shall be fully protected with respect to
anything done or omitted by it in good faith in conformity with such advice or
opinion. The Custodian shall be liable to a Fund for any loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or willful misconduct on the part of the
Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold or
written by or for a Fund, the legality of the purchase, sale or writing thereof,
or the propriety of the amount paid or received thereof;
(b) The legality of the issue or sale of any of a Fund's Shares, or the
sufficiency of the amount to be received therefor;
(c) The legality of the redemption of any of a Fund's Shares, or the
propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any dividend by a
Fund;
(e) The legality of any borrowing by a Fund using Securities as
collateral;
(f) The legality of any loan of portfolio Securities pursuant to Article
XI of this Agreement, nor shall the Custodian be under any duty or obligation to
see to it that any cash collateral delivered to it by a broker, dealer or
financial institution or held by it at any time as a result of such loan of
portfolio Securities of a Fund is adequate collateral for a Fund against any
loss it might sustain as a result of such loan. The Custodian specifically, but
not by way of limitation, shall not be under any duty or obligation periodically
to check or notify a Fund that the amount of such cash collateral held by it for
a Fund is sufficient collateral for a Fund, but such duty or obligation shall be
the sole responsibility of a Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution to
which portfolio Securities of a Fund are lent pursuant to Article XI of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of a Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify a Fund in the event that such dividends or interest are not paid and
received when due; or
(g) The sufficiency or value of any amounts of money and/or Securities
held in any Margin Account, Segregated Security Account or Collateral Account in
connection with transactions by a Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer, or Clearing Member
makes payment to a Fund of any variation margin payment or similar payment which
a Fund
11
<PAGE>
may be entitled to receive from such broker, dealer, or Clearing Member, to see
that any payment received by the Custodian from any broker, dealer, or Clearing
Member is the amount a Fund is entitled to receive, or to notify a Fund of the
Custodian's receipt or non-receipt of any such payment; provided however that
the Custodian, upon a Fund's written request, shall as Custodian, demand from
any broker, dealer, or Clearing Member identified by a Fund the payment of any
variation margin payment or similar payment that a Fund asserts it is entitled
to receive pursuant to the terms of a Margin Account Agreement or otherwise from
such broker, dealer, or Clearing Member.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft or other
instrument for the payment of money, received by it on behalf of a Fund until
the Custodian actually receives and collects such money directly or by the final
crediting of the account representing a Fund's interest at the Book-Entry System
or the Depository.
4. The Custodian shall have no responsibility and shall not be liable
for ascertaining or acting upon any calls, conversions, exchanges, offers,
tenders, interest rate changes or similar matters relating to Securities held in
the Depository unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any responsibility or
liability for the failure of the Depository to collect, or for the late
collection or late crediting by the Depository of any amount payable upon
Securities deposited in the Depository which may mature or be redeemed, retired,
called or otherwise become payable. However, upon receipt of a Certificate from
a Fund of an overdue amount on Securities held in the Depository, the Custodian
shall make a claim against the Depository on behalf of a Fund, except that the
Custodian shall not be under any obligation to appear in, prosecute or defend
any action, suit or proceeding in respect to any Securities held by the
Depository which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to a Fund from the Transfer Agent
of a Fund nor to take any action to effect payment or distribution by the
Transfer Agent of a Fund of any amount paid by the Custodian to the Transfer
Agent of a Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
7. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as sub-custodian(s), including, but not limited
to, banking institutions located in foreign countries, of Securities and moneys
at any time owned by a Fund, upon terms and conditions approved in a
Certificate, which shall, if requested by the Custodian, be accompanied by an
approving resolution of the Trust's Board of Trustees adopted in accordance with
Rule 17f-5 under the Investment Company Act of 1940, as amended.
8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
a Fund are such as properly may be held by a Fund under the provisions of its
Declaration of Trust.
9. The Custodian shall be entitled to receive and each Fund agrees to
pay to the Custodian all out-of-pocket expenses and fees as set forth in
Appendix D attached hereto. The Custodian may
12
<PAGE>
charge such fees and any expenses incurred by the Custodian in the performance
of its duties against any money held by it for the account of a Fund. The
Custodian shall also be entitled to charge against any money held by it for the
account of a Fund the amount of any loss, damage, liability or expense,
including attorney's fees, for which it shall be entitled to reimbursement under
the provisions of this Agreement. The expense which the Custodian may charge
against the account of a Fund include, but are not limited to, the expenses of
Sub-Custodians of the Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities of a Fund.
10. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably believed
by the Custodian to be a Certificate. The Custodian shall be entitled to rely
upon any Oral Instructions and any Written Instructions actually received by the
Custodian pursuant to Article IV or VII hereof. A Fund agrees to forward to the
Custodian a Certificate or facsimile thereof, confirming such Oral Instructions
or Written Instructions in such manner so that such Certificate or facsimile
thereof is received by the Custodian, whether by hand delivery, telex or
otherwise, by the close of business of the same day that such Oral Instructions
or Written Instructions are given to the Custodian. A Fund agrees that the fact
that such confirming instructions are not received by the Custodian shall in no
way affect the validity of the transactions hereby authorized by a Fund. A Fund
agrees that the Custodian shall incur no liability to a Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such transactions,
provided such instructions reasonably appear to have been received from an
Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, or Clearing Member.
12. The books and records pertaining to a Fund which are in the
possession of the Custodian shall be the property of a Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws, rules and
regulations. A Fund, or a Fund's authorized representative(s), shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of a Fund, copies of any such books and records
shall be provided by the Custodian to a Fund or a Fund's authorized
representative(s) at a Fund's expense.
13. The Custodian shall provide the Trust with any report obtained by
the Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with such reports on its own systems of internal
accounting control as the Trust may reasonably request from time to time.
14. A Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article IX as part of any check redemption privilege program of a
Fund, except for any such liability, claim, loss and demand arising out of the
Custodian's own negligence or willful misconduct.
15. Subject to the foregoing provisions of this Agreement, the Custodian
may deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to be made and
13
<PAGE>
received by the Custodian in accordance with the customs prevailing from time to
time among brokers or dealers in such Securities.
16. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement or Appendix D attached hereto, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
ARTICLE XIII
TERMINATION
1. This Agreement shall continue until January 1998, and thereafter
shall continue automatically for successive annual periods ending on the last
day of December of each year, provided such continuance is specifically approved
at least annually by (i) the Trust's Trustees or (ii) vote of a majority (as
defined in the Investment Company Act of 1940) of a Fund's outstanding voting
securities, provided that in either event its continuance also is approved by a
majority of the Trust's Trustees who are not "interested persons" (as defined in
said Act) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. This Agreement is terminable
without penalty, on sixty (60) days' notice, by the Trust's Trustees or, by vote
of holders of a majority of a Fund's Shares or, upon not less than ninety (90)
days' notice, by the Custodian. In the event such notice is given by a Fund, it
shall be accompanied by a copy of a resolution of the Trustees of the Trust on
behalf of a Fund, certified by the Secretary or any Assistant Secretary,
electing to terminate this Agreement and designating a successor custodian or
custodians, each of which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. In the event such
notice is given by the Custodian, a Fund shall, on or before the termination
date, deliver to the Custodian a copy of a resolution of the Trustees, certified
by the Secretary or any Assistant Secretary, designating a successor custodian
or custodians. In the absence of such designation by a Fund, the Custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon
the date set forth in such notice, this Agreement shall terminate and the
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date deliver directly to the successor custodian all
Securities and moneys then owned by a Fund and held by it as Custodian, after
deducting all fees, expenses, and other amounts for the payment of reimbursement
of which shall then be entitled.
2. If a successor custodian is not designated by the Trust on behalf of
a Fund or the Custodian in accordance with the preceding paragraph, a Fund
shall, upon the date specified in the notice of termination of this Agreement
and upon the delivery by the Custodian of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to a Fund) and moneys
then owned by a Fund, be deemed to be its own custodian, and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the Book-Entry
System, in any Depository or by a Clearing Member which cannot be delivered to a
Fund, to hold such Securities hereunder in accordance with this Agreement.
14
<PAGE>
ARTICLE XIV
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Trust under its seal, setting forth the names and the
signatures of the present Authorized Persons. The Trust agrees to furnish to
the Custodian a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or in the event that
other or additional Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Trust under its seal, setting forth the names and the
signatures of the present Officers of the Trust. A Fund agrees to furnish to
the Custodian a new Certificate in similar form in the event any such present
Officer ceases to be an Officer of the Trust, or in the event that other or
additional Officers are elected or appointed. Until such new Certificate shall
be received, the Custodian shall be fully be protected in acting under the
provisions of this Agreement upon the signatures of the Officers as set forth in
the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be deemed sufficiently given
if addressed to the Custodian and mailed or delivered to it at its offices at
420 Montgomery Street, San Francisco, California, 94105, or at such other place
as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given by or on behalf of a Fund, shall be deemed
sufficiently given if addressed to a Fund and mailed or delivered to it at its
office at 111 Center Street, Little Rock, Arkansas, 72201, or at such other
place as a Fund may from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties to this Agreement and approved by a
resolution of the Trustees of the Trust.
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successor(s) and assign(s); provided, however, that
this Agreement shall not be assignable by the Trust without the written consent
of the Custodian, or by the Custodian without the written consent of the Trust,
authorized or approved by a resolution of its Trustees.
7. This Agreement shall be construed in accordance with the laws of the
State of California without giving effect to the choice of law provisions
thereof.
15
<PAGE>
8. This Agreement may be executed in any number of counterparts, each
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized, as of the day
and year first above written.
WELLS FARGO FUNDS TRUST BARCLAYS GLOBAL INVESTORS, N.A.
By: ____________________ By: ____________________
Name:___________________ Name: __________________
Title: _________________ Title: _________________
By: ____________________
Name: __________________
Title: _________________
16
<PAGE>
Exhibit 99.B(g)(2)
CUSTODY AGREEMENT
WELLS FARGO FUNDS TRUST
AGREEMENT, dated as of September __, 1999, between Wells Fargo Funds Trust,
a business Trust organized under the laws of the State of Delaware with its
principal place of business at 111 Center Street, Little Rock, Arkansas 72201
and Norwest Bank Minnesota, N.A. (the "Custodian"), a banking association
organized under the laws of the United States of America with its principal
place of business at Norwest Center, Sixth and Marquette, Minneapolis, Minnesota
55479.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company;
WHEREAS, the Trust desires to appoint the Custodian as custodian of the
securities and cash of each investment portfolio ("Fund") of the Trust and the
Custodian is willing to act in such capacity upon the terms and conditions set
forth below.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:
SECTION 1. DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
meanings specified, insofar as the context will allow.
(a) 1940 Act: The term 1940 Act shall mean the Investment Company Act of 1940,
--------
as amended from time to time.
(b) Authorized Person: The term Authorized Person shall be deemed to include
-----------------
the treasurer, the controller or any other person, whether or not any such
person is an Officer or employee of the Trust, duly authorized by the Board
of Trustees ("Trustees") to give Oral Instructions and Written Instructions
on behalf of the Fund and listed in the Certificate attached hereto as
Appendix A or such other Certificate as may be received from time to time
by the Custodian.
(c) Board: The term Board shall mean the Board of Trustees of the Trust.
-----
(d) Book-Entry Account: The term Book-Entry Account shall mean an account
------------------
maintained by a Federal Reserve Bank in which Book-Entry Securities are
held.
-1-
<PAGE>
(e) Book-Entry Securities: The term Book-Entry Securities shall mean securities
---------------------
issued by the United States Treasury and United States Federal agencies and
instrumentalities that are maintained in the book-entry system maintained
by a Federal Reserve Bank.
(f) Certificate: The term Certificate shall mean any notice, instruction, or
-----------
other instrument in writing, authorized or required by this Agreement to be
given to the Custodian, which is actually received by the Custodian and
signed on behalf of a Fund by any two Officers of the Trust.
(g) Clearing Member: The Term Clearing Member shall mean a registered broker-
---------------
dealer that is a member of a national securities exchange qualified to act
as a custodian for an investment company, or any broker-dealer reasonably
believed by the Custodian to be such a clearing member.
(h) Depository: The term Depository shall mean The Depository Trust Company
----------
("DTC"), Participants Trust Company ("PTC"), and any other clearing agency
Registered with the Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, its successor(s) and its nominee(s),
provided the Custodian has received a certified copy of a resolution of the
Board of Trustees specifically approving deposits in DTC, PTC or such other
clearing agency. The term "Depository" shall further mean and include any
person authorized to act as a depository pursuant to Section 17, Rule 17f-4
or Rule 17f-5 under the 1940 Act, its successor(s) and its nominee(s),
specifically identified in a certified copy of a resolution of the Board of
Trustees approving deposits therein by the Custodian.
(i) Custodian: The term Custodian shall mean the Custodian in its capacity as
---------
custodian under this Agreement.
(j) Foreign Securities: The term Foreign Securities shall mean "Foreign
------------------
Securities" as that term is defined in Rule 17f-5 under the 1940 Act.
(k) Foreign Sub-Custodian: The term Foreign Sub-Custodian shall mean "Eligible
---------------------
Foreign Sub-Custodian" as that term is defined in Rule 17f-5 under the 1940
Act.
(l) Fund Business Day: The term Fund Business Day shall mean a day that is a
-----------------
business day for a Fund as defined in the Fund's prospectus.
(m) Funds: The term Funds shall mean the Funds listed in Appendix A or any Fund
-----
that the Trust shall subsequently establish provided, that the Custodian
may decline to act as custodian for any Fund subsequently established.
(n) Margin Account: The term Margin Account shall mean a segregated account in
--------------
the name of a broker, dealer, or Clearing Member, or in the name of the
Trust or a Fund for the benefit of a broker, dealer, or Clearing Member, or
otherwise, in accordance with an agreement between the Trust on behalf of a
Fund, the Custodian and a broker, dealer, or
-2-
<PAGE>
Clearing Member (a "Margin Account Agreement"), separate and distinct from
the custody account, in which certain Securities and/or moneys of a Fund
shall be deposited and withdrawn from time to time in connection with such
transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's
effecting an appropriate entry on its books and records.
(o) Money Market Securities: The term Money Market Securities shall be deemed
-----------------------
to include, without limitation, debt obligations issued or guaranteed as to
principal and interest by the government of the United States or agencies
or instrumentalities thereof, commercial paper, certificates of deposit and
bankers' acceptances, repurchase and reverse repurchase agreements with
respect to the same and bank time deposits, where the purchase and sale of
such securities normally requires settlement in federal funds on the same
date as such purchase or sale.
(p) Officers: The term Officers shall be deemed to include the President, Vice
--------
President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary, any Assistant Treasurer or any other person or persons duly
authorized by the Trustees of the Trust to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund and listed in
the Certificate attached hereto as Appendix B [to follow] or such other
Certificate as may be received by the Custodian from time to time.
(q) Oral Instructions: The term Oral Instructions shall mean an authorization,
-----------------
instruction, approval, item or set of data, or information of any kind
transmitted to the Custodian in person or by telephone, vocal telegram or
other electronic means, by a person or persons reasonably believed in good
faith by the Custodian to be a person or persons authorized by a resolution
of the Board to give Oral Instructions on behalf of the Trust. Each Oral
Instruction shall specify whether it is applicable to the entire Trust or a
specific Fund of the Trust.
(r) Reverse Repurchase Agreement: The term Reverse Repurchase Agreement shall
----------------------------
mean an agreement pursuant to which a Fund sells Securities and agrees to
repurchase such Securities at a described or specified date and price.
(s) Securities: The term Securities shall mean bonds, debentures, notes,
----------
stocks, shares, evidences of indebtedness, and other securities and
investments from time to time owned by the Trust.
(t) Securities Depository: The term Securities Depository shall mean a system,
---------------------
domestic or foreign, for the central handling of securities in which all
securities of any particular class or series of any issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the securities and shall
include any system for the issuance of Book-Entry Securities.
-3-
<PAGE>
(u) Segregated Security Account: shall mean an account maintained under the
---------------------------
terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or
other assets of a Fund shall be deposited and withdrawn from time to time
in accordance with Certificates received by the Custodian in connection
with such transactions as a Fund may from time to time determine.
(v) Share Certificates: The term Share Certificates shall mean the certificates
------------------
for the Shares.
(w) Shareholders: The term Shareholders shall mean the registered owners from
------------
time to time of the Shares, as reflected on the share registry records of
the Trust.
(x) Shares: The term Shares shall mean the shares of common stock of a Fund,
------
each of which, in the case of a Fund having Series, is allocated to a
particular Series.
(y) Sub-Custodian: The term Sub-Custodian shall mean any person selected by the
-------------
Custodian under Section 20 hereof and in accordance with the requirements
of the 1940 Act to custody any or all of the Securities and cash of the
Trust, and shall include Foreign Sub-Custodians.
(z) Trust: The term Trust shall mean Wells Fargo Funds Trust.
-----
(aa) Written Instructions: The term Written Instructions shall mean an
--------------------
authorization, instruction, approval, item or set of data, or information
of any kind transmitted to the Custodian in original writing containing
original signatures, or a copy of such document transmitted by telecopy,
including transmission of such signature, or other mechanical or
documentary means, at the request of a person or persons reasonably
believed in good faith by the Custodian to be a person or persons
authorized by a resolution of the Board to give Written Instructions on
behalf of the Trust. Each Written Instruction shall specify whether it is
applicable to the entire Trust or a specific Fund of the Trust.
SECTION 2. APPOINTMENT
The Trust hereby appoints the Custodian as custodian of the Securities and
cash of each Fund from time to time on deposit hereunder. The Securities and
cash of the Trust shall be and remain the sole property of the Trust and the
Custodian shall have only custody thereof. The Custodian shall hold, earmark
and physically segregate for the appropriate Fund account of the Trust all non-
cash property, including all Securities that are not maintained pursuant to
Section 6 in a Securities Depository or Book-Entry Account. The Custodian will
collect from time to time the dividends and interest of the Securities held by
the Custodian.
The Custodian shall open and maintain a separate bank or trust account or
accounts in the name of the Trust, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement, and shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Trust. Notwithstanding the foregoing, a separate
bank account may be established by the Trust to be used as a petty cash account
in
-4-
<PAGE>
accordance with Rule 17f-3 under the 1940 Act and the Custodian shall have not
duty or liability with regard to such account.
Upon receipt of Written Instructions, funds held by the Custodian for the
Trust may be deposited by the Custodian to its credit in the banking department
of the Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
SECTION 3. DELIVERY OF BOARD RESOLUTIONS
The Trust shall, as necessary, file with the Custodian a certified copy of
the operative resolution of the Board authorizing execution of Written
Instructions and the number of signatories required and setting forth authentic
signatures of all signatories authorized to sign on behalf of the Trust or any
Fund thereof. Such resolution shall constitute conclusive evidence of the
authority of all signatories designated therein to act and shall be considered
in full force and effect, with the Custodian fully protected in acting in
reliance thereon, until the Custodian receives a certified copy of a replacement
resolution adding or deleting a person or persons authorized to give written
Instructions.
The Trust shall, as necessary, file with the Custodian a certified copy of
the operative resolution of the Board authorizing the transmittal of Oral
Instructions and specifying the person or persons authorized to give Oral
Instructions on behalf of the Trust or any Fund. Such resolution shall
constitute conclusive evidence of the authority of the person or persons
designated therein to act and shall be considered in full force and effect, with
the Custodian fully protected in acting in reliance therein, until the Custodian
actually receives a certified copy of a replacement resolution adding or
deleting a person or persons authorized to give Oral Instructions. If the
officer certifying the resolution is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Trust.
SECTION 4. INSTRUCTIONS
For all purposes under this Agreement, the Custodian is authorized to act
upon receipt of the first of any Written or Oral Instruction it receives. If
the first Instruction is an Oral Instruction, the Trust shall deliver or have
delivered to the Custodian a confirmatory Written Instruction; and if the
Custodian receives an Instruction, whether Written or Oral, with respect to a
Securities transaction, the Trust shall cause the broker or dealer to send a
written confirmation of the transaction to the Custodian. The Custodian shall
be entitled to rely on the first Instruction received and, for any act or
omission undertaken in compliance therewith, shall be free of liability and
fully indemnified and held harmless by the Trust. The sole obligation of the
Custodian with respect to any confirmatory Written Instruction or broker or
dealer written confirmation shall be to make reasonable efforts to detect any
discrepancy between the original Instruction and such confirmation and to report
such discrepancy to the Trust. The Trust shall be responsible, at the Trust's
expense, for taking any action, including any reprocessing, necessary
-5-
<PAGE>
to correct any discrepancy or error, and to the extent such action requires the
Custodian to act, the Trust shall give the Custodian specific Written
Instructions as to the action required.
SECTION 5. DEPOSIT OF TRUST ASSETS
The Trust will initially transfer and deposit or cause to be transferred
and deposited with the Custodian all of the Securities, other property and cash
owned by the Trust at the time this Agreement becomes effective, provided that
the Custodian shall have the right, in its sole discretion, to refuse to accept
any securities or other property that are not in proper form for deposit or any
reason. Such transfer and deposit shall be evidenced by appropriate schedules
duly executed by the Trust. The Trust may deposit with the Custodian additional
Securities of the Trust and dividends or interest collected on such Securities
as the same are acquired from time to time.
The Trust will cause to be deposited with the Custodian from time to time
(i) the net proceeds of Securities sold, (ii) the applicable net asset value of
Shares sold, whether representing initial issue or any other securities and
(iii) cash as may be acquired. Deposits with respect to sales of Shares shall
be accompanied by Written or Oral Instructions stating the amount to be
deposited with the Custodian and registration instructions.
SECTION 6. DEPOSIT OF TRUST ASSETS WITH THIRD PARTIES
The Trust hereby authorizes the Custodian to deposit assets of the Trust as
follows:
(a) With the Custodian or any other bank licensed and regularly examined
by the United States or any state thereof assets held in the Option Account
created pursuant to Section 13(b).
(b) In the Custodian or Sub-Custodian's account(s) with any Securities
Depository as the Trust shall permit by Written or Oral Instruction.
(c) Book-Entry Securities belonging to the Trust in a Book-Entry Account
maintained for the Custodian.
So long as any deposit referred to in (b) or (c) above is maintained for
the Trust, the Custodian shall: (i) deposit the Securities in an account that
includes only assets held by the Custodian for customers; (ii) send the Trust a
confirmation (i.e., an advice of notice of transaction) of any transfers of the
Trust to or from the account; (iii) with respect to Securities of the Trust
transferred to the account, identify as belonging to the Trust a quantity of
securities in a fungible bulk of securities that are registered in the name of
the Custodian or its nominee, or credited to the Custodian's account on the
books of a Securities Depository or the Custodian's agent; (iv) promptly send to
the Trust all reports it receives from the appropriate Federal Reserve Bank or
Securities Depository on its respective system of internal accounting control;
and (v) send to the Trust such reports of the systems of internal accounting
control of the Custodian and
-6-
<PAGE>
its agents through which Securities are deposited as are available and as the
Trust may reasonably request from time to time.
The Custodian shall be liable to the Trust for any loss or damage to the
Trust resulting from the negligence (including failure to act), fault or willful
misconduct of the Custodian, its agents or employees in selecting a Securities
Depository or Book-Entry Account. The Custodian shall not waive any rights it
may have against a Securities Depository or Federal Reserve Bank. The Trust may
elect to be subrogated to the rights of the Custodian against the Securities
Depository or Federal Reserve Bank or any other person with respect to any claim
that the Custodian may have as a consequence of any such loss or damage, if and
to the extent that the Trust has not been made whole for any such loss or
damage.
SECTION 7. REGISTRATION OF SECURITIES
The Securities held by the Custodian, unless payable to bearer or
maintained in a Securities Depository or Book-Entry Account pursuant to Section
6, shall be registered in the name of the Custodian or in the name of its
nominee, or if directed by Written Instructions, in the name of the Trust or its
nominee. In the event that any Securities are registered in the name of the
Trust or its nominee, the Trust will endorse, or cause to be endorsed, to the
Custodian dividend and interest checks, or will issue appropriate orders to the
issuers of the Securities to pay dividends and interest to the Custodian.
Securities, excepting bearer securities, delivered from time to time to the
Custodian shall, in all cases, be in due form for transfer, or registered as
above provided.
SECTION 8. DISBURSEMENTS OF CASH
The Custodian is hereby authorized and directed to disburse cash to or from
the Trust from time to time as follows:
(a) For the purchase of Securities by the Trust, upon receipt by the
Custodian of (i) Written or Oral Instructions specifying the Securities and
stating the purchase price and the name of the broker, investment banker or
other party to or upon whose order the purchase price is to be paid and (ii)
either the Securities so purchased, in due form for transfer or already
registered as provided in Section 7, or notification by a Securities Depository
or a Federal Reserve Bank that the Securities have been credited to the
Custodian's account with the Securities Depository or Federal Reserve Bank.
(b) For transferring funds, including mark-to-the-market payments, in
connection with a repurchase agreement covering Securities that have been
received by the Custodian as provided in subsection (a) above, upon receipt by
the Custodian of (i) Written or Oral Instruction specifying the Securities, the
purchase price and the party to whom the purchase price is to be paid and (ii)
written agreement to repurchase the Securities from the Trust.
(c) For transferring funds to a duly-designated redemption paying agent to
redeem or repurchase Shares, upon receipt of (i) either Share Certificates in
due form for transfer, or proper
-7-
<PAGE>
processing of Shares for which no Share Certificates are outstanding and (ii)
Written or Oral Instructions stating the applicable redemption price.
(d) For exercising warrants and rights received upon the Securities, upon
timely receipt of Written or Oral Instructions authorizing the exercise of such
warrants and rights and stating the consideration to be paid.
(e) For repaying, in whole or in part, any loan of the Trust, or returning
cash collateral for Securities loaned by the Trust, upon receipt of Written or
Oral Instructions directing payment and stating the Securities, if any, to be
received against payment.
(f) For paying over to a duly-designated dividend disbursing agent such
amounts as may be stated in Written or Oral Instructions as the Trust deems
appropriate to include in dividends or distributions declared on the Shares.
(g) For paying or reimbursing the Trust for other corporate expenditures,
upon receipt of Written or Oral Instructions stating that such expenditures are
or were authorized by resolution of the Board and specifying the amount of
payment, the purposes for which such payment is to be made, and the person or
persons to whom payment is to be made.
(h) For transferring funds to any Sub-Custodian, upon receipt of Written
or Oral Instructions and upon agreement by the Custodian.
(i) To advance or pay out accrued interest on bonds purchased, dividends
on stocks sold and similar items.
(j) To pay proper compensation and expenses of the Custodian.
(k) To pay, or provide the Trust with money to pay, taxes, upon receipt of
appropriate Written or Oral Instructions.
(l) To transfer funds to a separate checking account maintained by the
Trust.
(m) To pay interest, management or supervisory fees, administration,
dividend and transfer agency fees and costs, compensation of personnel and
operating expenses, including but not limited to fees for legal, accounting and
auditing services.
Before making any payments or disbursements, however, the Custodian shall
receive, and may conclusively rely upon, Written or Oral Instructions requesting
such payment or disbursement and stating that it is for one or more or the
purposes enumerated above. Notwithstanding the foregoing, the Custodian may
disburse cash for other corporate purposes; provided, however, that such
disbursement maybe made only upon receipt of Written or Oral Instructions
stating that such disbursement was authorized by resolution of the Board.
-8-
<PAGE>
SECTION 9. DELIVERY OF SECURITIES
The Custodian is hereby authorized and directed to deliver Securities of
the Trust from time to time as follows:
(a) For completing sales of Securities sold by the Trust, upon receipt of
(i) Written or Oral Instructions specifying the Securities sold, the amount to
be received and the broker, investment banker or other party to or upon whose
order the Securities are to be delivered and (ii) the net proceeds of sale;
provided, however, that the Custodian may accept payment in connection with the
sale of Book-Entry Securities and Securities on deposit with a Securities
Depository by means of a credit in the appropriate amount to the account
described in Section 6(b) or (c) above.
(b) For exchanging Securities for other Securities (and cash, if
applicable), upon timely receipt of (i) Written or Oral Instructions stating the
Securities to be exchanged, cash to be received and the manner in which the
exchange is to be made and (ii) the other Securities (and cash, if applicable)
as specified in the Written or Oral Instructions.
(c) For exchanging or converting Securities pursuant to their terms or
pursuant to any plan of conversion, consolidation, recapitalization,
reorganization, re-adjustment or otherwise, upon timely receipt of (i) Written
or Oral Instructions authorizing such exchange or conversion and stating the
manner in which such exchange or conversion is to be made and (ii) the
Securities, certificates of deposit, interim receipts, and/or cash to be
received as specified in the Written or Oral Instructions.
(d) For presenting for payment Securities that have matured or have been
called for redemption;
(e) For delivering Securities upon redemption of Shares in kind, upon
receipt of (i) Share Certificates in due form for transfer, or proper processing
of Shares for which no Share Certificates are outstanding and (ii) appropriate
Written or Oral Instructions.
(f) For depositing with the lender Securities to be held as collateral for
a loan to the Trust or depositing with a borrower Securities to be loaned by the
Trust, (i) upon receipt of Written or Oral Instructions directing delivery to
the lender or borrower and suitable collateral, if Securities are loaned or (ii)
pursuant to the terms of a separate securities lending agreement.
(g) For complying with a repurchase agreement, upon receipt of Written or
Oral Instructions stating (i) the securities to be delivered and the payment to
be received and (ii) payment.
(h) For depositing with a depository agent in connection with a tender or
other similar offer to purchase Securities of the Trust, upon receipt of Written
or Oral Instructions.
-9-
<PAGE>
(i) For depositing Securities with the issuer thereof, or its agents, for
the purpose of transferring such Securities into the name of the Trust, the
Custodian or any nominee of either in accordance with Section 7.
(j) For other proper corporate purposes; provided, that the Custodian
shall receive Written or Oral Instructions requesting such delivery.
(k) Notwithstanding the foregoing, the Custodian may, without Written or
Oral Instructions, surrender and exchange Securities for other Securities in
connection with any reorganization, recapitalization, or similar transaction in
which the owner of the Securities is not given an option; provided, however,
that the Custodian has no responsibility to effect any such exchange unless it
has received actual notice of the event permitting or requiring such exchange.
To facilitate any such exchange, the Custodian is authorized to surrender
against payment maturing obligations and obligations called for redemption and
to effectuate the exchange in accordance with customary practices and procedures
established in the market for exchanges.
SECTION 10. BORROWINGS
The Trust will cause any person (including the Custodian) from which it
borrows money using Securities as collateral to deliver to the Custodian a
notice of undertaking in the form currently employed by the lender setting forth
the amount that the lender will loan to the Trust against delivery of a stated
amount of collateral. The Trust shall promptly deliver to the Custodian Written
or Oral Instructions for each loan, stating (i) the name of the lender, (ii) the
amount and terms of the loan, which terms may be specified by incorporating by
reference an attached promissory note or loan agreement duly endorsed by the
Trust, (iii) the time and date, if known, on which the loan will be consummated
(the "borrowing date"), (iv) the date on which the loan becomes due and payable,
(v) the total amount payable to the Trust on the borrowing date, (vi) the market
value of Securities to be delivered as collateral for such loan and (vii) the
name of the issuer, the title and the number of shares or principal amount of
the Securities to be delivered as collateral. The Custodian shall deliver on
the borrowing date such specified collateral and the executed promissory note,
if any, and receive from the lender the total amount of the loan proceeds;
provided, however, that no delivery of Securities shall occur if the amount of
loan proceeds does not conform to the amount set forth in the Written or Oral
Instructions, or if such Instruction do not contain the requirements of (vii)
above. The Custodian may, at the option of the lender, keep such collateral in
its possession; provided such collateral is subject to all rights given the
lender by any promissory note or loan agreement executed by the Trust.
The Custodian shall deliver, from time to time, any Securities required as
additional collateral for any transaction described in this Section, upon
receipt of Written or Oral Instructions. The Trust shall cause all Securities
released from collateral status to be returned directly to the Custodian.
-10-
<PAGE>
SECTION 11. INDEBTEDNESS TO CUSTODIAN
If, in its sole discretion, the Custodian advances funds to the Trust to
pay for the purchase of Securities, to cover an overdraft of the Trust's account
with the Custodian, or to pay any other indebtedness to the Custodian, the
Trust's indebtedness shall be deemed to be a loan by the Custodian to the Trust,
payable on demand and bearing interest at the rate then charged by the Custodian
for such loans; provided, however, that the Custodian shall give the Trust
notice of any such advance that exceeds five percent of the value of the
Securities and cash held by the Custodian at the time of the advance. The Trust
hereby agrees that the Custodian shall have a continuing lien and security
interest, to the extent of any such overdraft or indebtedness, in any property
then held by the Custodian or its agents for the benefit of the Trust, or in
which the Trust may have an interest. The Trust authorizes the Custodian, in
its sole discretion at any time, to charge any such overdraft or indebtedness,
together with interest due thereon, against any balance then credited to the
Trust on the Custodian's books.
SECTION 12. SECURITIES LOANS
The Custodian may from time to time lend securities of the Trust in
accordance with and pursuant to a separate securities lending agreement.
SECTION 13. OPTIONS, FUTURES CONTRACTS AND SEGREGATED ACCOUNTS
The Custodian's responsibilities regarding option contracts will be
governed by the following sub-paragraphs:
(a) Options.
-------
(i) Upon receipt of Written or Oral Instructions relating to the
purchase of an option or sale of a covered call option, the Custodian shall:
(A) receive and retain confirmations or other documents, if any, evidencing the
purchase or writing of the option; (B) if the transaction involves the sale of
a covered call option, deposit and maintain in a segregated account the
Securities (either physically or by book-entry in a Securities Depository)
subject to the covered call option written on behalf of the Funds; and (C) pay,
release and/or transfer such securities, cash or other assets in accordance with
any notices or other communications evidencing the expiration, termination or
exercise of such options which are furnished to the Custodian by the Options
Clearing Corporation (the "OCC"), the Securities or Options Exchanges on which
such options were traded, or such other organization as may be responsible for
handling such option transactions.
(ii) Upon receipt of instructions relating to the sale of a naked option
(including stock index and commodity options), the Custodian, the Trust and the
broker-dealer shall enter into an agreement to comply with the rules of the OCC
or of any registered national securities exchange or similar organizations(s).
Pursuant to that agreement and any Written or Oral Instructions, the
-11-
<PAGE>
Custodian shall: (A) receive and retain confirmations or other documents, if
any, evidencing the writing of the option; (B) deposit and maintain in a
segregated account Securities (either physically or by book-entry in a
Securities Depository cash and/or other assets; and (C) pay, release and/or
transfer such Securities, cash or other assets in accordance with any such
agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the Securities or Options Exchanges on which such options
were traded, or such other organization as may be responsible for handling such
option transactions. The Custodian shall not be responsible for determining the
quality and quantity of assets held in any segregated account established in
compliance with applicable margin maintenance requirements and the performance
of other terms of any option contract.
(b) Futures Contracts. Upon receipt of Written or Oral Instructions, the
-----------------
custodian shall enter into a futures margin procedural agreement among the Fund,
the Custodian and the designated futures commission merchant (a "Procedural
Agreement"). Under the Procedural Agreement the Custodian shall: (A) receive
and retain confirmations, if any, evidencing the purchase or sale of a futures
contract or an option on a futures contract by a Series; (B) deposit and
maintain in a segregated account cash, Securities and/or other assets designated
as initial, maintenance or variation "margin" deposits intended to secure the
Funds' performance of its obligations under any futures contracts purchased or
sold, or any options on futures contracts written by the Funds, in accordance
with the provisions of any Procedural Agreement designed to comply with the
provisions of the Commodity Futures Trading Commission and/or any commodity
exchange or contract market (such as the Chicago Board of Trade), or any similar
organization(s), regarding such margin deposits; and (C) release assets from
and/or transfer assets into such margin accounts only in accordance with any
such Procedural Agreements. The Custodian shall not be responsible for
determining the type and amount of assets held in the segregated account or paid
to the broker-dealer in compliance with applicable margin maintenance
requirements and the performance of any futures contract or option on a futures
contract in accordance with its terms.
(c) Segregated Accounts. Upon receipt of Written or Oral Instructions, the
-------------------
Custodian shall establish and maintain on its books a segregated account or
accounts for and on behalf of the Funds, into which account or accounts may be
transferred assets of each Fund, including Securities maintained by the
Custodian in a Securities Depository, said account or accounts to be maintained
(i) for the purpose of compliance by the Fund with the procedures required by
SEC 1940 Act Release Number 10666 or any subsequent release or releases relating
to the maintenance of segregated accounts by registered investment companies or
(ii) for such other purposes as may be set forth, from time to time in Written
or Oral Instructions. The Custodian shall not be responsible for the
determination of the type or amount of assets to be held in any segregated
account referred to in this paragraph.
SECTION 14. EXERCISE OF POWERS WITH RESPECT TO SECURITIES
The Custodian assumes no duty, obligation or responsibility whatsoever to
exercise any voting or consent powers with respect to the Securities held by it
from time to time hereunder.
-12-
<PAGE>
The Trust or such persons as it may designate shall have the right to vote,
consent or otherwise act with respect to Securities. The Custodian will exercise
its best efforts (as defined in Section 16) to furnish to the Trust in a timely
manner all proxies or other appropriate authorizations with respect to
Securities registered in the name of the Custodian or its nominee, so that the
Trust or its designee may vote, consent or otherwise act.
SECTION 15. COMPENSATION
(a) The Trust agrees to pay to the Custodian compensation for its services
as set forth in Appendix A hereto, or as shall be set forth in written
amendments to Appendix A approved by the Trust and the Custodian from time to
time.
(b) The Trust shall pay all fees and expenses of any Sub-Custodian
approved by the Trust.
SECTION 16. CORPORATE ACTIVITY
The Custodian will exercise its best efforts to forward to the Trust in a
timely manner all notices of shareholder meetings, proxy statements, annual
reports, conversion notices, call notices, or other notices or written materials
of any kind (excluding share certificates and dividend, principal and interest
payments) sent to the Custodian as registered owner of Securities. Best efforts
as used in this Agreement shall mean the efforts reasonably believed in good
faith by the Custodian to be adequate in the circumstances.
Upon receipt of warrants or rights issued in connection with the assets of
the Trust, the Custodian shall enter into its ledgers appropriate notations
indicating such receipt and shall notify the Trust of such receipt. However,
the Custodian shall have no obligation to take any other action with respect to
such warrants or rights, except as directed in Written or Oral Instructions.
Custodian shall take all reasonable actions, as agreed to by the Trust and
the Custodian, to assist the Trust in obtaining from year to year favorable
opinions from the Trust's independent auditors with respect to the Custodian's
activities hereunder.
SECTION 17. RECORDS
The Custodian acknowledges and agrees that all books and records maintained
for the Trust in any capacity under this Agreement are the property of the Trust
and may be inspected by the Trust or any authorized regulatory agency at any
reasonable time. Upon request all such books and records will be surrendered
promptly to the Trust. The Custodian agrees to make available upon request and
to preserve for the periods prescribed in Rule 31a-2 of the 1940 Act any records
related to services provided under this Agreement and required to be maintained
by Rule 31a-1 under the 1940 Act.
-13-
<PAGE>
SECTION 18. LIABILITY
The Custodian assumes only the usual duties and obligations normally
performed by custodians of open-end investment companies. The Custodian
specifically assumes no responsibility for the management, investment or
reinvestment of the Securities from time to time owned by the Trust, whether or
not on deposit hereunder. The Custodian assumes no duty, obligation or
responsibility whatsoever with respect to Securities not deposited with the
Custodian.
The Custodian may rely upon the advice of counsel, who may be counsel for
the Trust or for the Custodian, and upon statements of accountants, brokers or
other persons believed by the Custodian in good faith to be expert in the
matters upon which they are consulted. The Custodian shall not be liable for
any action taken in good faith reliance upon such advice or statements. The
Custodian shall not be liable for action taken in good faith in accordance with
any Written or Oral Instructions, request or advice of the Trust or its
officers, or information furnished by the Trust or its officers. The Custodian
shall not be liable for any non-negligent action taken in good faith and
reasonably believed by it to be within the powers conferred upon it by this
Agreement.
No liability of any kind, other than to the Trust, shall attach to the
Custodian by reason of its custody of the Securities and cash held by the
Custodian hereunder or otherwise as a result of its custodianship. In the event
that any claim shall be made against the Custodian, it shall have the right to
pay the claim and reimburse itself from the assets of the Trust; provided,
however, that no such reimbursement shall occur unless the Trust is notified of
the claim and is afforded an opportunity to contest or defend the claim, if it
so elects. The Trust agrees to indemnify and hold the Custodian harmless for
any loss, claim, damage or expense arising out of the custodian relationship
under this Agreement; provided such loss, claim, damage or expense is not the
direct result of the Custodian's negligence or willful misconduct.
SECTION 19. TAXES
The Custodian shall not be liable for any taxes, assessments or
governmental charges that may be levied or assessed upon the Securities held by
it hereunder, or upon the income therefrom. Upon Written or Oral Instruction,
the Custodian may pay any such tax, assessment or charge and reimburse itself
out of the monies of the Trust or the Securities held hereunder.
SECTION 20. SUB-CUSTODIANS
(a) The Custodian may from time to time request appointment of one or more
Sub-Custodians. Upon receipt of Written or Oral Instructions authorizing the
use of a Sub-Custodian, the Custodian shall appoint one or more Sub-Custodians
or Foreign Sub-Custodians of Securities and cash owned by the Trust from time to
time.
-14-
<PAGE>
(b) Custodian shall cause Foreign Securities and amounts of cash
reasonably required to effect Trust's Foreign Securities transactions in
the Custodian Account to be held in such countries or other jurisdictions
as Trust shall direct in Written or Oral Instructions.
Custodian may hold Foreign Securities and cash in sub-custody accounts,
which shall be deemed part of the Custodian Account and which have been
established by Custodian or by a Sub-Custodian with those Foreign Sub-Custodians
as Trust shall approve in Written or Oral Instructions.
Each Foreign Sub-Custodian is authorized to hold Foreign Securities in an
account with any foreign Securities Depository as the Trust shall approve in
Written or Oral Instructions.
The contractual agreement between the Custodian and any Foreign Sub-
Custodian must provide at a minimum that the Foreign Sub-Custodian shall
provide, obtain or use its best efforts to assist the Trust in obtaining
information responsive to the "notes" to Rule 17f-5 under the 1940 Act with
respect to (i) each country or jurisdiction where the Trust's assets are
proposed to be maintained, are maintained or in the future may be maintained and
(ii) each Foreign Sub-Custodian which is proposed to hold, holds or in the
future may hold Foreign Securities or cash of the Trust. Notwithstanding any
other provisions of this Agreement, each Foreign Sub-Custodian's undertaking to
assist the Trust in obtaining such information shall neither increase the
Foreign Sub-Custodian's duty of care nor reduce the Trust's responsibility to
determine for itself the prudence of entrusting its assets to any particular
Foreign Sub-Custodian or foreign Securities Depository.
The Custodian shall deposit Foreign Securities and cash of the Trust with a
Foreign Sub-Custodian only in an account of the Foreign Sub-Custodian which
holds only assets held by Custodian as custodian for its customers. In the
event that a Foreign Sub-Custodian is authorized to hold any of the Foreign
Securities placed in its care in a foreign Securities Depository, Custodian will
direct the Foreign Sub-Custodian to identify the Foreign Securities on the books
of the foreign Securities Depository as being held for the account of Custodian
as custodian for its customers.
(c) The Custodian shall have no liability to the Trust by reason of any
act or omission of any Sub-Custodian approved by the Trust, and the Trust shall
indemnify the Custodian and hold it harmless from and against any and all
actions, suits, claims, losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising directly or indirectly out of or in connection
with the performance of any Sub-Custodian approved by the Trust. The Custodian
assigns to the Trust any and all claims for any losses, costs, expenses, or
damages that may be incurred by the Trust by reason of the negligence, gross
negligence or misconduct of any Sub-Custodian approved by the Trust, or by
reason of the failure of a Sub-Custodian approved by the Trust to perform in
accordance with any applicable agreement, including instructions of the
Custodian. The Custodian shall be under no obligation to prosecute or to defend
any action, suit or claim arising out of, or in connection with, the performance
of any Sub-Custodian approved by the Trust, if, in the opinion of the
Custodian's counsel, such action will involve expense or liability to the
Custodian. The Trust shall, upon request, furnish the Custodian with
satisfactory
-15-
<PAGE>
indemnity against such expense or liability, and upon request of the Custodian,
the Trust shall assume the entire defense of any action, suit, or claim subject
to the foregoing indemnity.
With respect to each Sub-Custodian not approved by the Trust, which may not
be a Foreign Sub-Custodian, the Custodian shall be liable to the Trust for any
loss which shall occur as a result of the failure of the Sub-Custodian to
exercise reasonable care with respect to the safekeeping of assets to the same
extent that the Custodian would be liable to the Trust if the Custodian were
holding such assets in its own premises. The Custodian shall be liable to the
Trust under this paragraph only to the extent of the Trust's direct damages, to
be determined based on the market value of the assets which are subject to loss
and without reference to any special conditions or circumstances.
SECTION 21. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement may be executed in more than one counterpart, each of
which shall be deemed to be an original, and shall become effective on the date
hereof. This Agreement shall remain in effect for a period of one year from the
date of its effectiveness and shall continue in effect for successive twelve-
month periods; provided that such continuance is specifically approved at least
annually by the Board and by a majority of the Trustees who are not parties to
this Agreement or interested persons of any such party.
(b) This Agreement may be terminated by either party upon notice to the
other. The termination shall become effective at the time specified in the
notice but no earlier than sixty (60) days after the date of the notice. Upon
notice of termination, the Trust shall use its best efforts to obtain a
successor custodian. If a successor custodian is not appointed within ninety
(90) days after the date of the notice of termination, the Board shall, by
resolution, designate the Trust as its own custodian. Each successor custodian
shall be a person qualified to serve under the 1940 Act. Promptly following
receipt of written notice from the Trust of the appointment of a successor
custodian and receipt of Written or Oral Instructions, the Custodian shall
deliver all Securities and cash it then holds directly to the successor
custodian and shall, upon request of the Trust and the successor custodian and
upon payment of the Custodian's reasonable charges and disbursements, (i)
execute and deliver to the successor custodian an instrument approved by the
successor custodian's counsel transferring to the successor custodian all the
rights, duties and obligations of the Custodian, (ii) transfer to the successor
custodian the originals or copies of all books and records maintained by the
Custodian hereunder and (iii) cooperate with, and provide reasonable assistance
to, the successor custodian in the establishment of the books and records
necessary to carry out the successor custodian's responsibilities hereunder.
Upon delivery of the Securities and other assets of the Trust and compliance
with the other requirements of this Section 21, the Custodian shall have no
further duty or liability hereunder. Every successor custodian appointed
hereunder shall execute and deliver an appropriate written acceptance of its
appointment and shall thereupon become vested with the rights, duties and
obligations of the predecessor custodian.
-16-
<PAGE>
SECTION 22. REQUIRED PERFORMANCE ON FUND BUSINESS DAYS
Nothing contained in this Agreement is intended to or shall require the
Custodian, in any capacity hereunder, to perform any functions or duties on any
day other than a Fund Business Day. Functions or duties normally scheduled to
be performed on any day which is not a Fund Business Day shall be performed on,
and as of, the next Fund Business Day unless otherwise required by law.
SECTION 23. MISCELLANEOUS
(a) This Agreement shall extend to and bind the parties hereto and their
respective successors and assigns; provided, however, that this Agreement shall
not be assignable by the Trust without the written consent of the Custodian, or
by the Custodian without the written consent of the Trust. Notwithstanding the
foregoing, either party may assign this Agreement without the consent of the
other party so long as the assignee is an affiliate, parent or subsidiary of the
assigning party and the assignee of the Custodian is qualified to serve as
custodian under the 1940 Act.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of Minnesota.
(c) The captions inserted herein are for convenience of reference and
shall not affect, in any way, the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
WELLS FARGO FUNDS TRUST
By:_________________________________
Richard H. Blank, Jr.
Chief Operating Officer
NORWEST BANK MINNESOTA, N.A.
By:_________________________________
Name:_______________________________
Title:______________________________
-17-
<PAGE>
CUSTODY AGREEMENT
Wells Fargo Funds Trust
Appendix A
For its custodial services, the Custodian shall receive a fee, with respect to
each Fund, except the International Fund, listed below, of 0.02% of the average
daily net assets of each such Fund. The anticipated custodial fee for the
International Fund is 0.25%, on an annualized basis.
Funds of Wells Fargo Funds Trust Covered by This Agreement
1. Aggressive Balanced-Equity Fund
2. Arizona Tax-Free Fund
3. California Tax-Free Bond Fund
4. California Tax-Free Income Fund
5. California Tax-Free Money Market Fund
6. California Tax-Free Money Market Trust
7. Cash Investment Money Market Fund
8. Colorado Tax-Free Fund
9. Corporate Bond Fund
10. Disciplined Growth Fund
11. Diversified Bond Fund
12. Diversified Equity Fund
13. Diversified Small Cap Fund
14. Equity Index Fund
15. Equity Value Fund
16. Government Money Market Fund
17. Growth Balanced Fund
18. Growth Equity Fund
19. Growth Fund
20. Income Equity Fund
21. Income Fund
22. Income Plus Fund
23. Index Fund
24. Intermediate Government Income Fund
25. International Fund
26. Large Company Growth Fund
27. LifePath Opportunity Fund
28. LifePath 2010 Fund
29. LifePath 2020 Fund
30. LifePath 2030 Fund
31. LifePath 2040 Fund
32. Limited Term Government Income Fund
33. Limited Term Tax-Free Fund
34. Minnesota Intermediate Tax-Free Fund
35. Minnesota Tax-Free Fund
36. Moderate Balanced Fund
37. Money Market Fund
38. Money Market Trust
39. National Tax-Free Institutional Money Market Fund
<PAGE>
40. National Tax-Free Money Market Fund
41. National Tax-Free Money Market Trust
42. Oregon Tax-Free Fund
43. Overland Express Sweep Fund
44. Prime Investment Money Market Fund
45. Small Cap Fund
46. Small Cap Opportunities Fund
47. Small Cap Value Fund
48. Small Company Growth Fund
49. Stable Income Fund
50. Strategic Income Fund
51. Tax-Free Income Fund
52. Treasury Plus Institutional Money Market Fund
53. Treasury Plus Money Market Fund
54. 100% Treasury Money Market Fund
55. Variable Rate Government Fund
56. Wealthbuilder II Growth & Income Portfolio
57. Wealthbuilder II Growth Balanced Portfolio
58. Wealthbuilder II Growth Portfolio
Approved by the Board of Trustees: March 26, 1999
<PAGE>
Exhibit 99.B(h)(1)
ADMINISTRATION AGREEMENT
Wells Fargo Funds Trust
111 Center Street
Little Rock, Arkansas 72201
THIS AGREEMENT is made as of this ___ day of September, 1999, by and
between Wells Fargo Funds Trust, a Delaware business trust (the "Trust") and
Wells Fargo Bank, N.A., a national banking association ("Wells Fargo").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain Wells Fargo to render certain
administrative services to the Trust's investment portfolios listed on Appendix
A (individually, a "Fund" and collectively, the "Funds"), and Wells Fargo is
willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. The Trust hereby appoints Wells Fargo to act as
-----------
Administrator of the Funds, and Wells Fargo hereby accepts such appointment and
agrees to render such services and duties set forth in Paragraph 3, for the
compensation and on the terms herein provided. Each new investment portfolio
established in the future by the Trust shall automatically become a "Fund" for
all purposes hereunder as if it were listed on Appendix A, absent written
notification to the contrary by either the Trust or Wells Fargo.
2. Delivery of Documents. The Trust shall furnish to, or cause to be
---------------------
furnished to, Wells Fargo originals of, or copies of, all books, records, and
other documents and papers related in any way to the administration of the
Trust.
3. Duties as Administrator. Wells Fargo shall, at its expense, provide
-----------------------
the following administrative services in connection with the operations of the
Trust and the Funds:
(a) receive and tabulate shareholder votes;
(b) furnish statistical and research data;
(c) coordinate (or assist in) the preparation and filing with the U.S.
Securities and Exchange Commission ("SEC") of registration
statements, notices, shareholder reports, and other material
required to be filed under applicable laws;
<PAGE>
(d) prepare and file with the states registration statements, notices,
reports, and other material required to be filed under applicable laws;
(e) prepare and file Form 24F-2s and N-SARs;
(f) review bills submitted to the Funds and, upon determining that a
bill is appropriate, allocating amounts to the appropriate Funds and Classes
thereof and instructing the Funds' custodian to pay such bills;
(g) coordinate (or assist in) the preparation of reports and other
information materials regarding the Funds including proxies and other
shareholder communications, and review prospectuses;
(h) prepare expense table information for annual updates;
(i) provide legal and regulatory advice to the Funds in connection
with its other administrative functions, including assignment of matters to
outside legal counsel on behalf of the Trust and supervising the work of such
counsel;
(j) provide office facilities and clerical support for the Funds;
(k) develop and implement procedures for monitoring compliance with
regulatory requirements and compliance with the Funds' investment objectives,
policies and restrictions;
(l) serve as liaison between the Funds and their independent
auditors;
(m) prepare and file tax returns;
(n) review payments of Fund expenses;
(o) prepare expense budgeting and accruals;
(p) provide communication, coordination, and supervision services with
regard to the Funds' transfer agent, custodian, fund accountant, any co-
administrators, and other service organizations that render recordkeeping or
shareholder communication services;
(q) provide information to the Funds' distributor concerning fund
performance and administration;
(r) assist the Trust in the development of additional investment
portfolios;
(s) provide reports to the Funds' board of directors regarding
its activities;
2
<PAGE>
(t) assist in the preparation and assembly of meeting materials,
including comparable fee information, as required, for the Funds' board of
directors; and
(u) provide any other administrative services reasonably necessary for
the operation of the Funds other than those services that are to be provided by
the Trust's transfer and dividend disbursing agent, custodian, and fund
accountant, provided that nothing in this Agreement shall be deemed to require
Wells Fargo to provide any services that may not be provided by it under
applicable banking laws and regulations.
In performing all services under this Agreement, Wells Fargo shall:
(a) act in conformity with the Trust's Declaration of Trust (and By-Laws, if
any), the 1940 Act, and any other applicable laws as may be amended from time to
time, and with the Trust's registration statement under the Securities Act of
1933 and the 1940 Act, as may be amended from time to time; (b) consult and
coordinate with legal counsel to the Trust as necessary and appropriate; and (c)
advise and report to the Trust and its legal counsel, as necessary and
appropriate, with respect to any compliance or other matters that come to its
attention.
In connection with its duties under this Paragraph, Wells Fargo may,
at its own expense, enter into sub-administration agreements with other service
providers, provided that each such service provider agrees with Wells Fargo to
comply with this Agreement and all relevant provisions of the 1940 Act, the
Investment Advisers Act of 1940, any other applicable laws as may be amended
from time to time, and all relevant rules thereunder. Wells Fargo will provide
the Trust with a copy of each sub-administration agreement it executes relating
to the Trust. Wells Fargo will be liable for acts or omissions of any such sub-
administrators under the standards of care described herein under Paragraph 5.
4. Compensation. In consideration of the administration services to
------------
be rendered by Wells Fargo under this Agreement, the Trust shall pay Wells Fargo
a monthly fee, as shown on Appendix A, of the average daily value (as determined
on each business day at the time set forth in the Prospectus for determining net
asset value per share) of the Funds' net assets during the preceding month. If
the fee payable to Wells Fargo pursuant to this Paragraph begins to accrue
before the end of any month or if this Agreement terminates before the end of
any month, the fee for the period from the effective date to the end of that
month or from the beginning of that month to the termination date, respectively,
shall be prorated according to the proportion that the period bears to the full
month in which the effectiveness or termination occurs. For purposes of
calculating each such monthly fee, the value of each Fund's net assets shall be
computed in the manner specified in that Fund's registration statement as then
on file with the SEC for the computation of the value of the Fund's net assets
in connection with the determination of the net asset value of Fund shares. For
purposes of this Agreement, a "business day" is any day that the Trust is open
for trading.
5. Limitation of Liability; Indemnification.
----------------------------------------
(a) Wells Fargo shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
performance of its obligations and
3
<PAGE>
duties under this Agreement, except a loss resulting from Wells Fargo's willful
misfeasance, bad faith, or negligence in the performance of its obligations and
duties or that of its agents or sub-administrators, or by reason of its or their
reckless disregard thereof. Any person, even though also an officer, director,
employee or agent of Wells Fargo, shall be deemed, when rendering services to
the Trust or acting on any business of the Trust (other than services or
business in connection with Wells Fargo's duties as Administrator hereunder), to
be acting solely for the Trust and not as an officer, director, employee, or
agent or one under the control or discretion of Wells Fargo even though paid by
it.
(b) The Trust, on behalf of each Fund, will indemnify Wells Fargo
against and hold it harmless from any and all losses, claims, damages,
liabilities, or expenses (including reasonable counsel fees and expenses)
resulting from any claim, demand, action, or suit relating to the particular
Fund and not resulting from willful misfeasance, bad faith, or negligence of
Wells Fargo or its agents or sub-administrators in the performance of their
obligations and duties, or by reason of its or their reckless disregard thereof.
Wells Fargo will not confess any claim or settle or make any compromise in any
instance in which the Trust will be asked to provide indemnification, except
with the Trust's prior written consent. Any amounts payable by the Trust under
this Subparagraph shall be satisfied only against the assets of the Fund
involved in the claim, demand, action, or suit and not against the assets of any
other Fund.
(c) Wells Fargo will indemnify the Trust against and hold it harmless
from any and all losses, claims, damages, liabilities, or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand, action,
or suit against the Trust or any Fund that resulted from a failure of Wells
Fargo or its agents to act in accordance with the standard of care set forth in
Subparagraph (a) above; provided that such loss, claim, damage, liability or
expense did not result primarily from willful misfeasance, bad faith, or
negligence of the Trust or its agents (other than Wells Fargo or agents of Wells
Fargo) in the performance of their obligations and duties, or by reason of its
or their reckless disregard thereof. The Trust will not confess any claim or
settle or make any compromise in any instance in which Wells Fargo will be asked
to provide indemnification, except with Wells Fargo's prior written consent.
6. Allocation of Expenses. Wells Fargo assumes and shall pay for
----------------------
maintaining the staff and personnel necessary to perform its obligations under
this Agreement and shall, at its own expense, provide its own office space,
facilities and equipment. In addition to the fees described in Section 4 of
this Agreement, the Trust (or its other service providers, as may be provided
pursuant to their respective agreements and contracts with the Trust) shall pay
all of its expenses which are not expressly assumed by Wells Fargo hereunder.
The expenses of legal counsel and accounting experts retained by Wells Fargo,
after consulting with the Trust's legal counsel and independent auditors, as may
be reasonably necessary or appropriate for the performance by Wells Fargo of its
duties under this Agreement shall be deemed to be expenses of, and shall be paid
for by, the Trust.
7. Amendments. This Agreement may be amended at any time by mutual
----------
agreement in writing of the Trust and Wells Fargo, provided that the Board of
Trustees of the Trust,
4
<PAGE>
including a majority of the trustees who are not interested persons of the Trust
or any party to this Agreement, as defined by the 1940 Act, approves any such
amendment in advance.
8. Administrator's Other Businesses. Except to the extent necessary
--------------------------------
to perform Wells Fargo's obligations under this Agreement, nothing herein shall
be deemed to limit or restrict the right of Wells Fargo, or any affiliate or
employee of Wells Fargo, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
9. Duration. This Agreement shall become effective on its execution
--------
date and shall remain in full force and effect for one year or until terminated
pursuant to the provisions in Paragraph 10, and it may be reapproved at least
annually by the Board of Trustees, including a majority of the directors who are
not interested persons of the Trust or any party to this Agreement, as defined
by the 1940 Act.
10. Termination of Agreement. This Agreement may be terminated at
------------------------
any time, without the payment of any penalty, by a vote of a majority of the
members of the Trust's Board of Trustees, on 60 days' written notice to Wells
Fargo; or by Wells Fargo on 60 days' written notice to the Trust.
11. Expense Waivers. If in any fiscal year the total expenses of a
---------------
Fund incurred by, or allocated to, the Fund, excluding taxes, interest,
brokerage commissions and other portfolio transaction expenses, other
expenditures that are capitalized in accordance with generally accepted
accounting principles, extraordinary expenses and amounts accrued or paid under
a Rule 12b-1 Plan of the Fund and including only the fees provided for in
Paragraph 4 and those provided for pursuant to the Fund's advisory agreement
("includible expenses"), exceed the applicable voluntary expense waivers, if
any, set forth in the Prospectus, Wells Fargo shall waive or reimburse that
portion of the excess derived by multiplying the excess by a fraction, the
numerator of which shall be the percentage at which the fee payable pursuant to
this Agreement is calculated under Paragraph 4, and the denominator of which
shall be the sum of such percentage plus the percentage at which the fee payable
pursuant to the Fund's advisory agreement is calculated (the "Applicable
Ratio"), but only to the extent of the fee hereunder for the fiscal year. If
the fees payable under this Agreement and/or the Fund's advisory agreement
contributing to such excess portion are calculated at more than one percentage
rate, the Applicable Ratio shall be calculated separately for and applied
separately to the portions of excess attributable to, the period to which a
particular percentage rate applied. At the end of each month of the Trust's
fiscal year, the Trust shall review the includible expenses accrued during that
fiscal year to the end of that period and shall estimate the includible expenses
for the balance of that fiscal year. If as a result of that review and
estimation it appears likely that the includible expenses will exceed the
limitations referred to in this Paragraph for a fiscal year with respect to the
Fund, the monthly fee set forth in Paragraph 4 payable to Wells Fargo for such
month shall be reduced, subject to a later adjustment, by an amount equal to the
Applicable Ratio times the estimated excess pro rated over the remaining months
of the fiscal year (including the month just
5
<PAGE>
ended). For purposes of computing the excess, if any, the value of the Fund's
net assets shall be computed in the manner specified in Paragraph 4, and any
reimbursements required to be made by Wells Fargo shall be made once a year
promptly after the end of the Trust's fiscal year.
12. Trust not bound to violate its Articles. Nothing in this
---------------------------------------
Agreement shall require the Trust to take any action contrary to any provision
of its Declaration of Trust or to any applicable statute or regulation.
13. Miscellaneous.
-------------
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Trust or Wells Fargo shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Trust:
Wells Fargo Funds Trust
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank
To Wells Fargo:
Wells Fargo Bank, N.A.
525 Market Street, 12th Floor
San Francisco, California 94105
Attention: Michael J. Hogan
(b) This Agreement shall extend to and be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be subject to assignment (as that term is defined under the
1940 Act) without the written consent of the other party.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and which collectively shall be
deemed to constitute only one agreement.
(e) The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
6
<PAGE>
(f) If any provision of this Agreement is declared to be
prohibited or unenforceable, the remaining provisions of this Agreement shall
continue to be valid and fully enforceable.
In witness whereof, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
WELLS FARGO FUNDS TRUST
By: ____________________________
Richard H. Blank
Secretary
WELLS FARGO BANK, N.A.
By: ____________________________
Michael J. Hogan
Senior Vice President
By: ____________________________
C. David Messman
Vice President
7
<PAGE>
Appendix A
Funds of Wells Fargo Funds Trust Covered by This Agreement
Fee of 0.15% of average daily
- -----------------------------
net assets on an annual basis:
- -----------------------------
1. Aggressive Balanced-Equity Fund
2. Arizona Tax-Free Fund
3. Asset Allocation Fund
4. California Tax-Free Bond Fund
5. California Tax-Free Income Fund
6. California Tax-Free Money Market Fund
7. California Tax-Free Money Market Trust
8. Cash Investment Money Market Fund
9. Colorado Tax-Free Fund
10. Corporate Bond Fund
11. Disciplined Growth Fund
12. Diversified Bond Fund
13. Diversified Equity Fund
14. Diversified Small Cap Fund
15. Equity Index Fund
16. Equity Value Fund
17. Government Money Market Fund
18. Growth Balanced Fund
19. Growth Equity Fund
20. Growth Fund
21. Income Equity Fund
22. Income Fund
23. Income Plus Fund
24. Index Allocation Fund
25. Index Fund
26. Intermediate Government Income Fund
27. International Equity Fund
28. International Fund
29. Large Company Growth Fund
30. LifePath Opportunity Fund
31. LifePath 2010 Fund
32. LifePath 2020 Fund
33. LifePath 2030 Fund
34. LifePath 2040 Fund
35. Limited Term Government Income Fund
36. Limited Term Tax-Free Fund
37. Minnesota Intermediate Tax-Free Fund
38. Minnesota Tax-Free Fund
39. Moderate Balanced Fund
40. Money Market Fund
41. Money Market Trust
42. National Tax-Free Institutional Money Market Fund
43. National Tax-Free Money Market Fund
44. National Tax-Free Money Market Trust
45. Oregon Tax-Free Fund
46. Overland Express Sweep Fund
A-1
<PAGE>
47. Prime Investment Money Market Fund
48. Small Cap Fund
49. Small Cap Opportunities Fund
50. Small Cap Value Fund
51. Small Company Growth Fund
52. Stable Income Fund
53. Strategic Income Fund
54. Tax-Free Income Fund
55. Treasury Plus Institutional Money Market Fund
56. Treasury Plus Money Market Fund
57. 100% Treasury Money Market Fund
58. Variable Rate Government Fund
59. Wealthbuilder II Growth & Income Portfolio
60. Wealthbuilder II Growth Balanced Portfolio
61. Wealthbuilder II Growth Portfolio
Approved by Broad of Trustees: March 26, 1999
A-2
<PAGE>
Exhibit 99.B(h)(2)
WELLS FARGO FUNDS TRUST
FUND ACCOUNTING AGREEMENT
September 17, 1999
AGREEMENT made as of the 17th day of September, 1999, by and between
Wells Fargo Funds Trust, a business trust organized under the laws of the State
of Delaware, with its principal office and place of business at 111 Center
Street, Little Rock, Arkansas 72201 (the "Trust"), and Forum Accounting
Services, LLC ("Forum") a Delaware limited liability company with its principal
office and place of business at Two Portland Square, Portland, Maine 04101.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and may issue its shares of beneficial interest (the "Shares"), in separate
series and classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and subject to this Agreement in accordance with
Section 6, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust offers shares of various classes of each Fund as listed
in Appendix A hereto (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes");
WHEREAS, the Trust desires that Forum perform certain fund accounting
services for each Fund and Class thereof and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints Forum, and Forum hereby agrees, to act as
fund accountant of the Trust for the period and on the terms set forth in this
Agreement. In connection therewith, the Trust has delivered to Forum copies of
(i) the Trust's Trust Instrument and, if applicable, Bylaws (collectively, as
amended from time to time, "Organic Documents"), (ii) the Trust's Registration
Statement and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the 1940 Act (the "Registration Statement"), (iii) the
Trust's current Prospectus and Statement of Additional Information of each Fund
(collectively, as currently in effect and as amended or supplemented, the
"Prospectus") and (iv) all procedures adopted by the Trust with respect to the
Funds (e.g., repurchase agreement procedures), and shall promptly furnish Forum
with all amendments of or supplements to the foregoing. The Trust shall deliver
to Forum a certified copy of the resolution of the Board of Trustees of the
Trust (the "Board") appointing Forum and authorizing the execution and delivery
of this Agreement.
<PAGE>
SECTION 2. DUTIES OF FORUM
(a) Forum and Wells Fargo Bank, N.A., the Trust's administrator
(collectively with its agents, the "Administrator"), may from time to time adopt
such procedures as they agree upon to implement the terms of this Section. With
respect to each Fund, Forum shall perform the following services:
(i) calculate the net asset value per share ("NAV") with the
frequency prescribed in each Fund's then-current Prospectus;
(ii) calculate each item of income, expense, deduction, credit, gain
and loss, if any, as required by the Trust and in conformance with
generally accepted accounting practice ("GAAP"), the SEC's Regulation
S-X (or any successor regulation) and the Internal Revenue Code of
1986, as amended (or any successor laws)(the "Code");
(iii) Maintain each Fund's general ledger and record all income,
gross expenses, capital share activity and security transactions of
each Fund;
(iv) calculate the yield, effective yield, tax equivalent yield and
total return for each Fund, and each Class thereof, as applicable, and
such other measure of performance as may be agreed upon between the
parties hereto;
(v) provide the Trust and such other persons as the Administrator
may direct with the following reports (A) a current security position
report, (B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each portfolio
security in maturity date order), and (C) a current cash position and
projection report;
(vi) prepare and record, as of each time when the net asset value of
a Fund is calculated or as otherwise directed by the Trust, either (A)
a valuation of the assets of the Fund (based upon the use of outside
services normally used and contracted for this purpose by Forum in the
case of securities for which information and market price or yield
quotations are readily available and based upon evaluations conducted
in accordance with the Trust's instructions in the case of all other
assets) or (B) a calculation confirming that the market value of the
Fund's assets does not deviate from the amortized cost value of those
assets by more than a specified percentage;
(vii) make such adjustments over such periods as the Administrator
deems necessary to reflect over-accruals or under-accruals of
estimated expenses or income;
(viii) request any necessary information from the Administrator and
the Trust's transfer agent and distributor and prepare the Trust's
Form N-SAR;
-2-
<PAGE>
(ix) provide appropriate records to assist the Trust's independent
accountants and, upon approval of the Trust or the Administrator, any
regulatory body in any requested review of the Trust's books and
records maintained by Forum;
(x) prepare the Funds' semi-annual financial statements to the
Trust's shareholders;
(xi) file the Funds' semi-annual financial statements with the SEC
or ensure that the Funds' semi-annual financial statements are filed
with the SEC;
(xii) provide information typically supplied in the investment
company industry to companies that track or report price, performance
or other information with respect to investment companies;
(xiii) provide the Trust or the Administrator with the data requested
by the Trust or the Administrator that is required to update the
Registration Statement;
(xiv) provide the Trust or independent accountants with all
information requested with respect to the preparation of the Trust's
income, excise and other tax returns;
(xv) prepare, or prepare, execute and file all Federal income and
excise tax returns and state income and other tax returns, including
any extensions or amendments, each as agreed between the Trust and
Forum;
(xvi) produce quarterly compliance reports for investment advisers
to the Trust and the Board and provide information to the
Administrator, investment advisers to the Trust and other appropriate
persons with respect to questions of Fund compliance;
(xvii) determine the amount of distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Code, and prepare and
distribute to appropriate parties notices announcing the declaration
of distributions to shareholders;
(xviii) transmit to and receive from each Fund's transfer agent
appropriate data to reconcile daily Shares outstanding and other data
with the transfer agent;
(xix) periodically reconcile all appropriate data with each Fund's
custodian;
(xx) verify investment trade tickets when received from an
investment adviser and maintain individual ledgers and historical tax
lots for each security;
(xxi) report to the Trust and the Administrator within 15 days after
the end of each calendar month, Forum's compliance for the prior month
with the written service level standards agreed upon from time to time
by the Trust and Forum (the "Service Standards"). The initial Service
Standards are attached as Appendix B hereto; and
-3-
<PAGE>
(xxii) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time in the procedures adopted by the
Board pursuant to mutually acceptable compensation and implementation
agreements.
(b) Forum shall prepare and maintain on behalf of the Trust the
following books and records of each Fund, and each Class thereof, pursuant to
Rule 31a-1 under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required by subsection
(b)(1) of the Rule;
(ii) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required
by subsection (b)(2)(iv) of the Rule);
(iii) A record of each brokerage order given by or on behalf of the
Trust for, or in connection with, the purchase or sale of securities,
whether executed or not, and all other portfolio purchases or sales,
as required by subsections (b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any
direct or indirect interest or which the Trust has granted or
guaranteed and a record of any contractual commitments to purchase,
sell, receive or deliver any property, as required by subsection
(b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the Rule;
and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to those provisions of the Rule
applicable to portfolio transactions and as agreed upon between the
parties hereto.
(c) The books and records prepared and maintained pursuant to
Section 2(b) shall be prepared and maintained in such form, for such periods and
in such locations as may be required by the 1940 Act. The books and records
pertaining to the Trust that are in possession of Forum shall be the property of
the Trust. The Trust, the Administrator, or the Trust's or the Administrator's
authorized representatives, shall have access to such books and records at all
times during Forum's normal business hours. Upon the reasonable request of the
Trust or the Administrator, copies of any such books and records shall be
provided promptly by Forum to the Trust or the Trust's authorized
representatives at the Trust's expense. In the event the Trust designates a
successor that shall assume any of Forum's obligations hereunder, Forum shall,
at the expense and direction of the Trust, transfer to such successor all
relevant books, records and other data established or maintained by Forum under
this Agreement.
-4-
<PAGE>
(d) Forum shall provide the Trust and, subject to agreement to be
bound by the following sentence, the Administrator and any other service
provider to the Trust specified by the Trust, nightly snapshots of such data and
information from Forum's fund accounting system as may be agreed to in writing
from time to time. The Trust acknowledges that the databases, computer
programs, screen formats, report formats, interactive design techniques, and
documentation manuals maintained by Forum on databases under the control and
ownership of Forum or a third party hired by Forum constitute copyrighted, trade
secret, or other proprietary information (collectively, "Proprietary
Information") of substantial value to Forum or the third party. The Trust
agrees to treat all Proprietary Information as proprietary to Forum and further
agrees that it shall not divulge any Proprietary Information to any person or
organization except as may be provided under this Agreement.
(e) Forum shall implement the accounting practices and procedures
approved by the Board as soon as practical following receipt of written notice
thereof, subject to Section 2(a)(xxi).
(f) Nothing contained herein shall be construed to require Forum to
perform any service that could cause Forum to be deemed an investment adviser
for purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended,
or that could cause a Fund to act in contravention of the Fund's Prospectus or
any provision of the 1940 Act. Except as otherwise specifically provided
herein, the Trust assumes all responsibility for ensuring that the Trust
complies with all applicable requirements of the Securities Act, the 1940 Act
and any laws, rules and regulations of governmental authorities with
jurisdiction over the Trust. All references to any law in this Agreement shall
be deemed to include reference to the applicable rules and regulations
promulgated under authority of the law and all official interpretations of such
law or rules or regulations.
SECTION 3. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by Forum in
writing. Forum shall use its best judgment and efforts in rendering the
services described in this Agreement. Forum shall not be liable to the Trust or
any of the Trust's shareholders for any action or inaction of Forum relating to
any event whatsoever in the absence of bad faith, willful misfeasance or
negligence in the performance or disregard of Forum's duties or obligations
under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who controls
Forum within the meaning of section 15 of the Securities Act or section 20 of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), ("Forum
Indemnitees"), against and from any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees
and other expenses of every nature and character arising out of or in any way
related to Forum's actions taken or failures to act with respect to a Fund that
are consistent with the standard of care set forth in Section 3(a) or based, if
applicable, on good faith reliance upon an
-5-
<PAGE>
item described in Section 3(d) (a "Forum Claim"). The Trust shall not be
required to indemnify any Forum Indemnitee if, prior to confessing any Forum
Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not give
the Trust written notice of and reasonable opportunity to defend against the
Forum Claim in its own name or in the name of the Forum Indemnitee.
(c) Forum agrees to indemnify and hold harmless the Trust, its
employees, agents, directors, officers and managers and any person who controls
the Trust within the meaning of section 15 of the Securities Act or section 20
of the 1934 Act ("Trust Indemnitees"), against and from any and all claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character arising out of or in any way related to (i) Forum's actions taken or
failures to act with respect to a Fund that are not consistent with the standard
of care set forth in Section 3(a) or based, if applicable, on good faith
reliance upon an item described in Section 3(d), or (ii) any breach of Forum's
representation set forth in Section 13 (a "Trust Claim"). Forum shall not be
required to indemnify any Trust Indemnitee if, prior to confessing any Trust
Claim against the Trust Indemnitee, the Trust or the Trust Indemnitee does not
give Forum written notice of and reasonable opportunity to defend against the
Trust Claim in its own name or in the name of the Trust Indemnitee.]
(d) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of reputable counsel, who may be
counsel to the Trust or counsel to Forum, or the advice of in-house
counsel of the Administrator or its affiliates;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by a person or persons
authorized by the Board to give such oral instruction. Provided that
Forum has such reasonable belief, Forum shall have no duty or
obligation to make any inquiry or effort of certification of such oral
instruction;
(iii) any written instruction or certified copy of any resolution of
the Board, and Forum may rely upon the genuineness of any such
document or copy thereof reasonably believed in good faith by Forum to
have been validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report,
notice, consent, order, or other document reasonably believed in good
faith by Forum to be genuine and to have been signed or presented by
the Trust or other proper party or parties;
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
-6-
<PAGE>
(e) Forum shall not be liable for the errors of other service
providers to the Trust, including the errors of pricing services (other than to
pursue all reasonable claims against the pricing service based on the pricing
services' standard contracts entered into by Forum) and errors in information
provided by an investment adviser (including prices and pricing formulas and the
untimely transmission of trade information), custodian or transfer agent to the
Trust.
(f) Forum shall reimburse each applicable Fund for any net losses to
the Fund during each NAV Error Period resulting from an NAV Difference that is
at least $0.01 per Fund share but that, as a percentage of Recalculated NAV of
such Fund, is less than 1/2 of 1%. Forum shall reimburse the Fund on its own
behalf and on behalf of each Fund shareholder for any losses experienced by the
Fund or any Fund shareholder, as applicable, during each NAV Error Period
resulting from an NAV Difference that is at least $0.01 per Fund share and that,
as a percentage of Recalculated NAV of such Fund, is at least 1/2 of 1%;
provided, however, that Forum shall not be responsible for reimbursing any Fund
with respect to any shareholder that experiences a loss during any NAV Error
Period of less than $10.
(g) For purposes of this Agreement, (i) the NAV Difference shall mean
the difference between the NAV at which a shareholder purchase or redemption
should have been effected ("Recalculated NAV") and the NAV at which the purchase
or redemption is effected, (ii) NAV Error Period shall mean any Fund business
day or series of two or more consecutive Fund business days during which an NAV
Difference of $0.01 per Fund share or more exists, (iii) NAV Differences and any
Forum liability therefrom are to be calculated each time a Fund's (or Class's)
NAV is calculated, (iv) in calculating any amount for which Forum would
otherwise be liable under this Agreement for a particular NAV error, Fund (or
Class) losses and gains shall be netted and (v) in calculating any amount for
which Forum would otherwise be liable under this Agreement for a particular NAV
error that continues for a period covering more than one NAV determination, Fund
(or Class) losses and gains for the period shall be netted.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to
this Agreement, the Trust shall pay Forum, with respect to each Fund, the fees
set forth in Clause (i) of Appendix C hereto. In consideration of the services
provided by Forum to begin the operations of a new Fund, the Trust shall pay
Forum, with respect to each Fund, the fees set forth in clause (ii) of Appendix
C hereto. In consideration of additional services provided by Forum to perform
certain functions, the Trust shall pay Forum, with respect to each Fund the fees
set forth in clause (iii) of Appendix C hereto. Nothing in this Agreement shall
require Forum to perform any of the services listed in Section 2(a)(xv) and
clause (iii) of Appendix C hereto, as such services may be performed by the
Fund's independent accountant if appropriate in the judgment of Forum.
All fees payable hereunder shall be accrued daily by the Trust. The
fees payable for the services listed in clauses (i) and (iii) of Appendix C
hereto shall be payable monthly in advance on the tenth Fund business day of
each calendar month for services to be performed during that month. The fees
payable for the services listed in clause (ii) of Appendix C hereto shall be
payable monthly in arrears on the fifth Fund business day of the calendar month
following the
-7-
<PAGE>
month in which a Fund commences operations. If fees payable for the services
listed in clause (i) begin to accrue in the middle of a month or if this
Agreement terminates before the end of any month, all fees for the period from
the date on which such accrual begins to the end of that month or from the
beginning of that month to the date of termination, as the case may be, shall be
prorated according to the proportion that the period bears to the full month in
which the commencement or termination occurs. Upon the termination of this
Agreement with respect to a Fund, the Trust shall pay to Forum such compensation
as shall be payable prior to the effective date of termination.
(b) In connection with the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to reimburse Forum for the
expenses set forth in Clause (iv) of Appendix C hereto. Reimbursements shall be
payable as incurred. In addition, the Trust, on behalf of the applicable Fund,
shall reimburse Forum for all reasonably incurred expenses and employee time (at
150% of salary) attributable to any review of the Trust's accounts and records
by the Trust's independent accountants or any regulatory body outside of routine
and normal periodic reviews. Should the Trust exercise its right to terminate
this Agreement, the Trust, on behalf of the applicable Fund, shall reimburse
Forum for all reasonably incurred out-of-pocket expenses and employee time (at
150% of salary) associated with the copying and movement of records and material
to any successor person and providing assistance to any successor person in the
establishment of the accounts and records necessary to carry out the successor's
responsibilities.
(c) Forum may, with respect to questions of law relating to its
services hereunder, apply to and obtain the advice and opinion of counsel to the
Trust or counsel to Forum; provided, however, that Forum shall in all cases
first reasonably attempt to apply to and obtain the advice and opinion of in-
house counsel to the Administrator. In the event that Forum is unable to
contact in-house counsel to the Administrator, it shall nonetheless inform a
Vice President or more senior person at the Administrator of the matters for
which it intends to seek advice and opinion. The costs of any such advice or
opinion shall be borne by the Trust.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund or
Class on the later of September 17, 1999 or the date of the commencement of
operations of the Fund or Class. Upon effectiveness of this Agreement, it shall
supersede all previous agreements between the parties hereto covering the
subject matter hereof insofar as any such agreement may have been deemed to
relate to the Funds.
(b) This Agreement shall continue in effect with respect to each Fund
until September 30, 2002 (the "Initial Term") and shall continue in effect
thereafter until terminated.
(c) Notwithstanding Section 5(b), this Agreement may be terminated
with respect to any or all Funds at any time after the expiration of the Initial
Term, without the payment of any
-8-
<PAGE>
penalty (i) by the Board on 60 days' written notice to Forum or (ii) by Forum on
60 days' written notice to the Trust.
(d) Notwithstanding Section 5(b), this Agreement may be terminated
by either party hereto at any time without notice, whether prior to or after the
expiration of the Initial Term, if:
(i) the other party breaches any material provision of this
Agreement, the terminating party has provided written notice of such breach
to the breaching party and the breaching party has not cured the breach
within 30 days of receipt of such notice; provided that such termination
notice shall not be given more than 30 days after the breaching party has
cured the breach;
(ii) the other party becomes the subject of any federal or state
bankruptcy proceeding that is not dismissed within 60 days after the
initiation of such proceeding; provided that such termination shall not
occur more than 60 days after the dismissal of such proceeding; or
(iii) the other party (or in the case of Forum, the Administrator) is
convicted of corporate criminal activity.
(e) Notwithstanding Section 5(b), this Agreement may be terminated
by the Trust at any time, whether prior to or after the expiration of the
Initial Term, if:
(i) Forum fails to meet or exceed [ ]% of the Service Standards:
(A) in any three consecutive months; or
(B) in any six months during any consecutive period of twelve
months; or
(ii) the average cumulative Service Level Percentage (as defined
below) is less than [ ]% in any consecutive period of six months.
Compliance with the Service Standards shall be computed as a fraction, the
numerator of which shall be the number of Service Standard criteria that were
met or exceeded in the month and the denominator of which shall be the number of
Service Standard criteria applicable in such month. The Service level
Percentage shall mean such fraction expressed as a percentage.
Nothing in this paragraph (e) shall in any way diminish the Trust's right to
terminate this Agreement in the event of a breach of a material provision of
this Agreement by Forum pursuant to Section 5(d).
(f) Notwithstanding Section 5(b), this Agreement may be terminated
by Forum at any time, whether prior to or after the expiration of the Initial
Term, without the payment of any penalty on 180 days' written notice to the
Trust.
-9-
<PAGE>
(g) The provisions of Sections 2(c), 3, 4, 5(g), 5(h), 7, 8, 9(b), 12,
13 and 14 shall survive any termination of this Agreement.
(h) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares
or one or more classes of Shares after the effectiveness of this Agreement, such
series of Shares or classes of Shares, as the case may be, shall become Funds
and Classes under this Agreement; provided, that such series shall not become
Series hereunder if the Board reasonably determines that Forum is unable to
perform the services.
SECTION 7. CONFIDENTIALITY
Forum agrees to treat all records and other information related to the
Trust as proprietary information of the Trust and, on behalf of itself and its
employees, to keep confidential all such information, except that Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where Forum is advised by reputable counsel that it may be exposed to civil or
criminal contempt proceedings for failure to release the information (provided,
however, that Forum shall seek the approval of the Trust as promptly as possible
so as to enable the Trust to pursue such legal or other action as it may desire
to prevent the release of such information) or when so requested by the Trust.
-10-
<PAGE>
SECTION 8. FORCE MAJEURE
Forum shall not be responsible or 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 civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations
under this Agreement, nothing herein shall be deemed to limit or restrict
Forum's right, or the right of any of Forum's managers, officers or employees
who also may be a trustee, officer or employee of the Trust, or persons who are
otherwise affiliated persons of the Trust, to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, trust, firm, individual or association.
(b) Forum may subcontract any or all of its functions or
responsibilities pursuant to this Agreement to one or more affiliated persons
who agree to comply with the terms of this Agreement; provided, that any such
subcontracting shall not relieve Forum of its responsibilities hereunder. Forum
shall be responsible for the acts and omissions of any such person to the same
extent as if Forum had done such acts or made such omissions itself. Forum may
pay those persons for their services, but no such payment will increase Forum's
compensation or reimbursement of expenses from the Trust.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent
public accountants and shall take reasonable action to make all necessary
information available to the accountants for the performance of the accountants'
duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in
-11-
<PAGE>
asserting any rights or claims under this Agreement, it shall look only to the
assets and property of the Trust or the Fund to which Forum's rights or claims
relate in settlement of such rights or claims, and not to the trustees of the
Trust or the shareholders of the Funds.
SECTION 13. YEAR 2000
Forum confirms that it has taken all reasonable business steps to
ensure that any system or software used in the operation of its business that is
an any way related to the services provided herein:
(i) manages and manipulates data involving all dates from the 20th
and 21st centuries without functional or data abnormality related to such
dates;
(ii) has user interfaces and data fields formatted to distinguish
between dates from the 20th and 21st centuries; and
(iii) represents all data to include indications of the millennium,
century, and decade, as well as the actual year.
SECTION 14. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement; provided,
however, that any damages suffered by the Trust by virtue of the loss by any
Fund of its status as a registered investment company under the 1940 Act shall
in no circumstances be treated as consequential damages for purposes of this
Agreement; provided, further, that the foregoing proviso shall not create any
implication that, in the absence of such proviso, consequential damages would
include any damages of the type or nature referred to therein.
(b) Except for Appendix A to add new Funds and Classes in
accordance with Section 6, no provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly authorized and
executed by both parties hereto.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any
number of counterparts, and all of the counterparts taken together shall be
deemed to constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered
-12-
<PAGE>
severable and not be affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by
the parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the
parties agree that the assets and liabilities of each Fund of the Trust are
separate and distinct from the assets and liabilities of each other Fund and
that no Fund shall be liable or shall be charged for any debt, obligation or
liability of any other Fund, whether arising under this Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or
manager of Forum shall be liable at law or in equity for Forum's obligations
under this Agreement.
(k) Each of the undersigned warrants and represents that they have
full power and authority to sign this Agreement on behalf of the party indicated
and that their signature will bind the party indicated to the terms hereof and
each party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person" and "affiliated person" shall have the meanings
ascribed thereto in the 1940 Act.
-13-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
WELLS FARGO FUNDS TRUST
By:____________________________
[Name]
President
FORUM ACCOUNTING SERVICES, LLC
By:____________________________
Stacey E. Hong
Director
-14-
<PAGE>
WELLS FARGO FUNDS TRUST
FUND ACCOUNTING AGREEMENT
Appendix A
Funds and Classes of the Trust Covered by this Agreement
as of September 17, 1999
--------------------------------------------------------------
Wells Fargo
Funds Trust Funds
--------------------------------------------------------------
1 AGGRESSIVE BALANCED EQUITY
Institutional Class
--------------------------------------------------------------
2 ARIZONA TAX-FREE FUND
Class A
Class B
Institutional Class
--------------------------------------------------------------
3 ASSET ALLOCATION FUND
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
4 CALIFORNIA TAX-FREE BOND FUND
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
5 CALIFORNIA TAX-FREE INCOME FUND
Class A
Institutional Class
--------------------------------------------------------------
6 CALIFORNIA TAX-FREE MONEY MARKET FUND
Class A
Service Class
--------------------------------------------------------------
7 CALIFORNIA TAX-FREE MONEY MARKET TRUST
--------------------------------------------------------------
8 CASH INVESTMENT MONEY MARKET FUND
Institutional Class
Service Class
--------------------------------------------------------------
9 Colorado Tax-Free Fund
Class A
Class B
Institutional Class
--------------------------------------------------------------
10 Corporate Bond Fund
Class A
Class B
Class C
--------------------------------------------------------------
11 Disciplined Growth Fund
--------------------------------------------------------------
12 Diversified Bond Fund
Institutional Class
--------------------------------------------------------------
<PAGE>
--------------------------------------------------------------
Wells Fargo
Funds Trust Funds
--------------------------------------------------------------
13 Diversified Equity Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
14 Diversified Small Cap Fund
Class A
Class B
Institutional Class
--------------------------------------------------------------
15 Equity Index Fund
Class A
Class B
Class O
--------------------------------------------------------------
16 Equity Value Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
17 Government Money Market Fund
Class A
Service Class
--------------------------------------------------------------
18 Growth Balanced Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
19 Growth Equity Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
20 Growth Fund
Class A
Class B
Institutional Class
--------------------------------------------------------------
21 Income Equity Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
22 Income Fund
Class A
Class B
Institutional Class
--------------------------------------------------------------
23 Income Plus Fund
Class A
Class B
Class C
--------------------------------------------------------------
<PAGE>
--------------------------------------------------------------
Wells Fargo
Funds Trust Funds
--------------------------------------------------------------
24 Index Allocation Fund
Class A
Class B
Class C
--------------------------------------------------------------
25 Index Fund
Class I
--------------------------------------------------------------
26 Intermediate Government Income Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
27 International Equity Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
28 International Fund
Class A
Class B
Institutional Class
--------------------------------------------------------------
29 Large Company Growth Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
30 LifePath Opportunity Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
31 LifePath 2010 Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
32 LifePath 2020 Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
33 LifePath 2030 Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
34 LifePath 2040 Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
<PAGE>
--------------------------------------------------------------
Wells Fargo
Funds Trust Funds
--------------------------------------------------------------
35. Limited Term Government Income Fund
Class A
Class B
Institutional Class
--------------------------------------------------------------
36. Limited Term Tax-Free Fund
Institutional Class
--------------------------------------------------------------
37. Minnesota Intermediate Term Tax-Free Fund
Institutional Class
--------------------------------------------------------------
38. Minnesota Tax-Free Fund
Class A
Class B
Institutional Class
--------------------------------------------------------------
39. Moderate Balanced Fund
Institutional Class
--------------------------------------------------------------
40. Money Market Fund
Class A
Class B
--------------------------------------------------------------
41. Money Market Trust
--------------------------------------------------------------
42. National Tax-Free Institutional Money Market Fund
Institutional Class
Service Class
--------------------------------------------------------------
43. National Tax-Free Money Market Fund
Class A
--------------------------------------------------------------
44. National Tax-Free Money Market Trust
--------------------------------------------------------------
45. Oregon Tax-Free Fund
Class A
Class B
Institutional Class
--------------------------------------------------------------
46. Overland Express Sweep Fund
--------------------------------------------------------------
47. Prime Investment Money Market Fund
Service Class
--------------------------------------------------------------
48. Small Cap Fund
Class A
Class B
Class C
--------------------------------------------------------------
49. Institutional Class Small Cap Opportunities Fund
Class A
Class B
Institutional Class
--------------------------------------------------------------
50. Small Cap Value Fund
Class A
Class B
Institutional Class
--------------------------------------------------------------
51. Small Company Growth Fund
--------------------------------------------------------------
52. Stable Income Fund
Class A
Class B
Institutional Class
--------------------------------------------------------------
53. Strategic Income Fund
Institutional Class
--------------------------------------------------------------
<PAGE>
--------------------------------------------------------------
Wells Fargo
Funds Trust Funds
--------------------------------------------------------------
54. Tax-Free Income Fund
Class A
Class B
Class C
Institutional Class
--------------------------------------------------------------
55. 100% Treasury Money Market Fund
Class A
Service Class
--------------------------------------------------------------
56. Treasury Plus Institutional Money Market Fund
Institutional Class
Service Class
--------------------------------------------------------------
57. Treasury Plus Money Market Fund
Class A
--------------------------------------------------------------
58. Variable Rate Government Fund
Class A
--------------------------------------------------------------
59. Wealthbuilder II Growth Portfolio
--------------------------------------------------------------
60. Wealthbuilder II Growth and Income Portfolio
--------------------------------------------------------------
61. Wealthbuilder II Growth Balanced Portfolio
--------------------------------------------------------------
Approved by the Board of Trustees: March 26, 1999
<PAGE>
WELLS FARGO FUNDS TRUST
FUND ACCOUNTING AGREEMENT
Appendix B
Service Standards
as of September 17, 1999
<PAGE>
WELLS FARGO FUNDS TRUST
FUND ACCOUNTING AGREEMENT
Appendix C
Fees and Expenses
as of September 17, 1999
[(i) -(iii) FEES]
(iv) Out-Of-Pocket and Related Expenses
The Trust, on behalf of the applicable Fund, shall reimburse Forum for all
out-of-pocket and ancillary expenses reasonably incurred in providing the
services described in the Fund Accounting Agreement, including but not limited
to the cost of (or appropriate share of the cost of): (i) pricing, paydown,
corporate action, credit and other reporting services, (ii) taxes, (iii) postage
and delivery services, (iv) communications services, (v) electronic or facsimile
transmission services, (vi) reproduction, (vii) printing and distributing
financial statements, (viii) microfilm, microfiche and other storage medium and
(ix) Trust record storage and retention fees. In addition, any other expenses
incurred by Forum at the request or with the consent of the Trust, will be
reimbursed by the Trust on behalf of the applicable Fund.
<PAGE>
Exhibit 99.B(h)(3)
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of May ____, 1999, by and between WELLS FARGO FUNDS TRUST, a
Delaware business trust, having its principal office and place of business at
111 Center Street, Little Rock, Arkansas 72201 (the "Fund"), and BOSTON
FINANCIAL DATA SERVICES, INC. a Massachusetts corporation having its principal
office and place of business at 2 Heritage Drive, Quincy, Massachusetts 02171
(the "Transfer Agent")
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in series, such series shall
be named in the attached Schedule A which may be amended by the parties from
time to time (each such series, together with all other series subsequently
established by the Fund and made subject to this Agreement in accordance with
Section 18, being herein referred to as a "Portfolio," and collectively as the
- ----------
"Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Transfer
Agent as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities, and the
Transfer Agent desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Terms of Appointment and Duties
-------------------------------
1.1 Transfer Agency Services. Subject to the terms and conditions set
forth in this Agreement, the Fund, on behalf of the Portfolios, hereby
employs and appoints the Transfer Agent to act as, and the Transfer
Agent agrees to act as, transfer agent for the Fund's issued and
outstanding shares of beneficial interest, ("Shares") and as dividend
disbursing agent, custodian of certain retirement plans and agent in
connection with any accumulation, open-account or similar plan
provided to the shareholders of each of the respective Portfolios of
the Funds ("Shareholders") and set out in the currently effective
prospectus and statement of additional information ("Prospectus") of
the Fund on behalf of the applicable Portfolio, including without
limitation any periodic investment plan or periodic withdrawal
program. In accordance with procedures established from time to time
by agreement between the Fund on behalf of each of the Portfolios, as
applicable and the Transfer Agent, the Transfer Agent agrees that it
will perform the following services:
(a) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof to the
Custodian of the Fund authorized pursuant to the Fund's Declaration of
Trust (the "Custodian");
1
<PAGE>
(b) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(c) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to the
Custodian;
(d) In respect to the transactions in items (a), (b) and (c) above,
the Transfer Agent shall execute transactions directly with broker-
dealers authorized by the Fund;
(e) At the appropriate time as and when it receives monies paid to it
by the Custodian with respect to any redemption, pay over or cause to
be paid over in the appropriate manner such monies as instructed by
the redeeming Shareholders;
(f) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(g) Prepare and transmit payments (or credit the appropriate
shareholder account) for dividends and distributions declared by the
Fund on behalf of the applicable Portfolio;
(h) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Transfer Agent
of indemnification satisfactory to the Transfer Agent and protecting
the Transfer Agent and the Fund, and the Transfer Agent at its option,
may issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such indemnity;
(i) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(j) Record the issuance of Shares of the Fund and maintain pursuant to
Regulation 17Ad-10(e) of the Securities Exchange Act of 1934, as
amended, (the "Exchange Act") a record of the total number of Shares
of the Fund which are issued and outstanding. The Transfer Agent shall
also provide the Fund on a daily basis with the total number of Shares
which are issued and outstanding and shall have no other obligations
with respect to this item.
1.2 Additional Services. In addition to, and neither in lieu nor in
contravention of, the services set forth in the above paragraph, the
Transfer Agent shall perform the following services:
(a) Other Customary Services. Perform the customary services of a
transfer agent, dividend disbursing agent, custodian of certain
retirement plans and, as relevant, agent in connection with
accumulation, open-account or similar plan (including without
limitation any periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, Shareholder reports and
prospectuses to current Shareholders, withholding taxes on U.S.
resident and non-resident alien
2
<PAGE>
accounts, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing
and mailing confirmation and statements of account to Shareholders for
all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account
information.
(b) Control Book (also known as "Super Sheet"). Maintain a daily
record and produce a daily report for the Fund of all transactions and
receipts and disbursements of money and securities and deliver a copy
of such report for the Fund for each business day to the Fund no later
than 9:00 AM Eastern Time, or such earlier time as the Fund may
reasonably require on the next business day.
(c) "Blue Sky" Reporting. The Fund shall (i) identify to the Transfer
Agent in writing those transactions and assets to be treated as exempt
from blue sky reporting for each State; and (ii) verify the
establishment of transactions for each State on the system prior to
activation and thereafter monitor the daily activity for each State.
The responsibility of the Transfer Agent for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and providing
a system which will enable the Fund to monitor the total number of
Shares sold in each State.
(d) National Securities Clearing Corporation (the "NSCC"). (i) accept
and effectuate the registration and maintenance of accounts through
Networking and the purchase, redemption, transfer and exchange of
shares in such accounts through Fund/SERV (Networking and Fund/SERV
being programs operated by the NSCC on behalf of NSCC's participants,
including the Fund), in accordance with, instructions transmitted to
and received by the Transfer Agent by transmission from NSCC on behalf
of broker-dealers and banks which have been established by, or in
accordance with the instruction of authorized persons, as hereinafter
defined on the dealer file maintained by the Transfer Agent; (ii)
issue instructions to Fund's banks for the settlement of transactions
between the Fund and NSCC (acting on behalf of its broker dealer and
bank participants); (iii) provide account and transaction information
from the affected Fund's records on DST Systems, Inc. computer system
TA2000 ("TA2000 System") in accordance with NSCC's Networking and
Fund/SERV rules for those broker-dealers; and (iv) maintain
Shareholder accounts on TA2000 System through Networking.
(e) New Procedures. New procedures as to who shall provide certain of
these services in Section 1 may be established in writing from time to
time by agreement between the Fund and the Transfer Agent. The
Transfer Agent may at times perform only a portion of these services
and the Fund or its agent may perform these services on the Fund's
behalf.
3
<PAGE>
(f) Conversion Services. Upon completion of the contemplated mutual
fund reorganizations involving the Fund and Norwest Advantage Funds
("NAF"), Transfer Agent shall convert and merge the account
information for SFI and NAF into one platform for the conversion fee
specified in Schedule 1.3(f).
2. Third Party Administrators for Defined Contribution Plans
---------------------------------------------------------
2.1 The Fund may decide to make available to certain of its customers, a
qualified plan program (the "Program") pursuant to which the customers
("Employers") may adopt certain plans of deferred compensation ("Plan
or Plans") for the benefit of the individual Plan participant (the
"Plan Participant"), such Plan(s) being qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended ("Code") and
administered by third party administrators which may be plan
administrators as defined in the Employee Retirement Income Security
Act of 1974, as amended) (the "TPA(s)").
2.2 In accordance with the procedures established in the initial Schedule
--------
2.2 entitled "Third Party Administrator Procedures," as may be amended
---
by the Transfer Agent and the Fund from time to time ("Schedule 2.2"),
------------
the Transfer Agent shall:
(a) Treat and maintain accounts established by the Plans in the name
of the Trustees, Plans or TPA as omnibus accounts; and
(b) Perform all services under Section 1 as transfer agent of the
---------
Funds and not as a record-keeper for the Plans.
2.3 Transactions identified under Section 2.3 of this Agreement shall be
-----------
deemed exception services ("Exception Services") when such
transactions require the Transfer Agent to use methods and procedures
other than those usually employed by the Transfer Agent to perform
services under Section 1 according to the Fund's prospectus, or under
---------
Section 2.2 of this Agreement.
-----------
3. Fees and Expenses
-----------------
3.1 Fee Schedule. For the performance by the Transfer Agent pursuant to
this Agreement, the Fund agrees to pay the Transfer Agent the fees set
forth in the attached fee schedule ("Schedule 3.1"). Such fees and the
------------
out-of-pocket expenses and advances identified under Section 3.2 below
-----------
may be changed from time to time subject to mutual written agreement
between the Fund and the Transfer Agent.
3.2 Out-of-Pocket Expenses. In addition to the fee paid under Section 3.1
-----------
above, the Fund agrees to reimburse the Transfer Agent for out-of-
pocket expenses at cost, including but not limited to confirmation
production, postage, forms, telephone, microfilm, microfiche, records
storage, or advances incurred by the Transfer Agent for the items set
out in Schedule 3.1 attached hereto. In addition, any other expenses
------------
incurred by the Transfer Agent at the request or with the consent of
the Fund, will be reimbursed by the Fund.
4
<PAGE>
3.3 Postage. Postage for mailing of dividends, proxies, Fund reports and
other mailings to all shareholder accounts shall be advanced to the
Transfer Agent by the Fund at least seven (7) days prior to the
mailing date of such materials.
3.4 Invoices. The Fund agrees to pay all fees and reimbursable expenses
within thirty (30) days following the receipt of the respective
billing notice, except for any fees or expenses which are subject to
good faith dispute. In the event of such a dispute, the Fund may only
withhold that portion of the fee or expense subject to the good faith
dispute. The Fund shall notify the Transfer Agent in writing within
ninety (90) calendar days following the receipt of each billing notice
if the Fund is disputing in good faith any amounts already paid.
3.5 Fee Increases. Prices will be increased annually during the initial
three (3) year term of the Agreement. The Transfer Agent will increase
the fees payable under this Agreement, on an annual basis, by an
amount not to exceed change in the CPI Index. In no event, however,
shall such cumulative increase be greater than three percent (3%) over
the fee charged during the previous twelve (12) months. "CPI Index"
shall mean the United States Bureau of Labor Statistics, Consumer
Price Index for All Urban Consumers (CPI-U), All U.S. Cities Average
(1982-1984=100) published by the Bureau of Labor Statistics of the
United States Department of Labor, or such successor index
(appropriately converted to an equivalent reference base) as shall be
published by the Bureau of Labor Statistics.
4. Millennium Date Change
----------------------
4.1 Millennium Date Change. Transfer Agent will take all commercially
reasonable steps to ensure that its products (and those of its third
party providers) are Year 2000 Ready. For purposes of this Agreement,
"Year 2000 Ready" means that the products will operate with dates in
multiple centuries the same way the products operate with dates in
single centuries, including, but not limited to, century recognition
of dates and calculations that correctly compute same century and
multi-century formulas and date values. If any changes are required,
the Transfer Agent will make changes to its computer systems,
including the computer systems provided by DST Systems, Inc. ("DST
Systems"), at a price to be agreed upon by the parties and in a
commercially reasonable time frame and will require third party
providers to do likewise; provided however, if any such changes are
----------------
required pursuant to Section 4 of this Agreement solely because of the
---------
DST Systems, the Fund will not be required to pay a fee or out-of-
pocket expenses to the Transfer Agent for such changes. To the extent
that a change is necessary that will be charged to the Fund and such
change is not precipitated by a condition unique to the Fund, the
price and costs agreed upon will be based only upon the Fund's pro
rata share of such costs and fees spread out over all of the Transfer
Agent's affected customers. The provisions of this Section 4 do not
---------
constitute a certification, guarantee, warranty or indemnity with
respect to Year 2000 Ready Products, but do constitute covenants.
5
<PAGE>
4.2 Year 2000 Project Plans. Transfer Agent agrees that it will provide to
the Funds, no later than the execution date of this Agreement, a copy
of the TA Y2K Report filed with the Securities Exchange Commission and
all required updates thereto promptly. Transfer Agent agrees that it
will cooperate with Fund and its regulators, and the regulators of its
service providers regarding the TA Y2K Report, and all required
updates, required to be filed with the Securities & Exchange
Commission.
5. Performance Standards
---------------------
5.1 Establishing Bench Mark. On or before October 15, 1999 the Transfer
Agent and the Fund will determine a baseline for the establishment of
performance standards and agree upon service fee adjustments as either
a reward or risk to the Transfer Agent based on the relationship of
its performance to such performance standards. Thereafter, such
performance standards and service fee adjustments will to be set forth
in Schedule 5.1 of this Agreement.
------------
5.2 Third Party Study. The parties shall retain, each contributing equally
to the expense, National Quality Review or another firm to be chosen
by the parties ("NQR" herein in any case) to perform a study to
determine a baseline of performance standards to measure accuracy and
timeliness of services. Such study shall use, as a determining factor
in establishing the baseline, periodic Fund provided data which
forecasts predicted market and volume projections.
6. Representations and Warranties of the Transfer Agent
----------------------------------------------------
The Transfer Agent represents and warrants to the Fund that:
6.1 It is a Massachusetts corporation duly organized and existing and in
good standing under the laws of The Commonwealth of Massachusetts.
6.2 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts.
6.3 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
6.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
6.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.
6.6 It carries and will continue to carry general liability, errors and
omissions, fidelity bond and other policies, with limits of not less
than $5 million for aggregate general liability, $20 million for
errors and omissions and $80 million for fidelity bond and upon
written request shall provide certificates of liability insurance to
the Fund.
6
<PAGE>
7. Representations and Warranties of the Fund
------------------------------------------
The Fund represents and warrants to the Transfer Agent that:
7.1 It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
7.2 It is empowered under applicable laws and by its Declaration of Trust
to enter into and perform this Agreement.
7.3 All corporate proceedings required by said Declaration of Trust have
been taken to authorize it to enter into and perform this Agreement.
7.4 It is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended.
7.5 A registration statement under the Securities Act of 1933, as amended
is currently effective and will remain effective, and appropriate
state securities law filings have been made and will continue to be
made, with respect to all Shares of the Fund being offered for sale.
8. Wire Transfer Operating Guidelines/Articles4A of the Uniform Commercial
-----------------------------------------------------------------------
Code
----
8.1 The Transfer Agent is authorized to promptly debit the appropriate
Fund account(s) upon the receipt of a payment order in compliance
with the selected security procedure (the "Security Procedure")
chosen for funds transfer and in the amount of money that the
Transfer Agent has been instructed to transfer. The Transfer Agent
shall execute payment orders in compliance with the Security
Procedure and with the Funds' instructions on the execution date
provided that such payment order is received by the customary
deadline for processing such a request, unless the payment order
specifies a later time. All payment orders and communications
received after the customary deadline will be deemed to have been
received the next business day.
8.2 The Fund acknowledges that the Security Procedure it has designated
on the Fund Selection Form was selected by the Fund from security
procedures offered by the Transfer Agent. The Fund shall restrict
access to confidential information relating to the Security Procedure
to authorized persons as communicated to the Transfer Agent in
writing. The Fund must notify the Transfer Agent immediately if it
has reason to believe unauthorized persons may have obtained access
to such information or of any change in the Fund's authorized
personnel. The Transfer Agent shall verify the authenticity of all
Fund instructions according to the Security Procedure.
8.3 The Transfer Agent shall process all payment orders on the basis of
the account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the
account number, the account number shall take precedence and govern.
7
<PAGE>
8.4 The Transfer Agent reserves the right to decline to process or delay
the processing of a payment order which (a) is in excess of the
collected balance in the account to be charged at the time of the
Transfer Agent's receipt of such payment order; (b) if initiating
such payment order would cause the Transfer Agent, in the Transfer
Agent's sole judgment, to exceed any volume, aggregate dollar,
network, time, credit or similar limits which are applicable to the
Transfer Agent; or (c) if the Transfer Agent, in good faith, is
unable to satisfy itself that the transaction has been properly
authorized. If the Transfer Agent exercises its rights pursuant to
Section 8.4 of this Agreement the Transfer Agent shall notify the
-----------
Funds by confirmation pursuant to Section 8.9 of this Agreement.
-----------
8.5 The Transfer Agent shall use reasonable efforts to act on all
authorized requests to cancel or amend payment orders received in
compliance with the Security Procedure provided that such requests
are received in a timely manner affording the Transfer Agent
reasonable opportunity to act. However, the Transfer Agent assumes no
liability if the request for amendment or cancellation cannot be
satisfied.
8.6 The Transfer Agent shall assume no responsibility for failure to
detect any erroneous payment order provided that the Transfer Agent
complies with the payment order instructions as received and the
Transfer Agent complies with the Security Procedure. The Security
Procedure is established for the purpose of authenticating payment
orders only and not for the detection of errors in payment orders.
8.7 The Transfer Agent shall assume no responsibility for lost interest
with respect to the refundable amount of any unauthorized payment
order, unless the Transfer Agent is notified of the unauthorized
payment order within thirty (30) days of notification by the Transfer
Agent of the execution of such payment order pursuant to Section 8.9
-----------
of this Agreement. In no event (including failure to execute a
payment order) shall the Transfer Agent be liable for special,
indirect or consequential damages, even if advised of the possibility
of such damages.
8.8 When the Fund initiates or receives Automated Clearing House credit
and debit entries pursuant to these guidelines and the rules of the
National Automated Clearing House Association and the New England
Clearing House Association, the Transfer Agent will act as an
Originating Depository Financial Institution and/or Receiving
Depository Financial Institution, as the case may be, with respect to
such entries. Credits given by the Transfer Agent with respect to an
ACH credit entry are provisional until the Transfer Agent receives
final settlement for such entry from the Federal Reserve Bank. If the
Transfer Agent does not receive such final settlement, the Fund
agrees that the Transfer Agent shall receive a refund of the amount
credited to the Fund in connection with such entry, and the party
making payment to the Fund via such entry shall not be deemed to have
paid the amount of the entry.
8
<PAGE>
8.9 Confirmation of Transfer Agent's execution of payment orders shall
ordinarily be provided within twenty-four (24) hours notice and may be
delivered to the Fund through the Transfer Agent's proprietary
information systems, or by facsimile or call-back. Fund must report
any objections to the execution of an order within thirty (30) days.
9. Data Access and Proprietary Information
---------------------------------------
9.1 The Fund acknowledges that the databases, computer programs, screen
formats, report formats (except such screen formats and report formats
as may be necessary to respond to Shareholder problems or inquiries),
interactive design techniques, and documentation manuals furnished to
the Fund by the Transfer Agent as part of the Fund's ability to access
certain Fund related data ("Customer Data") maintained by the Transfer
Agent on data bases under the control and ownership of the Transfer
Agent or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information
(collectively, "Proprietary Information") of substantial value to the
Transfer Agent or other third party. In no sense shall Proprietary
Information be deemed Customer Data. The Fund agrees to treat all
Proprietary Information as proprietary to the Transfer Agent and
further agrees that it shall not divulge any Proprietary Information
to any person or organization except as may be provided hereunder.
Without limiting the foregoing, the Fund agrees for itself and its
employees and agents to:
(a) Use such programs and databases (i) solely on the Fund's
computers, or (ii) solely from equipment at the location agreed to
between the Fund and the Transfer Agent and (iii) solely in accordance
with the Transfer Agent's applicable user documentation;
(b) Refrain from copying or duplicating in any way (other than in the
normal course of performing, processing on the Fund's computer(s)),
the Proprietary Information;
(c) Refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Transfer Agent's instructions;
(d) Refrain from causing or allowing information transmitted from the
Transfer Agent's computer to the Fund's terminal to be retransmitted
to any other computer terminal or other device except as expressly
permitted by the Transfer Agent (such permission not to be
unreasonably withheld);
(e) Allow the Fund to have access only to those authorized
transactions as agreed to between the Fund and the Transfer Agent; and
(f) Honor all reasonable written requests made by the Transfer Agent
to protect at the Transfer Agent's expense the rights of the Transfer
Agent in Proprietary
9
<PAGE>
Information at common law, under federal copyright law and under other
federal or state law.
9.2 Proprietary Information shall not include all or any portion of any of
the foregoing items that: (i) are or become publicly available without
breach of this Agreement; (ii) are released for general disclosure by
a written release by the Transfer Agent; or (iii) are already in the
possession of the receiving party at the time of receipt without
obligation of confidentiality or breach of this Agreement.
9.3 The Fund acknowledges that its obligation to protect the Transfer
Agent's Proprietary Information is essential to the business interest
of the Transfer Agent and that the disclosure of such Proprietary
Information in breach of this Agreement would cause the Transfer Agent
immediate, substantial and irreparable harm, the value of which would
be extremely difficult to determine. Accordingly, the parties agree
that, in addition to any other remedies that may be available in law,
equity, or otherwise for the disclosure or use of the Propriety
Information in breach of this Agreement, the Transfer Agent shall be
entitled to seek and obtain a temporary restraining order, injunctive
relief, or other equitable relief against the continuance of such
breach.
9.4 If the Fund notifies the Transfer Agent that any of the Data Access
Services do not operate in material compliance with the most recently
issued user documentation for such services, the Transfer Agent shall
endeavor in a timely manner to correct such failure. Organizations
from which the Transfer Agent may obtain certain data included in the
Data Access Services are solely responsible for the contents of such
data and the Fund agrees to make no claim against the Transfer Agent
arising out of the contents of such third-party data, including, but
not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL
COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION
THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE TRANSFER
AGENT EXPRESSLY DISCLAIM ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED
HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9.5 If the transactions available to the Fund include the ability to
originate electronic instructions to the Transfer Agent in order to:
(i) effect the transfer or movement of cash or Shares; or (ii)
transmit Shareholder information or other information, then in such
event the Transfer Agent shall be entitled to rely on the validity and
authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Transfer Agent from time to
time and communicated in writing to the Fund for its review prior to
their implementation.
9.6 Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Section 9. The obligations of this
---------
Section shall survive any earlier termination of this Agreement.
10
<PAGE>
10. Indemnification
---------------
10.1 The Transfer Agent shall not be responsible for, and the Fund shall
indemnify and hold the Transfer Agent, and as respects Section
-------
10.1(e), State Street Bank and Trust Company (the "Bank"), harmless
-------
from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of the Transfer Agent or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without negligence or willful
misconduct;
(b) The Fund's lack of good faith, negligence, or willful misconduct
which arise out of the breach of any representation or warranty of
the Fund hereunder;
(c) The reliance upon, and any subsequent use of or action taken or
omitted, by the Transfer Agent, or its agents or subcontractors
on: (i) any information, records, documents, data, stock certificates
or services which are received by the Transfer Agent or its agents or
subcontractors in conformity with procedures established by the
Transfer Agent by machine readable input, facsimile, CRT data entry,
electronic instructions or other similar means authorized by the
Fund, and which have been prepared, maintained or performed by the
Fund or any other person or firm on behalf of the Fund including but
not limited to any previous transfer agent or registrar; (ii) any
instructions or requests of the Fund or any of its officers received
in conformity with a procedure established by the Transfer Agent from
time to time and communicated to the Fund in writing prior to
implementation; (iii) any paper or document, reasonably believed to
be genuine, authentic, or signed by the proper person or persons that
are received in conformity with a procedure established by the
Transfer Agent from time to time and communicated to the Fund in
writing prior to implementation; or (iv) any instruction or opinions
from qualified legal counsel (which may be Fund counsel) with respect
to any matter (e.g., distribution of Shareholder account pursuant to
a divorce decree) arising in connection with the Transfer Agent's
performance of services under this Agreement.
(d) The offer or sale of Shares in violation of federal or state
securities laws or regulations requiring that such Shares be
registered or in violation of any stop order or other determination
or ruling by any federal or any state agency with respect to the
offer or sale of such Shares;
(e) The negotiation and processing of any checks including without
limitation for deposit into the Fund's demand deposit account
maintained by the Transfer Agent; or
(f) Upon the Fund's request entering into any agreements required by
the National Securities Clearing Corporation (the "NSCC") required by
the NSCC for the transmission of Fund or Shareholder data through the
NSCC clearing systems.
11
<PAGE>
10.2 The Fund shall not be responsible for, and the Transfer Agent shall
indemnify and hold the Fund harmless from and against, any and all
losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any actions or failure of
the Transfer Agent to act as a result of the Transfer Agent's lack of
good faith, negligence or willful misconduct.
10.3 Upon the assertion of a claim for which the indemnifying party (the
"Indemnitor") may be required to indemnify the party seeking
indemnity (the "Indemnitee"), the Indemnitee shall promptly notify
the Indemnitor of such assertion, and shall keep the Indemnitor
advised with respect to all developments concerning such claim. The
Indemnitor shall have the option to participate with the Indemnitee
in the defense of such claim or to defend against said claim in its
own name or in the name of the Indemnitee. The Indemnitee shall in no
case confess any claim or make any compromise in any case in which
the Indemnitor may be required to indemnify the Indemnitee except
with the Indemnitor 's prior written consent.
10.4 The parties agree that the Bank shall be a third-party beneficiary to
this Agreement with respect to the indemnification provided in
Section 10.1(e) herein.
---------------
11. Standard of Care
----------------
11.1 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy
of all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to
errors, including encoding and payment processing errors, unless said
errors are caused by its negligence, bad faith, or willful misconduct
or that of its employees or agents, except as provided in Section
-------
11.2 below. The parties agree that any encoding or payment processing
----
errors shall be governed by the above standard of care and the Fund
agrees as between the Fund and the Transfer Agent that the standard
of care created under Section 4-209 of the Uniform Commercial Code is
superseded by Section 11.1 of this Agreement.
------------
11.2 In the case of Exception Services as defined in Sections 2.3 herein,
------------
the Transfer Agent shall be held to a standard of gross negligence.
12. Confidentiality
---------------
12.1 Transfer Agent Proprietary Information. Fund agrees and acknowledges
that it will be exposed to the Services and that, as between Transfer
Agent and the Fund, the Services contain valuable trade secrets of
Transfer Agent embodying substantial creative efforts and
confidential information, ideas and expressions ("Transfer Agent
Proprietary Information"). All Transfer Agent Proprietary Information
will remain the sole property of Transfer Agent and Fund will have no
interest in or rights to such Transfer Agent Proprietary Information
except as expressly granted by this Agreement.
12.2 Fund Proprietary Information. Transfer Agent agrees and acknowledges
that it will be exposed to information concerning the Fund and its
Affiliates' business,
12
<PAGE>
products, proposed products, shareholders and related information,
including without limitation, shareholder data, testing procedures
and pricing policies, along with the record-bearing media containing
such information, all of which constitute confidential and
proprietary information of the Fund ("Fund Proprietary Information").
All Fund Proprietary Information will remain the sole property of the
Fund except the right to use the same to carry out the Services set
forth in this Agreement.
12.3 The Transfer Agent and the Fund agree that they will not, at any time
during the term of this Agreement or after its termination, reveal,
divulge, or make known to any person, firm, corporation or other
business organization, any Shareholder's lists, trade secrets, cost
figures and projections, profit figures and projections, or any other
secret or confidential information whatsoever, whether of the
Transfer Agent or of the Fund, used or gained by the Transfer Agent
or the Fund during performance under this Agreement. The Fund and the
Transfer Agent further covenant and agree that they will not, at any
time during the term of this Agreement or after its termination, use
confidential information of the other party in its own business,
except as necessary to perform the terms of this Agreement. The Fund
and the Transfer Agent further covenant and agree to retain all such
knowledge and information acquired during and after the term of this
Agreement respecting such lists, trade secrets, or any secret or
confidential information whatsoever in trust for the sole benefit of
the Transfer Agent or the Fund and their successors and assigns. In
the event of breach of the foregoing by either party, the remedies
provided by Section 9.3 shall be available to the party whose
-----------
confidential information is disclosed. The above prohibition of
disclosure shall not apply to the extent that the Transfer Agent must
disclose such data to its sub-contractor or Fund agent for purposes
of providing services under this Agreement.
12.4 In the event that any requests or demands are made for the inspection
of the Shareholder records of the Fund, other than request for
records of Shareholders pursuant to standard subpoenas from state or
federal government authorities (i.e., divorce and criminal actions),
the Transfer Agent will notify the Fund and secure instructions from
an authorized officer of the Fund as to such inspection. The Transfer
Agent expressly reserves the right, however, to exhibit the
Shareholder records to any person whenever it is required by law or
court order.
13. Covenants of the Fund and the Transfer Agent
--------------------------------------------
13.1 The Fund shall promptly furnish to the Transfer Agent the following:
(a) A certified copy of the resolution of the Board of Trustees of
the Fund authorizing the appointment of the Transfer Agent and the
execution and delivery of this Agreement; and
(b) A copy of the Fund's Declaration of Trust and all amendments
thereto.
13
<PAGE>
13.2 The Transfer Agent hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of
stock certificates, check forms and facsimile signature imprinting
devices, if any; and for the preparation or use, and for keeping
account of, such certificates, forms and devices.
13.3 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable.
To the extent required by Section 31 of the Investment Company Act of
1940, as amended, and the Rules thereunder, the Transfer Agent agrees
that all such records prepared or maintained by the Transfer Agent
relating to the services to be performed by the Transfer Agent
hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in
accordance with its request.
14. Termination of Agreement
------------------------
14.1 Term. The initial term of this Agreement (the "Initial Term") shall
be three years from the mutual execution of the contract unless
terminated pursuant to the provisions of this Section. Unless a
terminating party gives written notice to the other party ninety (90)
days before the expiration of the Initial Term this Agreement will
renew automatically from year to year ("Renewal Term"). Ninety (90)
days before the expiration of the Initial Term or a Renewal Term the
parties to this Agreement will agree upon a Fee Schedule for the
upcoming Renewal Term.
14.2 Termination for Cause by Fund. The Fund may terminate this Agreement
for default as provided in Section 14.3 herein, in the event that:
------------
(a) Transfer Agent, its employees or affiliated agents becomes unable
to materially perform the services under this Agreement, including
material failure of its operational capability for any reason other
than the actions of the Fund, third parties or as provided in Section
-------
17.3 herein;
----
(b) Testing or a material operational failure of the DST Systems due
to a Year 2000 issue demonstrates that the DST Systems are not Year
2000 Ready as defined in Section 4 of this Agreement;
---------
(c) During the Initial Term (i) the Transfer Agent fails to meet the
performance standards in Section 5 of this Agreement for a period of
---------
seven (7) consecutive months (each month in which performance
standards are met, or before the seventh (7th) consecutive month
requires commencement of a new consecutive month calculation for any
subsequent failure to meet performance standards) (ii) or if any time
during such term there are more than two instances in which a new
consecutive month calculation is commenced as a result of performance
standards being met in the seventh (7th) month; or
14
<PAGE>
(d) The performance of the services by the Transfer Agent becomes
unlawful.
14.3 Default and Cure. If either of the parties to this Agreement becomes
in default in the performance of its duties or obligations under this
Agreement, and such default has a material effect on the other party,
then the non-defaulting party may give notice to the defaulting party
specifying the nature of the default in sufficient detail to permit
the defaulting party to identify and cure the default within thirty
(30) days of receipt of such notice, or within longer periods as the
parties may agree is necessary for such cure. If the defaulting party
fails to cure such default within the 30-day cure period (or such
other time as agreed to by the parties), then the non-defaulting
party may terminate this Agreement immediately upon written notice to
the defaulting party. Such opportunity to cure shall include the
Transfer Agent taking commercially reasonable steps to make the DST
Systems Year 2000 Ready Products.
14.4 Immediate Termination. Either party may terminate this Agreement by
written notice to the other party, effective at any time specified
therein, in the event:
(a) bankruptcy, insolvency, dissolution or liquidation proceedings of
any nature are instituted by or against the other party and such
suit, conservatorship or receivership is not discharged within thirty
(30) days; or
(b) either party to this Agreement discontinues all or a significant
part of its business operations.
14.5 Costs When Fund Terminates. Should the Fund exercise its right to
terminate pursuant to either Sections 14.3 or 14.4 of this Agreement,
---------------------
Transfer Agent agrees that all direct out-of-pocket expenses or costs
associated with the movement of records and material will be borne by
the Transfer Agent.
14.6 Costs When Transfer Agent Terminates or Term Ends. If the Agreement
terminates at the end of the term specified in Section 14.1 of this
------------
Agreement, or the Transfer Agent exercises its right to terminate
pursuant to Sections 14.3 or 14.4 of this Agreement, all direct out-
---------------------
of-pocket expenses or costs associated with the movement of records
and material will be borne by the Fund. The Transfer Agent will
charge, and the Fund will pay for any services provided by the
Transfer Agent in connection with the conversion to a successor
transfer agent. Payment of such expenses or costs shall be in
accordance with Section 3 of this Agreement.
---------
14.7 Confidential Data. Upon termination of this Agreement, each party
shall return to the other party all copies of confidential or
proprietary materials or information received from such other party
hereunder, other than materials or information required to be
retained by such party under applicable laws or regulations.
15
<PAGE>
15. Assignment and Third Party Beneficiaries
----------------------------------------
15.1 Except as provided in Section 16.1, neither this Agreement nor any
------------
rights or obligations hereunder may be assigned by either party
without the written consent of the other party. Any attempt to do so
in violation of this Section shall be void. Unless specifically
stated to the contrary in any written consent to an assignment, no
assignment will release or discharge the assignor from any duty or
responsibility under this Agreement.
15.2 Except as explicitly stated elsewhere in this Agreement, nothing
under this Agreement shall be construed to give any rights or
benefits in this Agreement to anyone other than the Transfer Agent
and the Fund, and the duties and responsibilities undertaken pursuant
to this Agreement shall be for the sole and exclusive benefit of the
Transfer Agent and the Fund. This Agreement shall inure to the
benefit of and be binding upon the parties and their respective
permitted successors and assigns.
15.3 This Agreement does not constitute an agreement for a partnership or
joint venture between the Transfer Agent and the Fund. Other than as
provided in Section 16.1, neither party shall make any commitment
------------
with third parties that are binding on the other party without the
other party's prior written consent.
16. Subcontractors
--------------
16.1 The Transfer Agent may, without further consent on the part of the
Fund, subcontract for the performance hereof with a Transfer Agent
subsidiary or affiliate duly registered as a transfer agent;
provided, however, that the Transfer Agent shall be fully responsible
to the Fund for the acts and omissions of its subsidiary or affiliate
as it is for its own acts and omissions.
16.2 Except as provided in Section 16.4, the Transfer Agent shall be
------------
fully responsible to the Fund for the acts and omissions of any
subcontractor chosen by the Transfer Agent to provide any of the
services described in Sections 1.1, 1.2, or 2.2 of this Agreement.
-------------------------
16.3 Transfer Agent agrees that, as a condition of subcontracting with an
affiliated party to provide Services under this Agreement, it will
require the such affiliated subcontractor to comply with the
following:
(a) the DST's Computer Systems, programs and software meet the
standards specified in Section 4 of this Agreement;
---------
(b) the subcontractor, its employees and agents will agree to abide
by the limitations in Section 12.3 of this Agreement concerning the
------------
disclosure and use of the Fund's Proprietary Information.
16
<PAGE>
16.4 Nothing herein shall impose any duty upon the Transfer Agent
in connection with or make the Transfer Agent liable for the
actions or omissions to act of Airborne Services, Federal
Express, United Parcel Service, the U.S. Mails, the NSCC and
telecommunication companies or such similar third parties
providing similar services, provided, if the Transfer Agent
selected such company, the Transfer Agent shall have exercised
due care in selecting the same.
17. Miscellaneous
-------------
17.1 Amendment. This Agreement may be amended or modified by a
written agreement executed by both parties and authorized or
approved by a resolution of the Board of Trustees of the Fund.
17.2 Massachusetts Law to Apply. This Agreement shall be construed
and the provisions thereof interpreted under and in accordance
with the laws of The Commonwealth of Massachusetts.
17.3 Force Majeure. In the event either party is unable to perform
its obligations under the terms of this Agreement because of
acts of God, strikes, equipment or transmission failure or
damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable
for damages to the other for any damages resulting from such
failure to perform or otherwise from such cause.
(a) Exceptions for Certain Computer Failures. This section
shall not excuse the Transfer Agent's failure to perform based
upon computer equipment failure arising from the Transfer
Agent's failure to meet its obligations under Section 4 of
---------
this Agreement.
(b) Exception Regarding Failure to Comply with Disaster
Recovery Plan. Transfer Agent represents that it has a
reasonable back-up and disaster recovery plan in place that
requires the Transfer Agent to maintain back-up files of the
Fund's data or records required to be maintained under the
Investment Company Act at another location other than the
Transfer Agent's principal place of business. This section
shall not excuse the Transfer Agent's failure to perform based
upon a loss of Fund data unless the Transfer Agent has
maintained back-up files of the Fund's data or records as
noted in Section 17.3 (b) of this Agreement.
----------------
17.4 Consequential Damages. Neither party to this Agreement shall
be liable to the other part for consequential damages under
any provision of this Agreement or for any consequential
damages arising out of any act or failure to act hereunder.
17.5 Survival. All provisions regarding indemnification, warranty,
liability, and limits thereon, and confidentiality and/or
protections of proprietary rights and trade secrets shall
survive the termination of this Agreement.
17
<PAGE>
17.6 Severability. If any provision or provisions of this Agreement
shall be held invalid, unlawful, or unenforceable, the
validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired.
17.7 Priorities Clause. In the event of any conflict, discrepancy
or ambiguity between the terms and conditions contained in
this Agreement and any Schedules or attachments hereto, the
terms and conditions contained in this Agreement shall take
precedence.
17.8 Waiver. No waiver by either party or any breach or default of
any of the covenants or conditions herein contained and
performed by the other party shall be construed as a waiver of
any succeeding breach of the same or of any other covenant or
condition.
17.9 Merger of Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior
agreement with respect to the subject matter hereof whether
oral or written.
17.10 Counterparts. This Agreement may be executed by the parties
herein on any number of counterparts, and all of said
counterparts taken together shall be deemed to constitute one
and the same instrument.
17.11 Reproduction of Documents. This Agreement and all schedules,
exhibits, attachments and amendments hereto may be reproduced
by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process. The parties
hereto each agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial
or administrative proceeding, whether or not the original is
in existence and whether or not such reproduction was made by
a party in the regular course of business, and that any
enlargement, facsimile or further reproduction shall likewise
be admissible in evidence.
17.12 Audit; Annual Financial Statements.
(a) Transfer Agent will cooperate in providing to Fund or its
auditors which shall be a national independent public
accounting firm, at Fund's expense (including time and
materials expense associated with Transfer Agent' staff
participation) any information reasonably requested by Fund or
Fund's auditors which is necessary or required for the
performance by Fund of any audit of the accounts or records of
Services performed by Transfer Agent pursuant to the terms and
conditions of this Agreement to the extent required by law. If
during the course of such audit, the Fund or its auditors
identify a control weakness that could adversely impact
Transfer Agent's ability to materially perform under the terms
and conditions of this Agreement, Fund shall promptly inform
Transfer Agent in writing of such control weakness. The
Transfer Agent shall have ten (10) business days to respond to
this written notice, and thirty (30) days to remedy the
18
<PAGE>
weakness. The Transfer Agent reserves the right to cause its
independent public accounting firm that provided the most
recent Statement of Auditing Standards Number 70 ("SAS 70") to
confirm or refute to the parties any perceived control
weakness.
(b) Transfer Agent shall provide to Fund, upon request, copies
of its SAS 70 Report which has been certified by an external
accounting firm.
17.13 Notices. All notices and other communications as required or
permitted hereunder shall be in writing and sent by first
class mail, postage prepaid, addressed as follows or to such
other address or addresses of which the respective party shall
have notified the other.
(a) If to Boston Financial Data Services, Inc., to:
Boston Financial Data Services, Inc.
Two Heritage Drive
Quincy, Massachusetts 02171
Attention: Legal Department
Facsimile: (617) 774-2287
(b) If to the Fund, to:
Stephens Inc.
111 Center Street
Little Rock, Arkansas 77201
Attention: Richard H. Blank, Jr.
Facsimile: (501) 377-2331 or
(501) 374-1324
18. Additional Funds
----------------
18.1 In the event that the Fund establishes one or more series of
Shares in addition to those listed in Schedule A with respect
to which it desires to have the Transfer Agent render services
as Transfer Agent under the terms hereof, it shall so notify
the Transfer Agent in writing, and if the Transfer Agent
agrees in writing to provide such services, such series of
Shares shall become a Portfolio hereunder.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their name and on their behalf by and through their duly authorized officers,
as of May __, 1999.
WELLS FARGO FUNDS TRUST
BY: ____________________________
Richard H. Blank, Jr.
Treasurer
BOSTON FINANCIAL DATA SERVICES, INC
BY: ______________________________
Linda Kaplan
20
<PAGE>
SCHEDULE A
WELLS FARGO FUNDS TRUST
<TABLE>
<S> <C>
Aggressive Balanced Equity Fund Arizona Tax-Free Fund
Asset Allocation Fund California Tax-Free Bond Fund
California Tax-Free Income Fund California Tax-Free Money Market Fund
California Tax-Free Money Market Trust Cash Investment Money Market Fund
Colorado Tax-Free Fund Corporate Bond Fund
Disciplined Growth Fund Diversified Bond Fund
Diversified Equity Fund Diversified Small Cap Fund
Equity Index Fund Equity Value Fund
Government Money Market Fund Growth Balanced Fund
Growth Equity Fund Growth Fund
Income Equity Fund Income Fund
Income Plus Fund Index Allocation Fund
Index Fund Intermediate Government Income Fund
International Equity Fund International Fund
Large Company Growth Fund Lifepath Opportunity Fund
Lifepath 2010 Fund Lifepath 2020 Fund
Lifepath 2030 Fund Lifepath 2040 Fund
Limited Term Tax-Free Fund Limited Term Government Income Fund
Minnesota Intermediate Tax-Free Fund Minnesota Tax-Free Fund
Moderate Balanced Fund Money Market Fund
Money Market Trust National Tax-Free Fund
National Tax-Free Money Market Fund (Class A) National Tax-Free Money Market Fund (Svc. and
Institutional Classes)
National Tax-Free Money Market Trust Oregon Tax-Free Fund
Overland Express Sweep Fund Ready Cash Investment Fund
Small Cap Fund Small Cap Opportunities Fund
Small Cap Value Fund Small Company Growth Fund
Stable Income Fund Strategic Income Fund (Institutional)
Treasury Plus Institutional Money Market Fund (Service Treasury Plus Money Market Fund (Class A & E)
and Institutional Classes)
100% Treasury Money Market Fund Variable Rate Government Fund
Wealthbuilder II Growth & Income Portfolio Weathbuilder II Growth Balanced Portfolio
Weathbuilder II Growth Portfolio
WELLS FARGO FUNDS TRUST BOSTON FINANCIAL DATA SERVICES, INC.
BY: ________________________________ BY: ________________________________
Richard H. Blank, Jr.
Treasurer
</TABLE>
June __, 1999.
21
<PAGE>
SCHEDULE 2.2
THIRD PARTY ADMINISTRATOR(S) PROCEDURES
1. On each Business Day, the TPA(s) shall receive, on behalf of and as agent
of the Fund(s), Instructions (as hereinafter defined) from the Plan.
Instructions shall mean as to each Fund (i) orders by the Plan for the
purchases of Shares, and (ii) requests by the Plan for the redemption of
Shares; in each case based on the Plan's receipt of purchase orders and
redemption requests by Plan Participants in proper form by the time
required by the term of the Plan, but not later than the time of day at
which the net asset value of a Fund is calculated, as described from time
to time in that Fund's prospectus. Each Business Day on which the TPA
receives Instructions shall be a "Trade Date."
2. The TPA(s) shall communicate the TPA(s)'s acceptance of such Instructions,
to the applicable Plan.
3. On the next succeeding Business Day following the Trade Date on which it
accepted Instructions for the purchase and redemption of Shares, (TD+1),
the TPA(s) shall notify the Transfer Agent of the net amount of such
purchases or redemptions, as the case may be, for each of the Plans. In the
case of net purchases by any Plan, the TPA(s) shall instruct the Trustees
of such Plan to transmit the aggregate purchase price for Shares by wire
transfer to the Transfer Agent on (TD+l). In the case of net redemptions by
any Plan, the TPA(s) shall instruct the Fund's custodian to transmit the
aggregate redemption proceeds for Shares by wire transfer to the Trustees
of such Plan on (TD+1). The times at which such notification and
transmission shall occur on (TD+1) shall be as mutually agreed upon by each
Fund, the TPA(s), and the Transfer Agent.
4. The TPA(s) shall maintain separate records for each Plan, which records
shall reflect Shares purchased and redeemed, including the date and price
for all transactions, and Share balances. The TPA(s) shall maintain on
behalf of each of the Plans a single master account with the Transfer Agent
and such account shall be in the name of that Plan, the TPA(s), or the
nominee of either thereof as the record owner of Shares owned by such Plan.
5. The TPA(s) shall maintain records of all proceeds of redemptions of Shares
and all other distributions not reinvested in Shares.
6. The TPA(s) shall prepare, and transmit to each of the Plans, periodic
account statements showing the total number of Shares owned by that Plan as
of the statement closing date, purchases and redemptions of Shares by the
Plan during the period covered by the statement, and the dividends and
other distributions paid to the Plan on Shares during the statement period
(whether paid in cash or reinvested in Shares).
7. The TPA(s) shall, at the request and expense of each Fund, transmit to the
Plans prospectuses, proxy materials, reports, and other information
provided by each Fund for delivery to its shareholders.
22
<PAGE>
8. The TPA(s) shall, at the request of each Fund, prepare and transmit to each
Fund or any agent designated by it such periodic reports covering Shares of
each Plan as each Fund shall reasonably conclude are necessary to enable
the Fund to comply with state Blue Sky requirements.
9. The TPA(s) shall transmit to the Plans confirmation of purchase orders and
redemption requests placed by the Plans; and
10. The TPA(s) shall, with respect to Shares, maintain account balance
information for the Plan(s) and daily and monthly purchase summaries
expressed in Shares and dollar amounts.
11. Plan sponsors may request, or the law may require, that prospectuses, proxy
materials, periodic reports and other materials relating to each Fund be
furnished to Plan Participants in which event the Transfer Agent or each
Fund shall mail or cause to be mailed such materials to Plan Participants.
With respect to any such mailing. the TPA(s) shall, at the request of the
Transfer Agent or each Fund, provide at the TPA(s)'s expense complete and
accurate set of mailing labels with the name and address of each Plan
Participant having an interest through the Plans in Shares.
WELLS FARGO FUNDS TRUST BOSTON FINANCIAL DATA SERVICES, INC.
BY: ________________________________ BY: ________________________________
Richard H. Blank, Jr.
Treasurer
June __, 1999.
23
<PAGE>
SCHEDULE 3.1
FEES
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
Norwest/Wells Fargo
Full Service
- --------------------------------------------------------------------------------
ANNUAL ACCOUNT SERVICE FEES
- --------------------------------------------------------------------------------
Direct Accounts $ 19.50
Level Three Networked Accounts $ 12.00
Closed Account Fee $ 2.00
Complex Base Fee $100,000
Fees are billable on a monthly basis at the rate of 1/12 of the annual fee. A
charge is made for an account in the month that an account opens or closes.
- --------------------------------------------------------------------------------
ACTIVITY BASED FEES
- --------------------------------------------------------------------------------
Telephone Calls $ 3.00/each
- --------------------------------------------------------------------------------
CONVERSION FEES
- --------------------------------------------------------------------------------
Per Account Fee $ 2.00
- --------------------------------------------------------------------------------
IRA CUSTODIAL FEES
- --------------------------------------------------------------------------------
Annual Maintenance $ 10.00/account*
- --------------------------------------------------------------------------------
DEDICATED PROGRAMMING
- --------------------------------------------------------------------------------
Per Dedicated Associate $150,000/per year
- --------------------------------------------------------------------------------
OUT-OF-POCKET EXPENSES BILLED AS INCURRED
- --------------------------------------------------------------------------------
These fees will be subject to an annual Cost of Living Adjustment based on
regional consumer price index.
*Paid by shareholder.
For purposes of the complex base fee, the term "complex" includes all the of the
Portfolios of Stagecoach Funds, Inc., Stagecoach Trust, Life & Annuity Trust,
Norwest Advantage Funds and Norwest Select Trust. After the closing of the
Reorganization of the Stagecoach and Norwest Fund families, the term "complex"
includes all of the Portfolios of Wells Fargo Funds Trust and Wells Fargo
Variable Trust,
24
<PAGE>
provided that the total amount of CUSIP numbers for the complex does not exceed
150. For each additional CUSIP number, the complex base fee will increase by
$7,000 per year.
Out-of-Pocket expenses include but are not limited to: confirmation statements,
investor statements, postage, forms, audio response, telephone, records
retention, customized programming/enhancements, federal wire, transcripts,
microfilm, microfiche, and expenses incurred at the specific direction of the
fund.
WELLS FARGO FUNDS TRUST BOSTON FINANCIAL DATA SERVICES, INC.
BY: ________________________________ BY: ________________________________
Richard H. Blank, Jr.
Treasurer
June __, 1999.
25
<PAGE>
Exhibit 99.B(h)(4)
WELLS FARGO FUNDS TRUST
SHAREHOLDER SERVICING PLAN
WHEREAS, Wells Fargo Funds Trust ("Trust") is registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust desires to adopt a Shareholder Servicing Plan (the
"Plan") on behalf of the classes of shares of each Fund listed in Appendix A as
it may be amended from time to time (each, a "Fund" and, collectively, the
"Funds") and the Board of Trustees, including a majority of the Qualified
Trustees (as defined below), has determined that there is a reasonable
likelihood that adoption of the Plan will benefit each class of each Fund listed
in Appendix A and its shareholders;
NOW THEREFORE, each Fund hereby adopts the Plan on behalf of each class
of each Fund listed in Appendix A on the following terms and conditions:
Section 1. The Trust, on behalf of each class of each Fund listed in
Appendix A, may execute and deliver written agreements based substantially on
the form attached hereto as Appendix B or on any other form duly approved by the
Trust's Board of Trustees ("Agreements") with broker/dealers, banks and other
financial institutions that are dealers of record or holders of record or which
have a servicing relationship with the beneficial owners of shares of the Funds
("Servicing Agents"). Pursuant to such Agreements, Servicing Agents shall
provide support services as set forth therein to their clients who beneficially
own shares of a Fund in consideration of a fee payable from the assets of each
class of each Fund listed in Appendix A, computed monthly in the manner set
forth in such Fund's then current prospectus, at the annual rates set forth in
Appendix A. The Trust's distributor, administrator and adviser, and their
respective affiliates, are eligible to become Servicing Agents and to receive
fees under the Plan. All expenses incurred by a class of shares of a Fund in
connection with the Agreements and the implementation of the Plan shall be borne
entirely by the holders of that class of shares.
Section 2. The Trust's Officers shall monitor, or shall cause the
Trust's administrator to monitor, the arrangements pertaining to the Trust's
Agreements with Servicing Agents.
Section 3. The Plan shall be effective with respect to each class of a
Fund listed on Appendix A, (or each class of a Fund added to Appendix A from
time to time): (a) on the date upon which it is approved for such class by vote
of a majority of the Trustees of the Trust, including a majority of the
Qualified Trustees, cast in person at a meeting called for the purpose of voting
on the approval of the Plan for such class; or (b) on the date the class
commences operations, if such date is later.
1
<PAGE>
Section 4. Unless earlier terminated, the Plan shall continue in effect
for a period of one year from its effective date and shall continue thereafter
for successive annual periods, provided that such Plan is reapproved at least
annually, with respect to a class or classes of shares of a Fund by vote of a
majority of the Trustees of the Trust, including a majority of the Qualified
Trustees, cast in person at a meeting called for the purpose of voting on such
reapproval.
Section 5. So long as the Plan is in effect, the Trust shall provide, or
shall cause the Trust's administrator to provide, to the Trust's Board of
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended pursuant to the Plan and the purposes for which such
expenditures were made.
Section 6. The Plan may be amended at any time with respect to a class
or classes of shares of a Fund by the Trustees of the Trust, provided that any
material amendment of the terms of the Plan (including a material increase of
the fee payable hereunder) shall become effective only upon the approvals set
forth in Section 4.
Section 7. The Plan may be terminated with respect to any class at any
time by vote of a majority of the Qualified Trustees.
Section 8. While the Plan is in effect, the selection and nomination of
the Trustees who are not interested persons of the Trust shall be committed to
the discretion of such Trustees who are not interested persons of the Trust.
Section 9. Notwithstanding anything herein to the contrary, no Fund or
class of shares shall be obligated to make any payments under the Plan that
exceed the maximum amounts payable under Rule 2830 of the Conduct Rules of the
National Association of Securities Dealers, Inc.
Section 10. The Trust shall preserve copies of the Plan, each Agreement,
and each written report presented to the Trust's Board of Trustees pursuant to
Section 3 hereof, for a period of not less than six years from the date of the
Plan, Agreement or report, as the case may be, the first two years in an easily
accessible place.
Section 11. The provisions of the Plan are severable for each class of
each Fund listed in Appendix A, and whenever any action is to be taken with
respect to the Plan, such action shall be taken separately for each such class
affected.
Section 12. As used in the Plan, (a) the term "interested person" shall
have the meaning given it in the 1940 Act and the rules and regulations
thereunder, subject to such exemption or interpretation as may be provided by
the Securities and Exchange Commission or the staff thereof, and (b) the term
"Qualified Trustees" shall mean the Trustees of the Trust who (i) are not
"interested persons" of the Trust and (ii) have no direct or indirect financial
interest in the operation of the Plan or in any Agreements.
2
<PAGE>
APPENDIX A
----------
-----------------------------------------------------------------------------
Funds Trust Maximum
Shareholder
Funds and Share Classes Servicing Fee
-----------------------------------------------------------------------------
1. Arizona Tax-Free Fund
Class A 0.25
Class B 0.25
-----------------------------------------------------------------------------
2. Asset Allocation Fund
Class A 0.10
Class B 0.10
Class C 0.10
-----------------------------------------------------------------------------
3. California Tax-Free Bond Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
4. California Tax-Free Income Fund
Class A 0.25
-----------------------------------------------------------------------------
5. California Tax-Free Money Market Fund
Class A 0.25
-----------------------------------------------------------------------------
6. Cash Investment Money Market Fund
Service Class 0.25
-----------------------------------------------------------------------------
7. Colorado Tax-Free Fund
Class A 0.25
Class B 0.25
-----------------------------------------------------------------------------
8. Corporate Bond Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
9. Diversified Equity Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
10. Diversified Small Cap Fund
Class A 0.25
Class B 0.25
Institutional Class 0.10
-----------------------------------------------------------------------------
11. Equity Index Fund
Class A 0.25
Class B 0.25
Class O 0.20
-----------------------------------------------------------------------------
12. Equity Value Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
13. Government Money Market Fund
Class A 0.25
-----------------------------------------------------------------------------
14. Growth Balanced Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
15. Growth Equity Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
A-1
<PAGE>
-----------------------------------------------------------------------------
Funds Trust Maximum
Shareholder
Funds and Share Classes Servicing Fee
-----------------------------------------------------------------------------
16. Growth Fund
Class A 0.25
Class B 0.25
-----------------------------------------------------------------------------
17. Income Equity Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
18. Income Fund
Class A 0.25
Class B 0.25
-----------------------------------------------------------------------------
19. Income Plus Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
20. Index Allocation Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
21. Intermediate Government Income Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
22. International Equity Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
23. International Fund
Class A 0.25
Class B 0.25
-----------------------------------------------------------------------------
24. Large Company Growth Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
25. LifePath Opportunity Fund
Class A 0.25
Class B 0.25
Class C 0.25
Institutional Class 0.25
-----------------------------------------------------------------------------
26. LifePath 2010 Fund
Class A 0.25
Class B 0.25
Class C 0.25
Institutional Class 0.25
-----------------------------------------------------------------------------
27. LifePath 2020 Fund
Class A 0.25
Class B 0.25
Class C 0.25
Institutional Class 0.25
-----------------------------------------------------------------------------
28. LifePath 2030 Fund
Class A 0.25
Class B 0.25
Class C 0.25
Institutional Class 0.25
-----------------------------------------------------------------------------
A-2
<PAGE>
-----------------------------------------------------------------------------
Funds Trust Maximum
Shareholder
Funds and Share Classes Servicing Fee
-----------------------------------------------------------------------------
29. LifePath 2040 Fund
Class A 0.25
Class B 0.25
Class C 0.25
Institutional Class 0.25
-----------------------------------------------------------------------------
30. Limited Term Government Income Fund
Class A 0.25
Class B 0.25
-----------------------------------------------------------------------------
31. Minnesota Tax-Free Fund
Class A 0.25
Class B 0.25
-----------------------------------------------------------------------------
32. Money Market Fund
Class A 0.25
Class B 0.25
-----------------------------------------------------------------------------
33. National Tax-Free Institutional Money Market Fund
Service Class 0.25
-----------------------------------------------------------------------------
34. National Tax-Free Money Market Fund
Class A 0.25
-----------------------------------------------------------------------------
35. Oregon Tax-Free Fund
Class A 0.25
Class B 0.25
-----------------------------------------------------------------------------
36. Overland Express Sweep Fund 0.30
-----------------------------------------------------------------------------
37. Prime Investment Money Market Fund
Service Class 0.25
-----------------------------------------------------------------------------
38. Small Cap Fund
Class A 0.25
Class B 0.25
Class C 0.25
Institutional Class 0.10
-----------------------------------------------------------------------------
39. Small Cap Opportunities Fund
Class A 0.25
Class B 0.25
Institutional Class 0.10
-----------------------------------------------------------------------------
40. Small Cap Value Fund
Class A 0.25
Class B 0.25
Institutional Class 0.10
-----------------------------------------------------------------------------
41. Small Company Growth Fund 0.10
-----------------------------------------------------------------------------
42. Stable Income Fund
Class A 0.25
Class B 0.25
-----------------------------------------------------------------------------
43. Tax-Free Income Fund
Class A 0.25
Class B 0.25
Class C 0.25
-----------------------------------------------------------------------------
44. 100% Treasury Money Market Fund
Class A 0.25
Service Class 0.25
-----------------------------------------------------------------------------
A-3
<PAGE>
-----------------------------------------------------------------------------
Funds Trust Maximum
Shareholder
Funds and Share Classes Servicing Fee
-----------------------------------------------------------------------------
45. Treasury Plus Institutional Money Market Fund
Service Class 0.25
-----------------------------------------------------------------------------
46. Treasury Plus Money Market Fund
Class A 0.25
-----------------------------------------------------------------------------
47. Variable Rate Government Fund
Class A 0.25
-----------------------------------------------------------------------------
Fees payable to a Servicing Agent are expressed as a percentage of the average
daily net asset value of the shares of the specified class of the particular
Fund beneficially owned by or attributable to clients of the Servicing Agent.
Approved by the Board of Trustees: March 26, 1999
A-4
<PAGE>
Exhibit 99.B(h)(5)
Wells Fargo Funds Trust
FORM OF SHAREHOLDER SERVICING AGREEMENT
THIS SHAREHOLDER SERVICING AGREEMENT ("Agreement"), dated as of
[____________ __, 1999], is made between Wells Fargo Funds Trust (the "Trust"),
a Delaware business trust, on behalf of the classes of shares of the Funds of
the Trust listed in the attached Appendix, as it may be amended from time to
time, (each a "Class" and a "Fund" and, collectively, the "Classes" and the
"Funds"), and _______________, as shareholder servicing agent ("Servicing
Agent");
WHEREAS, shares of beneficial interest of a Fund of the Trust (the
"Shares") may be purchased or redeemed through a broker/dealer or financial
institution that has entered into a shareholder servicing agreement with the
Trust on behalf of the Fund; and
WHEREAS, the Servicing Agent wishes to facilitate purchases and
redemptions of Shares by its customers (the "Customers") and wishes to act as
the Customers' agent in performing certain administrative functions in
connection with transactions in Shares and to provide related services to the
Customers in connection with their investments in a Fund; and
WHEREAS, it is in the best interests of the Funds to make the services of
the Servicing Agent available to the Customers who are or may become
shareholders of the Funds;
NOW THEREFORE, the Trust, on behalf of its Funds, and the Servicing Agent
hereby agree as follows:
1. Appointment. The Servicing Agent hereby agrees to perform certain
-----------
shareholder services with respect to the Funds listed in the attached Appendix.
The Servicing Agent's appointment is not exclusive.
2. Services to be Performed.
------------------------
2.1 Shareholder Services. The Servicing Agent shall be responsible
--------------------
for:
(a) establishing and maintaining accounts and records relating
to Customers that invest in Shares;
(b) answering Customer inquiries regarding account status and
history, and the manner in which purchases, exchanges and
redemptions of Shares may be effected;
(c) assisting Customers in designating and changing dividend
options (as available), account designations and addresses;
(d) processing and verifying purchase, redemption and exchange
transactions;
(e) processing and verifying the wiring or other transfer of
funds to and from Customer accounts in connection with
Customer orders to purchase or redeem Shares;
(f) furnishing (either separately or on an integrated basis with
other reports sent to the Customer), or monitoring the
furnishing of, account statements and confirmations of
transactions in the Customer's account;
1
<PAGE>
(g) providing necessary personnel and facilities to establish
and maintain Customer accounts and records and to provide
the other services contemplated hereby;
(h) providing such other shareholder liaison or related services
as the Funds or a Customer may reasonably request.
2.2 Standards. All services to be performed by the Servicing Agent
---------
hereunder shall be performed in a professional, competent and timely manner,
subject to the supervision of the Board of Trustees and Officers of the Trust.
Any detailed operating standards or procedures to be followed by the Servicing
Agent in performing the services described above shall be determined from time
to time by mutual agreement between the Servicing Agent and the Trust. The
Servicing Agent shall act as agent for Customers only and shall have no
authority to act as agent for the Funds.
3. Fees. As full compensation for the services described in Section 2
----
and expenses incurred by the Servicing Agent, the Servicing Agent shall receive
a fee, payable by each of the Classes of Shares of the Funds as indicated in the
attached Appendix. This fee will be payable as agreed by the Funds and the
Servicing Agent, but no more frequently than monthly. Notwithstanding anything
herein to the contrary, the Trust shall not be obligated to make any payments
under this Agreement that exceed the maximum amounts payable under Rule 2830 of
the Conduct Rules of National Association of Securities Dealers, Inc. The fees
indicated in the attached Appendix constitute all fees to be paid to the
Servicing Agent by the Trust for providing the shareholder services contemplated
hereby.
4. Information Pertaining to the Shares. The Servicing Agent and its
------------------------------------
officers, employees and agents are not authorized to make any representations
concerning the Trust, a Fund or the Shares of any Class except to communicate to
Customers accurately factual information contained in the relevant Fund's
prospectus and statement of additional information and objective historical
performance information.
During the term of this Agreement, the Funds agree to furnish the
Servicing Agent all prospectuses, statements of additional information, proxy
statements, reports to shareholders, sales literature, or other materials the
Funds distributes generally to shareholders of the Funds or the public. The
Funds shall furnish or otherwise make available to the Servicing Agent such
other information relating to the business affairs of the Funds as the Servicing
Agent may, from time to time, reasonably request in order to discharge its
obligations hereunder.
5. Security. The Servicing Agent represents and warrants that various
--------
procedures and systems that it has implemented with regard to safeguarding from
loss or damage attributable to fire, theft or any other cause the Trust records
and other data and the Servicing Agent's records, data, equipment, facilities
and other property used in the performance of its obligations hereunder are
adequate; and that it will make such changes therein from time to time as in its
judgment are required for the secure performance of its obligations hereunder.
6. Compliance with Laws. The Servicing Agent shall comply with all
--------------------
applicable federal and state laws and regulations. The Servicing Agent
represents and warrants to the Trust that the performance of all its obligations
hereunder will comply with all applicable laws and regulations, the provisions
of its charter documents and by-laws and all material contractual obligations
binding upon the Servicing Agent.
7. Force Majeure. The Servicing Agent shall not be liable or
-------------
responsible for delays or errors by reason of circumstances beyond its control,
including, but not limited to, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdown, flood or
catastrophe, acts of God, insurrection, war, riots or failure of communication
systems or power supply.
8. Indemnification. To the extent that the Servicing Agent acts in
---------------
good faith and without negligence or willful misconduct, Servicing Agent shall
not be responsible for, and the Fund shall indemnify and hold the Servicing
Agent harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities arising out of and attributable
to all actions of Servicing Agent, its directors,
2
<PAGE>
officers and employees taken pursuant to this Agreement. The Servicing Agent
shall indemnify and hold the Fund harmless from and against any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liabilities
arising out of or attributable to the lack of good faith, negligence or willful
misconduct of the Servicing Agent, its directors, officers and employees in the
performance of the Servicing Agent's obligations under this Agreement.
9. Representations. By your written acceptance of this Agreement, you
---------------
represent, warrant and agree that: (i) the compensation payable to you in
connection with the investment of your Clients' assets in Shares will be
disclosed by you to your Clients, will be authorized by your Clients and will
not be excessive; and (ii) the services provided by you under this Agreement
will in no event be primarily intended to result in the sale of Shares.
10. Termination. Notwithstanding anything herein to the contrary, this
-----------
Agreement may be terminated at any time, without payment of any penalty, by
either party upon ninety (90) days written notice to the other party.
11. Non-Exclusivity. Nothing in this Agreement shall limit or restrict
---------------
the right of the Servicing Agent to engage in any other business or to render
services of any kind to any other corporation, firm, individual or association.
Nothing in this Agreement shall limit or restrict the right of the Trust to
engage other broker/dealers or financial institutions to perform the same or
similar services for their customers that invest in Shares.
12. Amendments. This Agreement shall become effective upon receipt by
----------
us of a signed copy hereof, and shall cancel and supersede any and all prior
Shareholder Servicing Agreements or similar arrangements or contracts relating
to the provision of shareholder services. Any amendments to this Agreement
shall be deemed accepted by you, and will take effect with respect to, and on
the date of, any provision of shareholder services by you after the date set
forth in any notice of amendment sent by us to you.
13. Limitation of Liability. The Servicing Agent hereby agrees that
-----------------------
obligations assumed by the Trust pursuant to this Agreement shall be limited in
all cases to the Funds and their assets and that the Servicing Agent shall not
seek satisfaction of any such obligations from the Board of Trustees or any
individual Trustee of the Trust. The Servicing Agent further agrees that all
obligations of a Fund hereunder shall be solely the obligations of such Fund.
14. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the day and year first stated above.
WELLS FARGO FUNDS TRUST, on behalf of the
classes of shares of the Funds listed in the
attached Appendix
By:_______________________________________
Name: [Officer of Trust]
Title: [Title or Officer]
[NAME OF SERVICING AGENT]
By:________________________________
Name: [Officer of Servicing Agent]
Title: [Title of Officer]
3
<PAGE>
APPENDIX
--------
[Applicable Funds of Funds Trust to be inserted]
Approved as to Form: March 26, 1999
A-1
<PAGE>
EXHIBIT 99.B(i)
[MORRISON & FOERSTER LLP LETTERHEAD]
May 28, 1999
Wells Fargo Funds Trust
111 Center Street
Little Rock, Arkansas 72201
Re: Shares of Common Stock of
Wells Fargo Funds Trust
-----------------------
Ladies/Gentlemen:
We refer to the Registration Statement on Form N-1A (SEC File Nos. 333-
74295 and 811-09253) (the "Registration Statement") of Wells Fargo Funds Trust
(the "Trust") relating to the registration of an indefinite number of shares of
common stock of the Trust (collectively, the "Shares").
We have been requested by the Trust to furnish this opinion as Exhibit
(i) to the Registration Statement.
We have examined documents relating to the organization of the Trust and
its series and the authorization and issuance of shares of its series.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance and sale of the Shares by the Trust, upon completion of such
corporate action as is deemed necessary or appropriate, will be duly and validly
authorized by such corporate action and assuming delivery by sale or in accord
with the Trust's dividend reinvestment plan in accordance with the description
set forth in the Fund's current prospectus under the Securities Act of 1933, as
amended, the Shares will be legally issued, fully paid and nonassessable by the
Trust.
<PAGE>
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
In addition, we hereby consent to the use of our name and to the
reference to the description of advice rendered by our firm under the heading
"Counsel" in the Statement of Additional Information, which is included as part
of the Registration Statement.
Very truly yours,
/s/ MORRISON & FOERSTER LLP
------------------------------------------
MORRISON & FOERSTER LLP
<PAGE>
Exhibit 99.B(m)
WELLS FARGO FUNDS TRUST
DISTRIBUTION PLAN
WHEREAS, Wells Fargo Funds Trust ("Trust") is registered as an open-
end management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust desires to adopt a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act on behalf of the classes of shares of
each Fund listed in Appendix A as it may be amended from time to time (each, a
"Fund" and, collectively, the "Funds") and the Board of Trustees, including a
majority of the Qualified Trustees (as defined below), has determined that there
is a reasonable likelihood that adoption of the Plan will benefit each class of
each Fund listed in Appendix A and its shareholders;
NOW THEREFORE, each Fund hereby adopts the Plan on behalf of each
class of each Fund listed in Appendix A, in accordance with Rule 12b-1 under the
1940 Act, on the following terms and conditions:
Section 1. The Trust, on behalf of each class of each Fund listed in
Appendix A, may pay to the principal underwriter(s) of such class (the
"Distributor(s)"), as compensation for services or other activities that are
primarily intended to result in the sale of shares, or reimbursement for
expenses incurred in connection with services or other activities that are
primarily intended to result in the sale of shares, a monthly amount that is no
higher than the annual rates as set forth on Appendix A. Subject to such maximum
annual rates, the actual amount payable to the Distributor(s) shall be
determined from time to time by mutual agreement between the Trust and the
Distributor(s). The Distributor(s) may enter into selling agreements with one or
more selling agents under which such agents may receive compensation for
distribution-related services from the Distributor(s), including, but not
limited to, commissions or other payments to such agents based on the average
daily net assets of Fund shares attributable to them. The Distributor(s) may
retain any portion of the amount payable hereunder to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses.
Section 2. The Plan shall be effective with respect to each class of a
Fund listed on Appendix A, (or each class of a Fund added to Appendix A from
time to time): (a) on the date upon which it is approved for such class (i) by
vote of a majority of the Trustees of the Trust, including a majority of the
Qualified Trustees, cast in person at a meeting called for the purpose of voting
on the approval of the Plan for such class, and (ii) by at least a majority of
the outstanding voting securities of the class or Fund, if required; or (b) on
the date the class commences operations, if such date is later.
Section 3. Unless earlier terminated, the Plan and each related
agreement shall continue in effect for a period of one year from its respective
effective date and shall continue
1
<PAGE>
thereafter for successive annual periods, provided that such Plan and
agreement(s) are reapproved at least annually by vote of a majority of the
Trustees of the Trust, including a majority of the Qualified Trustees, cast in
person at a meeting called for the purpose of voting on such reapproval.
Section 4. So long as the Plan is in effect, the Trust shall provide,
or shall cause the Distributor(s) to provide, to the Trust's Board of Trustees,
and the Trustees shall review, at least quarterly, a written report of the
amounts expended by the Trust under the Plan and each related agreement and the
purposes for which such expenditures were made.
Section 5. All agreements related to the Plan shall be in writing and
shall be approved by vote of a majority of both (a) the Trustees of the Trust
and (b) the Qualified Trustees, cast in person at a meeting called for the
purpose of voting on such approval. Any agreement related to the Plan shall
provide:
A. That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Qualified
Trustees or by vote of a majority of the outstanding voting
securities of such class of such Fund, on not more than 60 days'
written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of
its assignment.
Section 6. The Plan may not be amended to increase materially the
amount that may be expended by a class of a Fund pursuant to the Plan without
the approval by a vote of a majority of the outstanding voting securities of
such class of such Fund, and no material amendment to the Plan shall be made
unless approved by vote of a majority of both (a) the Trustees of the Trust and
(b) the Qualified Trustees, cast in person at a meeting called for the purpose
of voting on such approval.
Section 7. The Plan may be terminated with respect to any class at any
time by vote of a majority of the Qualified Trustees or by vote of a majority of
the outstanding voting securities of the class.
Section 8. While the Plan is in effect, the selection and nomination
of each Trustee who is not an interested person of the Trust shall be committed
to the discretion of the Trustees who are not interested persons.
Section 9. To the extent any payments made by the Fund pursuant to a
Shareholder Servicing Plan and Servicing Agreement are deemed to be payments for
the financing of any activity primarily intended to result in the sale of shares
within the context of Rule 12b-1 under the 1940 Act, such payments shall be
deemed to have been approved pursuant to the Plan. Notwithstanding anything
herein to the contrary, no Fund or class of shares shall be obligated to make
any payments under the Plan that exceed the maximum amounts payable under Rule
2830 of the Conduct Rules of the National Association of Securities Dealers,
Inc.
2
<PAGE>
Section 10. The Trust shall preserve copies of the Plan, each related
agreement and each written report presented to the Trust's Board of Trustees
pursuant to Section 4 hereof, for a period of not less than six years from the
date of the Plan, agreement or report, as the case may be, the first two years
in an easily accessible place.
Section 11. The provisions of the Plan are severable for each class of
each Fund listed in Appendix A, and whenever any action is to be taken with
respect to the Plan, such action shall be taken separately for each such class
affected.
Section 12. As used in the Plan, (a) the terms "assignment",
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings given them in the 1940 Act and
the rules and regulations thereunder, subject to such exemption or
interpretation as may be provided by the Securities and Exchange Commission or
the staff thereof, and (b) the term "Qualified Trustees" shall mean the Trustees
of the Trust who (i) are not "interested persons" of the Trust and (ii) have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan. The agreement(s) between the Trust and its
Distributor(s) shall be considered to be agreements related to the Plan. The
agreement(s) between the Distributor(s) and any selling agents shall not be
considered to be agreements related to the Plan.
Approved: March 26, 1999
3
<PAGE>
APPENDIX A
----------
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Funds Trust Maximum
Funds and Share Classes Rule 12b-1 Fee
------------------------------------------------------------------------
<S> <C>
1. Arizona Tax-Free Fund
Class B 0.75
------------------------------------------------------------------------
2. Asset Allocation Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
3. California Tax-Free Bond Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
4. Colorado Tax-Free Fund
Class B 0.75
------------------------------------------------------------------------
5. Corporate Bond Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
6. Diversified Equity Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
7. Diversified Small Cap Fund
Class B 0.75
------------------------------------------------------------------------
8. Equity Index Fund
Class B 0.75
------------------------------------------------------------------------
9. Equity Value Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
10. Growth Balanced Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
11. Growth Equity Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
12. Growth Fund
Class B 0.75
------------------------------------------------------------------------
13. Income Equity Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
14. Income Fund
Class B 0.75
------------------------------------------------------------------------
15. Income Plus Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
16. Index Allocation Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
17. Intermediate Government Income Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Funds Trust Maximum
Funds and Share Classes Rule 12b-1 Fee
------------------------------------------------------------------------
<S> <C>
18. International Equity Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
19. International Fund
Class B 0.75
------------------------------------------------------------------------
20. Large Company Growth Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
21. LifePath Opportunity Fund
Class A 0.25
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
22. LifePath 2010 Fund
Class A 0.25
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
23. LifePath 2020 Fund
Class A 0.25
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
24. LifePath 2030 Fund
Class A 0.25
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
25. LifePath 2040 Fund
Class A 0.25
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
26. Limited Term Government Income Fund
Class B 0.75
------------------------------------------------------------------------
27. Minnesota Tax-Free Fund
Class B 0.75
------------------------------------------------------------------------
28. Money Market Fund
Class B 0.75
------------------------------------------------------------------------
29. Oregon Tax-Free Fund
Class B 0.75
------------------------------------------------------------------------
30. Overland Express Sweep Fund 0.30
------------------------------------------------------------------------
31. Small Cap Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
32. Small Cap Opportunities Fund
Class B 0.75
------------------------------------------------------------------------
33. Small Cap Value Fund
Class B 0.75
------------------------------------------------------------------------
34. Stable Income Fund
Class B 0.75
------------------------------------------------------------------------
35. Tax-Free Income Fund
Class B 0.75
Class C 0.75
------------------------------------------------------------------------
36. Wealthbuilder II Growth & Income Portfolio 0.75
------------------------------------------------------------------------
37. Wealthbuilder II Growth Balanced Portfolio 0.75
------------------------------------------------------------------------
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Funds Trust Maximum
Funds and Share Classes Rule 12b-1 Fee
------------------------------------------------------------------------
<S> <C>
38. Wealthbuilder II Growth Portfolio 0.75
------------------------------------------------------------------------
</TABLE>
Approved by the Board of Trustees: March 26, 1999
A-3
<PAGE>
WELLS FARGO FUNDS TRUST
RULE 18f-3 MULTI-CLASS PLAN
---------------------------
I. Introduction.
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), this Rule 18f-3 Multi-Class Plan (the "Plan") sets forth the
method for allocating fees and expenses among each class of shares in the
separate investment portfolios (the "Funds") of Wells Fargo Funds Trust (the
"Trust"). In addition, the Plan sets forth the maximum initial sales charges,
contingent deferred sales charges ("CDSCs"), Rule 12b-1 distribution fees,
shareholder servicing fees, conversion features, exchange privileges and other
shareholder services applicable to each class of shares of the Funds.
The Trust is an open-end series investment company registered under the
1940 Act, the shares of which are registered on Form N-1A under the Securities
Act of 1933. The Trust hereby elects to offer multiple classes of shares of the
Funds pursuant to the provisions of Rule 18f-3 and the Plan. Appendix A, as it
may be amended from time to time, lists the Funds that have approved the Plan
and the classes of each such Fund. Each such Fund that has authorized the
issuance of multiple classes of shares is referred to as a "Multi-Class Fund"
hereunder.
II. Allocation of Expenses.
----------------------
A. Mandatory Class Expenses. Pursuant to Rule 18f-3, the Trust allocates
------------------------
to each class of shares of a Multi-Class Fund: (i) any fees and expenses
incurred by the Fund in connection with the distribution of such class of shares
under a distribution plan adopted for such class of shares pursuant to Rule 12b-
1; and (ii) any fees and expenses incurred by the Fund under a shareholder
servicing plan in connection with the provision of shareholder administrative or
liaison services to the holders of such class of shares.
B. Discretionary Class Expenses. In addition, pursuant to Rule 18f-3, the
----------------------------
Trust may allocate the following fees and expenses to a particular class of
shares of a Multi-Class Fund:
(i) transfer agent fees identified by the transfer agent as being
attributable to such class of shares;
(ii) printing and postage expenses related to preparing and distributing
materials such as shareholder reports, notices, prospectuses,
reports, and proxies to current shareholders of that class or to
regulatory agencies with respect to such class of shares;
(iii) blue sky notification or other filing fees incurred with respect to
such class of shares;
(iv) Securities and Exchange Commission registration fees incurred with
respect to such class of shares;
1
<PAGE>
(v) the expense of administrative personnel and services (including, but
not limited to, those of a portfolio accountant, custodian or
dividend paying agent charged with calculating net asset values or
determining or paying dividends) as required to support the
shareholders of such class of shares;
(vi) litigation or other legal expenses incurred with respect to such
class of shares;
(vii) fees of the Trust's Trustees incurred with respect to matters
affecting such class of shares;
(viii) independent accountants' fees incurred with respect to such class of
shares; and
(ix) any other fees and expenses, not including advisory or custodial
fees or other expenses related to the management of the Fund's
assets, incurred with respect to such class of shares.
For all purposes under this Plan, fees and expenses incurred "with respect
to" a class of shares are those fees and expenses that are actually incurred in
a different amount by the class or that relate to a different kind or degree of
services provided to the class. Any decision to treat expenses referenced in
this Subsection B as class expenses and any subsequent changes to such decision
will be reviewed and approved by the Board of Trustees of the Trust, including a
majority of the Trustees who are not interested persons of the Trust.
C. Relative Net Asset Value Allocation. Income, realized and unrealized
-----------------------------------
capital gains and losses, and any expenses of a Multi-Class Fund not allocable
to a particular class of the Fund pursuant to this Plan shall be allocated to
each class of the Fund based upon the relative net asset value of that class in
relation to the aggregate net asset value of the Fund. In certain cases, a
service provider for a Multi-Class Fund may waive or reimburse all or a portion
of the expenses of a specific class of shares of the Multi-Class Fund. The
Board of Trustees will monitor any such waivers or reimbursements to ensure that
they do not generate inappropriate cross-subsidization between classes.
III. Class Arrangements.
------------------
The following summarizes the maximum initial sales charges, CDSCs, Rule
12b-1 distribution fees, shareholder servicing fees, conversion features,
exchange privileges and other shareholder services applicable to a particular
class of shares of the Multi-Class Funds. Appendix A sets forth the actual
sales charges, Rule 12b-1 fees and shareholder servicing fees of each class of
shares of each Multi-Class Fund. Additional details and restrictions regarding
such fees and services are set forth in the relevant Fund's current Prospectus
and Statement of Additional Information.
A. Class A Shares -- Multi-Class Funds
-----------------------------------
1. Maximum Initial Sales Charge: Not to exceed 5.75% of the net
----------------------------
asset value at the time of purchase, as further specified in
Appendix A.
2
<PAGE>
2. Contingent Deferred Sales Charge: Class A shares that are
--------------------------------
purchased at NAV in amounts of $1,000,000 or more will be
assessed a 1.00% CDSC if they are redeemed within one year from
the date of purchase.
3. Maximum Annual Rule 12b-1 Distribution Fee: Not to exceed 0.25%
------------------------------------------
of average daily net assets attributable to Class A shares, as
further specified in Appendix A.
4. Maximum Annual Shareholder Servicing Fee: Not to exceed 0.25% of
----------------------------------------
average daily net assets attributable to Class A shares, as
further specified in Appendix A.
5. Conversion Features: None
-------------------
6. Exchange Privileges: As described in the current prospectus for
-------------------
each Fund.
B. Class B Shares -- Multi-Class Funds
-----------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: Class B shares that are
--------------------------------
redeemed within six years from the receipt of a purchase order
affecting such shares are subject to a CDSC equal to the
indicated percentage of the dollar amount equal to the lesser of
the net asset value ("NAV") at the time of purchase of the Class
B shares being redeemed or the NAV of such shares at the time of
redemption. No CDSC is imposed on Class B shares purchased
through reinvestment of dividends or capital gain distributions.
<TABLE>
<CAPTION>
Redemption Within: 1 Year 2 Years 3 Years 4 Years 5 Years 6 Years 7 Years
----------------- ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
CDSC: 5.0% 4.0% 3.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
3. Maximum Annual Rule 12b-1 Distribution Fee: Not to exceed 0.75%
------------------------------------------
of average daily net assets attributable to Class B shares, as
further specified in Appendix A.
4. Maximum Annual Shareholder Servicing Fee: Not to exceed 0.25% of
----------------------------------------
average daily net assets attributable to Class B shares, as
further specified in Appendix A.
5. Conversion Features: Class B shares of a Multi-Class Fund that
-------------------
have been outstanding for seven years after the end of the month
in which the shares were initially purchased automatically
convert to Class A shares of such Fund. Such conversion is on the
basis of the relative NAVs of the two classes, without the
imposition of any sales charge or other charge.
6. Exchange Privileges: As described in the current prospectus for
-------------------
each Fund.
C. Class C Shares-- Multi-Class Funds
----------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
3
<PAGE>
2. Contingent Deferred Sales Charge: Class C shares that are
--------------------------------
redeemed within one year of the receipt of a purchase order
affecting such shares are subject to a CDSC equal to 1.00% of an
amount equal to the lesser of NAV at the time of purchase of the
Class C shares being redeemed or the NAV of such shares at the
time of redemption. No CDSC is imposed on Class C shares
purchased through reinvestment of dividends or capital gain
distributions.
3. Maximum Annual Rule 12b-1 Distribution Fee: Not to exceed 0.75%
------------------------------------------
of average daily net assets attributable to Class C shares, as
further specified in Appendix A.
4. Maximum Annual Shareholder Servicing Fee: Not to exceed 0.25% of
----------------------------------------
average daily net assets attributable to Class C shares, as
further specified in Appendix A.
5. Conversion Features: None
-------------------
6. Exchange Privileges: As described in the current prospectus for
-------------------
each Fund.
D. Institutional Class Shares -- Multi-Class Funds
-----------------------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: None
--------------------------------
3. Maximum Annual Rule 12b-1 Distribution Fee: None
-------------------------------------------
4. Maximum Annual Shareholder Servicing Fee: Not to exceed 0.10% of
----------------------------------------
average daily net assets attributable to Institutional Class
shares, as further specified in Appendix A.
5. Conversion Features: None.
--------------------
6. Exchange Privileges: As described in the current prospectus for
-------------------
each Fund.
E. Service Class Shares -- Multi-Class Funds
-----------------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: None
--------------------------------
3. Maximum Annual Rule 12b-1 Distribution Fee: None
-------------------------------------------
4. Maximum Annual Shareholder Servicing Fee: Not to exceed 0.25% of
----------------------------------------
the average daily net assets attributable to Service Class
shares, as further specified in Appendix A.
5. Conversion Features: None.
--------------------
6. Exchange Privileges: As described in the current prospectus for
-------------------
each Fund.
4
<PAGE>
7. Other Class-Specific Shareholder Services: None
------------------------------------------
F. Class O Shares -- Multi-Class Funds:
-----------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: None
--------------------------------
3. Maximum Annual Rule 12b-1 Distribution Fee: None.
------------------------------------------
4. Maximum Annual Shareholder Servicing Fee: Not to exceed 0.20 of
----------------------------------------
average daily net assets attributable to Class O Shares, as
further specified in Appendix A.
5. Conversion Features: None.
-------------------
6. Exchange Privileges: As described in the current prospectus for
-------------------
the Fund.
7. Other Class-Specific Shareholder Services: None.
-----------------------------------------
IV. Board Review.
-------------
The Board of Trustees of the Trust shall review the Plan as it deems
necessary. Prior to any material amendment(s) to the Plan with respect to any
Multi-Class Fund's shares, the Trust's Board of Trustees, including a majority
of the Trustees that are not interested persons of the Trust, shall find that
the Plan, as proposed to be amended (including any proposed amendments to the
method of allocating class and/or fund expenses), is in the best interest of
each class of shares of the Fund individually and the Fund as a whole. In
considering whether to approve any proposed amendment(s) to the Plan, the
Trustees of the Trust shall request and evaluate such information as they
consider reasonably necessary to evaluate the proposed amendment(s) to the Plan.
Adopted: March 26, 1999
5
<PAGE>
APPENDIX A
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Maximum Maximum
Funds Trust Initial Sales Maximum Maximum Shareholder
Multi Class Funds Charge CDSC 12b-1 Fee Servicing Fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Arizona Tax-Free Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
2. Asset Allocation Fund
Class A 5.75 1.00* None 0.10
Class B None 5.00 0.75 0.10
Class C None 1.00 0.75 0.10
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
3. California Tax-Free Bond Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
4. California Tax-Free Income Fund
Class A 4.50 1.00* None 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
5. California Tax-Free Money Market
Fund
Class A None None None 0.25
Service Class None None None None
- ------------------------------------------------------------------------------------------------------------
6. Cash Investment Money Market Fund
Institutional Class None None None None
Service Class None None None 0.25
- ------------------------------------------------------------------------------------------------------------
7. Colorado Tax-Free Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
8. Corporate Bond Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
- ------------------------------------------------------------------------------------------------------------
9. Diversified Equity Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
10. Diversified Small Cap Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None 0.10
- ------------------------------------------------------------------------------------------------------------
11. Equity Index Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class O None None None 0.20
- ------------------------------------------------------------------------------------------------------------
12. Equity Value Fund
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Maximum Maximum
Funds Trust Initial Sales Maximum Maximum Shareholder
Multi Class Funds Charge CDSC 12b-1 Fee Servicing Fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
13. Government Money Market Fund
Class A None 1.00* None 0.25
Service Class None None None None
- ------------------------------------------------------------------------------------------------------------
14. Growth Balanced Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
15. Growth Equity Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
16. Growth Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
17. Income Equity Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
18. Income Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
19. Income Plus Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
- ------------------------------------------------------------------------------------------------------------
20. Index Allocation Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
- ------------------------------------------------------------------------------------------------------------
21. Intermediate Government Income Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
22. International Equity Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
23. International Fund
Class A 5.75 1.00* None 0.25
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Maximum Maximum
Funds Trust Initial Sales Maximum Maximum Shareholder
Multi Class Funds Charge CDSC 12b-1 Fee Servicing Fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B None 5.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
24. Large Company Growth Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
25. LifePath Opportunity Fund
Class A 5.75 1.00* 0.25 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None 0.25
- ------------------------------------------------------------------------------------------------------------
26. LifePath 2010 Fund
Class A 5.75 1.00* 0.25 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None 0.25
- ------------------------------------------------------------------------------------------------------------
27. LifePath 2020 Fund
Class A 5.75 1.00* 0.25 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None 0.25
- ------------------------------------------------------------------------------------------------------------
28. LifePath 2030 Fund
Class A 5.75 1.00* 0.25 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None 0.25
- ------------------------------------------------------------------------------------------------------------
29. LifePath 2040 Fund
Class A 5.75 1.00* 0.25 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None 0.25
- ------------------------------------------------------------------------------------------------------------
30. Limited Term Government Income Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
31. Minnesota Tax-Free Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
32. Money Market Fund
Class A None None None 0.25
Class B None 5.00 0.75 0.25
- ------------------------------------------------------------------------------------------------------------
33. National Tax-Free Institutional
Money Market Fund
Institutional Class None None None None
Service Class None None None 0.25
- ------------------------------------------------------------------------------------------------------------
34. Oregon Tax-Free Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Maximum Maximum
Funds Trust Initial Sales Maximum Maximum Shareholder
Multi Class Funds Charge CDSC 12b-1 Fee Servicing Fee
- ------------------------------------------------------------------------------------------------------------
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
35. Small Cap Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None 0.10
- ------------------------------------------------------------------------------------------------------------
36. Small Cap Opportunities Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None 0.10
- ------------------------------------------------------------------------------------------------------------
37. Small Cap Value Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None 0.10
- ------------------------------------------------------------------------------------------------------------
38. Stable Income Fund
Class A 1.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
39. Tax-Free Income Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
- ------------------------------------------------------------------------------------------------------------
40. 100% Treasury Money Market Fund
Class A None None None 0.25
Service Class None None None None
- ------------------------------------------------------------------------------------------------------------
41. Treasury Plus Institutional Money
Market Fund
Institutional Class None None None None
Service Class None None None 0.25
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------
* Class A shares that are purchased at NAV in amounts of $1,000,000 or more
will be assessed a 1.00% CDSC if they are redeemed within one year from the
date of purchase. All other Class A shares will not have a CDSC.
Adopted: March 26, 1999
A-4
