As filed with the Securities and Exchange Commission
on November 17, 2000
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. 18 x
-----
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
------
Amendment No. 19 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):
Immediately upon filing pursuant to Rule 485(b), or
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on _________ pursuant to Rule 485(b)
----
60 days after filing pursuant to Rule 485(a)(1), or
----
on _________ pursuant to Rule 485(a)(1)
----
x 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.
EXPLANATORY NOTE
This Post-Effective Amendment No. 18 (the "Amendment") to the
Registration Statement of Wells Fargo Funds Trust (the "Trust") is being filed
to register the Specialized Health Care Fund, and to make certain other
non-material changes to the prospectuses and statements of additional
information for these funds.
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
Example of Expenses
4 Objectives and Principal Strategies
Important Risks
See Individual Fund Summaries
General Investment Risks
5 Not applicable
6 Organization and Management of the Funds
7 Your Account
How to Buy Shares
How to Sell Shares
Exchanges
Dividends and Distributions
Taxes
8 Distribution Plan
Exchanges
9 See Individual Fund Summaries
Part B Statement of Additional Information Captions
10 Cover Page and Table of Contents
11 Historical Fund Information
Cover Page
12 Investment Restrictions
Additional 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.
WELLS FARGO
SPECIALIZED HEALTH SCIENCES FUND
Please read this Prospectus and keep it for future reference. It is
designed to provide you with important information and to help you Class A,
Class B and Class C decide if a Fund's goals match your own. These securities
have not been approved or disapproved by the U.S.
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 or other obligations of, or
issued, endorsed or guaranteed by Wells Fargo Bank, N.A. ("Wells Fargo Bank") or
any of its affiliates. Fund shares are NOT insured or guaranteed by the U.S.
Government, the Federal Deposit Insurance Corporation ("FDIC") or any other
governmental agency. AN INVESTMENT IN A FUND INVOLVES CERTAIN RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
TABLE OF CONTENTS
Overview Objective and Principal
Strategies
This section contains Summary of Important Risks
important summary Summary of Expenses
information about the Key Information
Fund.
The Fund Specialized Health Sciences Fund
General Investment Risks
This section contains Organization and Management important information of the
Fund about the Fund.
Your Investment A Choice of Share Classes
Reduced Sales Charges
Turn to this section for Exchanges information on how to Your Account open an
account and how How to Buy Shares to buy, sell and exchange How to Sell Shares
Fund shares.
Reference Additional Services and
Other Information
Look here for additional Portfolio Managers
information and term Glossary
definitions
Wells Fargo Specialized Health Sciences Fund Overview
Objective
Seeks long-term capital appreciation.
Principal Strategies
We normally invest at least 65% of the Fund's total assets in equity securities
of domestic and foreign health care companies. Health care companies are
companies with revenues primarily generated by health care products and
services. Health care companies include pharmaceutical, biochemical and
biotechnology health care service and medical device companies.
Summary of Important Risks
This section summarizes important risks related to an investment in the Fund
described in this Prospectus that are important to your investment choice.
Additional information about these and other risks is included in:
o the individual Fund Descriptions later in this Prospectus; o under the
"General Investment Risks" section beginning on page 10; and o in the Fund's
Statement of Additional Information.
An investment in the Fund is not a deposit of Wells Fargo Bank and is not
insured or guaranteed by the FDIC or any other government agency. It is
possible to lose money by investing in the Fund.
Equity Securities. The Fund invests 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 the Fund's portfolio. Certain types of
stock and certain individual stocks selected for the Fund's portfolio may
underperform or decline in value more than the overall market. The Fund
invests in foreign companies (including investments made through American
Depositary Receipts and similar instruments), which are subject to additional
risks, including less liquidity and greater price volatility. The Fund's
investment in foreign companies is also subject to special risks associated
with international investing, including currency, political, regulatory,
information and diplomatic risks.
Fund-Specific Risks
The Fund invests a relatively high percentage of its assets in a limited
number of issuers and is therefore considered to be non-diversified.
Non-diversified funds are more susceptible to financial, market or economic
events affecting the particular issuers and industry sectors in which it
invests. The Fund invests in health care companies organized or headquartered
in at least three different countries (one of which may be the United
States). However, the fund currently expects the majority of its foreign
investments to be in companies organized or headquartered in countries of
Western Europe and in Japan. Foreign company stocks involve special risks,
including generally higher commission rates, and political, social, monetary
or diplomatic developments that could effect U.S. investments in foreign
countries. Additionally, dispositions of foreign securities and dividends and
interest payable on those securities may be subject to foreign taxes.
Summary of Expenses
These tables are intended to help you understand the various costs and
expenses you will pay as a shareholder in a Fund. A broker/dealer or financial
institution maintaining the account through which you hold Fund shares may
charge separate account, service or transaction fees on the purchase or sale
of Fund shares that would be in addition to the fees and expenses shown here.
<TABLE>
<S> <C> <C> <C>
-------------------------------------- --------------- ---------------- --------------
Specialized Specialized Specialized
Shareholder Fees Health Health Health
Sciences Fund Sciences Fund Sciences Fund
--------------- ---------------- --------------
Class A Class B Class C
--------------------------------------
--------------- ---------------- --------------
Maximum sales charge (load)
imposed on purchases (as a
percentage of
offering price) 5.75% None None
-------------------------------------- --------------- ---------------- --------------
Maximum deferred sales charge (load)
(as a percentage of the lower of None 5.00% 1.00%
the Net Asset Value ("NAV") at
purchase or the NAV at redemption)
-------------------------------------- --------------- ---------------- --------------
Annual Fund Operating Expenses (Expenses that are deducted from
Fund Assets)
----------------------- ---------------------------
Specialized Health
Sciences Fund
---------------------------
--------- -------- --------
Class Class Class
A B C
-----------------------
--------- -------- --------
Management Fees 1.10% 1.10% 1.10%
----------------------- --------- -------- --------
----------------------- --------- -------- --------
Distribution (12b-1) 0.00% 0.75% 0.75%
Fees
----------------------- --------- -------- --------
Other Expenses1 0.96% 0.96% 0.96%
----------------------- --------- -------- --------
TOTAL ANNUAL FUND
OPERATING
EXPENSES 2.06% 2.81% 2.81%
----------------------- --------- -------- --------
Fee Waivers2 0.31% 0.31% 0.31%
----------------------- --------- -------- --------
NET EXPENSES 1.75% 2.50% 2.50%
----------------------- --------- -------- --------
</TABLE>
--------------------------------
1 Other expenses are based on estimated amounts for the current fiscal year.
2 Fee waivers are contractual and apply for a minimum of one year from the
commencement of operations of the Fund and remain in effect thereafter until
such time as the Board of Trustees acts to reduce or eliminate such waivers.
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. The examples assume a fixed
rate of return and the fund operating expenses remain the same. Your actual
costs may be higher or lower than those shown.
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>
<S> <C> <C> <C>
--------------- ------------------------
===============
Specialized Health
Sciences Fund
------------------------
------- ------- --------
Class Class Class
A B C
---------------
------- ------- --------
1 YEAR $ $ $353
743 753
--------------- ------- ------- --------
3 YEARS $1,155 $1,142 $842
--------------- ------- ------- --------
</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 the periods
shown:
<TABLE>
<S> <C> <C> <C>
--------------- ------------------------
Specialized Health
Sciences Fund
------------------------
------- ------- --------
Class Class Class
A B C
---------------
------- ------- --------
1 YEAR $ $253 $253
743
--------------- ------- ------- --------
3 YEARS $1,155 $842 $842
--------------- ------- ------- --------
</TABLE>
Key Information
Important information you should look for as you decide to invest in a Fund:
The summary information on the previous pages is designed to provide you with an
overview of the Fund. The sections that follow provide more detailed information
about the investments and management of the Fund.
Investment Objective and Investment Strategies
The investment objective of the Fund in this Prospectus is non-fundamental, that
is, it can be changed by a vote of the Board of Trustees alone. The objectives
and strategies descriptions for the Fund tell you: o what the Fund is trying to
achieve; and o how we intend to invest your money.
Permitted Investments
A summary of the Fund's key permitted investments and practices.
Important Risk Factors
Describes the key risk factors for the Fund, and includes risks described in the
"Summary of Important Risks" and "General Investment Risks" sections.
Words appearing in italicized print and highlighted in color are defined in the
Glossary.
Specialized Health Sciences Fund
Investment Advisor: Wells Fargo Bank, N.A.
Investment Sub-Advisor: Dresdner RCM Global Investors LLC
Investment Objective
The Specialized Health Sciences Fund seeks long term capital appreciation by
investing in domestic and foreign equity securities of health care companies.
Investment Strategies
We actively manage a non-diversified portfolio of health care company equity
securities selected from at least three countries, including the United States.
Health care companies are companies with revenues primarily generated by health
care products and services. Health care companies include pharmaceutical,
biochemical, biotechnology, health care service and medical device companies. We
currently expect the majority of the fund's foreign investments to be in
companies organized or headquartered in countries of Western Europe and in
Japan.
We evaluate the fundamental value and prospects for growth of individual
companies and focus on health care companies that we expect will have higher
than average rates of growth and strong potential for capital appreciation. We
develop forecasts of economic growth, inflation, and interest rates that we use
to identify regions and individual countries that are likely to offer the best
investment opportunities.
Permitted Investments
Under normal market conditions, we invest:
o at least 65% of our assets in health care company equity securities selected
from at least three countries, including the U.S.; o up to 30% of total assets
in foreign securities; o up to 15% of total assets in equity securities of
issuers with market capitalization below $100 million at the time of purchase
and o in equity securities including common stocks, and preferred stocks, and in
warrants, convertible debt securities, American
Depositary Receipts ("ADRs"), Government Depositary Receipts ("GDRs") (and
similar instruments), shares of other mutual funds, and regular shares of
foreign companies traded and settled on U.S. exchanges and over-the-counter
markets.
We may hedge the portfolio's foreign currency exposure by purchasing or selling
foreign currency futures and forward foreign currency contracts. We may invest a
limited portion of the fund's assets in emerging market securities, although we
currently do not intend to do so.
We 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. During these periods, the Fund may not achieve its
objective of long term capital appreciation.
Important Risk Factors
The Fund reserves the right to concentrate its investments in a single industry
or industries, typically health care and health care-related companies. Because
of its focus in health care companies, it will be more susceptible than more
diversified funds to market and other conditions affecting health care
companies. The health care sector is rapidly changing and may be impacted by
such factors as government regulation, uncertain demand and the risk that
products may become obsolete. Such changes may negatively affect the performance
of Fund investments. Foreign company stocks may lose value or be more difficult
to trade as a result of adverse changes in currency exchange rates or other
developments in the issuer's home country. Larger investments in any single
country would make the Fund's value more sensitive to economic, political,
currency and regulatory changes within that country.
You should consider the "Summary of Important Risks" section on page 4, the
"General Investment Risks" section beginning on page 10, and the specific risks
listed here. They are all important to your investment choice.
Sub-Adviser's Prior Performance History
The performance information shown below represents performance of the Class N
shares of the Dresdner RCM Global Health Care Fund, an open end management
investment company with a substantially identical investment objective and
investment strategies. Differences in the operation of these portfolios are
minimal and the performance shown may be considered to be representative of
the investment strategy of the Specialized Health Sciences Fund. Please
remember that prior performance is no guarantee of future results.
[BAR CHART]
<TABLE>
<S> <C>
Class N Calendar Year Returns (%)1
1997 30.00
1998 25.57
1999 28.74
</TABLE>
<TABLE>
<S> <C> <C>
Average Annual Total Returns
Since
1 Yr Inception
(3 Yr)
Global Health Care Fund Class N2 (Incept. 12/31/96) 28.74% 28.09%
Russell Midcap Health Care Index -13.48% 11.22%
Lipper Peer Group (Health/Biotechnology) 19.40% 15.65%
</TABLE>
--------
1 Past performance assumes reinvestment of all distributions at net asset
value.
2 The Wells Fargo Specialized Health Sciences Fund charges certain other fees
not applicable to the Class N shares shown above. If the fee and expense
structure applicable to the Specialized Health Sciences Fund had been used,
performance shown would be lower.
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" section on page 4. Other risks of mutual fund
investing include the following:
o Unlike bank deposits, such as CDs or savings accounts, mutual funds are
not insured by the FDIC.
o We cannot guarantee that we will meet our investment objectives.
o 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.
o 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. This is known as price volatility.
o Investing in any mutual fund, including those deemed conservative, involves
risk, including the possible loss of any money you invest.
o An investment in a single Fund, by itself, does not constitute a
complete investment plan.
o The Specialized Health Sciences Fund may invest in smaller companies, and
invests in foreign companies (including investments made through ADRs and
similar instruments) and is subject to additional risks, including less
liquidity and greater price volatility. A Fund's investment in foreign
securities may also be subject to special risks associated with
international trade, including currency, political, regulatory and
diplomatic risk. Although the Fund does not normally intend to invest in
emerging market securities, it may do so from time to time if Fund managers
determine it to be advantageous for the Fund. Emerging markets may
have less developed financial systems, more volatile currencies, and may be
more sensitive than more mature foreign markets to a variety of economic
and political factors. Emerging market securities may be less liquid than
the securities of more developed countries, which may make them more
difficult to sell.
o The Funds may also 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.
Investment practices and risk levels are carefully monitored. Every attempt is
made to ensure that the risk exposure for the Fund remains within the parameters
of its objective.
What follows is a general list of the types of risks (some of which are
described previously) that may apply to a given Fund and a table showing some of
the additional investment practices that the 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.
Concentration Risk -- The risk that investing portfolio assets in a single
industry or industries exposes the portfolio to greater loss from adverse
changes affecting the industry.
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 of
liquidity of investments in either country.
General Investment Risks (Cont'd)
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 dates to maturity.
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 at the time desired, 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.
Non-Diversification Risk -- The risk that, because the proportion of a
non-diversified fund's assets that may be invested in the securities of a single
issuer is not limited by the Investment Company Act of 1940 (the "1940 Act"),
greater investment in a single issuer makes a fund more susceptible to
financial, economic or market events impacting the issuer. (A "diversified"
investment company is required by the 1940 Act generally, with respect to 75% of
its total assets, to invest not more than 5% of such assets in the securities of
a single issuer.)
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 their prepayment of
mortgage loans or other receivables, which can shorten 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.
General Investment Risks (Cont'd)
In addition to the general risks discussed above, you should carefully consider
and evaluate any special risks that may apply to investing in a particular Fund.
See the "Important Risk Factors" section in the summary for the Fund. You should
also see the Statement of Additional Information for additional information
about the investment practices and risks particular to the Fund.
Investment Practice/Risk
The following table lists some of the additional investment practices of the
Fund, including some not disclosed in the Investment Objective and Investment
Strategies 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 Strategies for the Fund or the Statement of
Additional Information for more information on these practices.
Investment practices and risk levels are carefully monitored. We attempt to
ensure that the risk exposure for the Fund remains within the parameters of its
objective.
Remember, the Fund is designed to meet different investment needs and
objectives.
<TABLE>
<S> <C> <C>
--------------------------------------------------- ------------------ ---
Investment Practice Risk
--------------------------------------------------- ------------------
--------------------------------------------------- ------------------
--------------------------------------------------- ------------------
--------------------------------------------------- ------------------ ---
Borrowing Policies
The ability to borrow from banks for temporary Risk o
purposes to meet shareholder redemptions. Leverage
---
--------------------------------------------------- ------------------ ---
Floating and Variable Rate Debt
Instruments with interest rates that are adjusted Interest Rate o
either on a schedule or when an index or and Credit Risk
benchmark changes.
--------------------------------------------------- ------------------ ---
--------------------------------------------------- ------------------ ---
Foreign Securities
Equity securities issued by a non-U.S. company or Information,
debt securities of a non-U.S. company foreign Political, o
government. Foreign securities may also be Regulatory,
emerging market securities, which are subject to Diplomatic,
the same risks, but to a higher degree. Liquidity and
Currency Risk
--------------------------------------------------- ------------------ ---
Forward Commitment, When-Issued and Delayed
Delivery Transactions
Securities bought or sold for delivery at a later Interest Rate, o
date or bought or sold for a fixed price at a Leverage, Credit
fixed date. and
Experience Risk
--------------------------------------------------- ------------------ ---
General Investment Risks (Cont'd)
--------------------------------------------------- ------------------ ---
Illiquid Securities
A security that cannot be readily sold, or cannot Liquidity Risk be readily sold
without negatively affecting its o fair price. Limited to 15% of total assets.
--------------------------------------------------- ------------------ ---
---
Loans of Portfolio Securities
The practice of loaning securities to brokers, Credit, dealers and financial
institutions to increase Counter-Party o return on those securities. Loans may
be made up and Leverage Risk to Investment Company of 1940 limits (currently
one-third of total assets including the value of collateral received).
---
--------------------------------------------------- ------------------ ---
Options
The right or obligation to receive or deliver a Credit,
security or cash payment depending on the Information o
security's price or the performance of an index and Liquidity
or benchmark. Types of options used may Risk
include: options on securities, options on a
stock index, stock index futures and options on
stock index futures to protect liquidity and
portfolio value.
---
--------------------------------------------------- ------------------ ---
Other Mutual Funds
A pro rata portion of the other fund's expenses, Market Risk in addition to the
expenses paid by the Fund, may o be borne by Fund shareholders.
--------------------------------------------------- ------------------ ---
--------------------------------------------------- ------------------ ---
Repurchase Agreements
A transaction in which the seller of a security Credit and o
agrees to buy back a security at an agreed upon Counter-Party
time and price, usually with interest. Risk
--------------------------------------------------- ------------------ ---
Privately Issued Securities
Securities that are not publicly traded but which Liquidity Risk may or may not
be resold in accordance with Rule o 144A under the Securities Act of 1933.
--------------------------------------------------- ------------------ ---
Small Company Securities Market, The risk that investments in small companies
may Experience and o be more volatile than investments in larger Liquidity Risk
companies.
--------------------------------------------------- ------------------ ---
</TABLE>
Organization and Management of the Fund
A number of different entities provide services to the Fund. This section shows
how the Fund is 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 Fund.
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 the 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. The Board of Trustees of the Trust supervises
the Fund's activities and approves the selection of various companies hired to
manage the Fund's operation. The major service providers are described in the
diagram below. Except for the advisers, which generally require shareholder
approval to change, if the Board believes that it is in the best interests of
the shareholders it may make a change in one of these companies.
Organization and Management of the Fund (Cont'd)
<TABLE>
<S> <C>
------------------------------------------------------------------------------------
BOARD OF TRUSTEES
------------------------------------------------------------------------------------
Supervises the Fund's activities
------------------------------------------------------------------------------------
------------------------------------------ -----------------------------------------
INVESTMENT ADVISOR CUSTODIAN
------------------------------------------ -----------------------------------------
Wells Fargo Bank, N.A. Wells Fargo Bank Minnesota, N.A.
525 Market St., San Francisco, CA 6th Street & Marquette, Minneapolis, MN
Manages the Fund's investment Provides safekeeping for the Fund's
assets
activities
------------------------------------------ -----------------------------------------
------------------------------------------------------------------------------------
INVESTMENT SUB-ADVISOR
------------------------------------------------------------------------------------
Dresdner RCM Global Investors LLC
Four Embarcadero Center,
San Francisco, CA
Manages the Fund's investment activities
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
-------------------- ----------------------- ----------------------- ---------------
SHAREHOLDER
TRANSFER SERVICING
DISTRIBUTOR ADMINISTRATOR AGENT AGENTS
-------------------- ----------------------- ----------------------- ---------------
Stephens Inc. Wells Fargo Bank, N.A. Boston Financial Data Various Agents
111 Center St. 525 Market Street Services, Inc.
Little Rock, AR San Francisco, CA Two Heritage Drive
Markets the Fund Manages the Quincy, MA Provide
and distributes Fund's business Maintains records services to
Fund shares activities of shares and customers
supervises the
paying of dividends
-------------------- ----------------------- ----------------------- ---------------
------------------------------------------------------------------------------------
FINANCIAL SERVICES FIRMS AND SELLING AGENTS
------------------------------------------------------------------------------------
Advise current and prospective shareholders on their Fund investments
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
SHAREHOLDERS
------------------------------------------------------------------------------------
</TABLE>
Organization and Management of the Fund (Cont'd)
The Investment Advisor
Wells Fargo Bank provides portfolio management and fundamental security analysis
services as the advisor for each of the Fund. 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 March 31, 2000, Wells
Fargo Bank and its affiliates provided advisory services for over $131 billion
in assets. For providing these services, Wells Fargo Bank is entitled to receive
fees as described in the "Summary of Expenses" section at the front of this
Prospectus.
The Sub-Advisor
Dresdner RCM Global Investors LLC ("Dresdner"), an indirect wholly owned
subsidiary of Dresdner Bank AG, is the sub-advisor for the Specialized Health
Sciences Fund. Dresdner is responsible for the day-to-day investment management
activities of the Fund. As of September 30, 2000, Dresdner managed over $51
billion in assets.
The Administrator
Wells Fargo Bank provides the Fund with administration services, including
general supervision of the Fund's operation, coordination of the other services
provided to the Fund, compilation of information for reports to the SEC and the
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 the Fund's
business. For providing these services, Wells Fargo Bank is entitled to receive
a fee of 0.15% of the average annual net assets of the Fund.
Shareholder Servicing Plan
We have a shareholder servicing plan for the 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, the Fund pays 0.25% of its average net assets.
The Transfer Agent
Boston Financial Data Services, Inc. ("BFDS") provides transfer agency and
dividend disbursing services to the Fund. For providing these services, BFDS
receives an annual fee, certain transaction-related fees, and is reimbursed for
out-of-pocket expenses incurred on behalf of the Fund.
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: o
Class A Shares - with a front-end sales charge, volume reductions and lower
on-going expenses than Class B and Class C shares. o 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.
o 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 of a single fund 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 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 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.
Orders for Class B shares of more than $250,000 are either treated as orders for
Class A shares or they will be refused. For Class C shares, orders of $1,000,000
or more, including purchases made which because of a right of accumulation or
letter of intent would qualify for the purchase of Class A shares without an
initial sales charge, are also either treated as orders for Class A shares or
they will be refused.
Please see the expenses listed for each class of the Specialized Health Sciences
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 NAV plus the applicable sales charge. 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.
<TABLE>
<S> <C> <C>
---------------------------------------------------------------------------------------
CLASS A SHARES LISTED IN THIS PROSPECTUS
HAVE THE FOLLOWING SALES CHARGE SCHEDULE:
------------------------------ ---------------------------- ---------------------------
FRONT-END SALES FRONT-END SALES
CHARGE AS % CHARGE AS %
AMOUNT OF PUBLIC OF AMOUNT
OF PURCHASE OFFERING PRICE INVESTED
------------------------------ ---------------------------- ---------------------------
------------------------------ ---------------------------- ---------------------------
------------------------------ ---------------------------- ---------------------------
------------------------------ ---------------------------- ---------------------------
Less than $50,000 5.75% 6.10%
------------------------------ ---------------------------- ---------------------------
------------------------------ ---------------------------- ---------------------------
$50,000 to $99,999 4.75% 4.99%
------------------------------ ---------------------------- ---------------------------
------------------------------ ---------------------------- ---------------------------
$100,000 to $249,999 3.75% 3.90%
------------------------------ ---------------------------- ---------------------------
------------------------------ ---------------------------- ---------------------------
$250,000 to $499,999 2.75% 2.83%
------------------------------ ---------------------------- ---------------------------
------------------------------ ---------------------------- ---------------------------
$500,000 to $999,999 2.00% 2.04%
------------------------------ ---------------------------- ---------------------------
------------------------------ ---------------------------- ---------------------------
$1,000,000 and over1 0.00% 0.00%
------------------------------ ---------------------------- ---------------------------
</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, unless
the dealer of record waived its commission with the Fund's approval.
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:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------
CLASS B SHARES LISTED IN THIS PROSPECTUS HAVE
THE FOLLOWING SALES CHARGE SCHEDULE:
-------------- ------- -------- --------- --------- --------- --------- ---------- ----------
REDEMPTION 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS 7 YEARS 8 YEARS
WITHIN
-------------- ------- -------- --------- --------- --------- --------- ---------- ----------
-------------- ---------- ----------
CDSC 5.00% 4.00% 3.00% 3.00% 2.00% 1.00% 0.00% A shares
-------------- ------- -------- --------- --------- --------- --------- ---------- ----------
</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.
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 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.
Class A Share Reductions
o You pay no sales charges on Fund shares you buy with reinvested
distributions.
o 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.
o 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.
o 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.
o You pay no sales charges on Fund shares you purchase with the proceeds of a
redemption of either Class A or Class B shares within 120 days of the date
of redemption.
o 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:
o a family unit, consisting of a husband and wife and children under the age of
twenty-one or single trust estate; o a trustee or fiduciary purchasing for a
single fiduciary relationship; or o the members of a "qualified group" which
consists of a "company" (as defined in the Investment Company Act of 1940, as
amended
("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 3.75% sales load on the entire purchase. Otherwise, you might pay 5.75%
on the first $49,999, then 4.75% on the next $50,000!
Class B and Class C Share CDSC Reductions:
o You pay no CDSC on Funds shares you purchase with reinvested distributions.
o We waive the CDSC for all redemptions made because of scheduled (Rule 72T
withdrawal schedule) or mandatory (withdrawals made after age 70 1/2
according to IRS guidelines) distributions for certain retirement plans.
(See your retirement plan disclosure for details.)
Reduced Sales Charges (Cont'd)
o 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.)
o 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.
o We waive the Class B share CDSC for withdrawals made by former Norwest
Advantage Fund shareholders in certain qualified accounts up to certain
units. (See the Statement of Additional Information for further details.)
o We waive Class C share CDSC for certain types of accounts.
For Class B shares purchased after May 18, 1999 for former Norwest Advantage
Fund shareholders, after July 17, 1999 for former Stagecoach Funds shareholders,
or after September 17, 1999, for all other shareholders, no CDSC is imposed on
withdrawals that meet all of the following circumstances:
o withdrawals are made by participating in the Systematic Withdrawal Plan;
o withdrawals may not exceed 10% of your fund assets (including "free
shares") annually based on your anniversary date in the Systematic
Withdrawal Plan; and
o you must participate in the dividend and capital gain reinvestment program.
Waivers 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: o Current and retired employees, directors and officers of:
o Wells Fargo Funds and its affiliates; o Wells Fargo Bank, Norwest Bank and
their affiliates; o Stephens and its affiliates; o Broker-Dealers who act as
selling agents; and o Certain service providers to the Wells Fargo Funds. o and
the families of any of the above. Contact your selling agent for further
information.
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 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.
Distribution Plan
We have adopted a Distribution Plan ("Plan") pursuant to Rule 12b-1 for the
Class B and Class C shares of the Specialized Health Sciences Fund. 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 Class B and Class C shares each pay 0.75% of average
daily net assets on an annual basis.
These fees are paid out of the Fund's 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:
o You may make exchanges between like share classes. You may also exchange
from any Class C shares into the Money Market Fund Class A shares.
Exchanged shares retain any applicable CDSC upon redemption.
o You should carefully read the Prospectus for the Fund into which you wish to
exchange.
o Every exchange involves selling Fund shares and such sale may produce a
capital gain or loss for federal income tax purposes. o 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. o Any exchange between Funds you already
own must meet the minimum redemption and subsequent purchase amounts for the
Fund involved. o Exchanges between Class B shares and the Wells Fargo Money
Market Fund Class B shares 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 into Money Market Fund Class B shares are subject to
certain restrictions in addition to those described above.
o Exchanges from any share class to a money market fund can only be re-exchanged
for the original share class. o In order to discourage excessive exchange
activity that could result in additional expenses and lower returns for the
Fund, the
Fund may restrict or refuse exchanges from market timers. You may be
considered a market timer if you completed more than one exchange within a
3 month period, or seem to be following a timing pattern.
We reserve the right to limit or reject exchange orders. Generally, we will
notify you up to 60 days in advance of any changes in your exchange privileges.
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
o 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.
o We determine the NAV of each class of the Fund's 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 Fund's assets are generally valued at current market prices.
See the Statement of Additional Information for further information.
o We process requests to buy or sell shares of the Fund 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). If the
markets close early, the Fund may close early and may value its 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.
o The Fund is 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.
You Can Buy Fund Shares
o By opening an account directly with the Fund (simply complete and return a
Wells Fargo Funds Application with proper payment); o Through a brokerage
account with an approved selling agent; or o Through certain retirement,
benefits and pension plans, or through certain packaged investment products
(please see the providers
of the plan for instructions).
Minimum Investments
o $1,000 per Fund minimum initial investment; or o $100 per Fund if you use the
Systematic Purchase Program; and o $100 per Fund for all investments after your
first.
We may waive the minimum for the Fund 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.
Your Account (Cont'd)
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.
Shares must always be purchased in U.S. Dollars.
--------------------------------------------------------------------------------
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. Mail to:
-------------------------------------------------------------
Enclose a check for at least $1,000 made out in the full Wells Fargo Funds
name and share class of the Fund. For example, "Wells PO Box 8266
Fargo Specialized Health Sciences Fund, Class B." Boston, MA
02266-8266
-------------------------------------------------------------
You may start your account with $100 if you elect the Systematic Purchase Plan
option on the Application.
------------------------------------------------------------- ------------------
-------------------------------------------------------------
------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
------------------------------------------------------------- ------------------
Make a check payable to the full name and share class of Mail to:
your Fund for at least $100. Be sure to write your account Wells Fargo Funds
number on the check as well. PO Box 8266
Boston, MA
Enclose the payment stub/card from your statement if 02266-8266
available.
------------------------------------------------------------- ------------------
Your Account (Cont'd)
--------------------------------------------------------------------------------
BY WIRE
--------------------------------------------------------------------------------
IF YOU ARE BUYING SHARES FOR THE FIRST TIME:
------------------
-------------------------------------------------------------
If you do not currently have an account, complete a Wells Mail Application to:
Fargo Funds Application. You must wire at least $1,000. Wells Fargo Funds
Be sure to indicate the Fund name and the share class into P.O. Box 8266
which you intend to invest. Boston, MA
02266-8266
-------------------------------------------------------------
Mail the completed Application.
-------------------------------------------------------------
You must first call Investor Services at 1-800-222-8222, option 0, to notify
them of an incoming wire trade.
-------------------------------------------------------------
Wire money to:
Wells Fargo Funds
c/o State Street Bank
& Trust
Boston, MA
Bank Routing Number:
ABA 011 000028
Wire Purchase Account
Number:
9905-437-1
Attention:
Wells Fargo Funds (Name
of Fund and Share Class)
Account Name:
(Registration Name
Indicated on Application)
--------------------------
================================================================================
Your Account (Cont'd)
================================================================================
------------------------------------------------------------- ------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
------------------------------------------------------------- ------------------
Instruct your wiring bank to transmit at least $100 Wire to:
according to the instructions given to the right. Be sure Wells Fargo Funds
to have the wiring bank include your current account number c/o State Street
and the name your account is registered in. Bank & Trust
Boston, MA
-------------------------------------------------------------
Bank Routing Number:
ABA 011 000028
Wire Purchase Account
Number:
9905-437-1
Attention:
Wells Fargo Funds (Name
of Fund and Share Class)
Account Name:
(Registration Name
Indicated on Application)
--------------------------
Your Account (Cont'd)
--------------------------------------------------------------------------------
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 Account.
Call:
-------------------------------------------------------------
Call Investor Services and instruct the representative to 1-800-222-8222
either:
o transfer at least $1,000 from a linked settlement
account, or
o exchange at least $1,000 worth of shares from an existing Wells Fargo Fund.
Please see "How to Exchange Shares" section for special rules.
------------------
-------------------------------------------------------------
------------------------------------------------------------- ------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
------------------------------------------------------------- ------------------
Call Investor Services and instruct the representative to Call:
either: 1-800-222-8222
o transfer at least $100 from a linked settlement
account, or
o exchange at least $100 worth of shares from another Wells Fargo Fund.
------------------------------------------------------------- ------------------
HOW TO SELL 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 Mail to: check, by
ACH transfer into a bank account, or by wire. Wells Fargo Funds Please call
Investor Services regarding requirements for PO Box 8266 linking bank accounts
or for wiring funds. We reserve the Boston, MA right to charge a fee for wiring
funds although it is not 02266-8266 currently our practice to do so.
-------------------------------------------------------------
Signature Guarantees are required for mailed redemption requests over $50,000,
or if the address on your account was changed within the last 60 days. You can
get a signature guarantee at financial institutions such as a bank or brokerage
house. We do not accept notarized signatures.
------------------------------------------------------------- ------------------
Your Account (Cont'd)
--------------------------------------------------------------------------------
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. Call: 1-800-222-8222
-------------------------------------------------------------
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 30 days.
------------------------------------------------------------- ------------------
--------------------------------------------------------------------------------
GENERAL NOTES FOR SELLING SHARES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
We determine the NAV of the Fund each day as of the close of regular trading on
the NYSE, which is generally 1:00 p.m. (Pacific time)/3:00 p.m. (Central time).
If any of the markets for the Fund close early, the Fund may close early, and
may value its 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 may be 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.
--------------------------------------------------------------------------------
Additional Services and Other Information
Automatic Programs
These programs help you conveniently purchase and/or redeem shares each month.
Once you select a Plan, tell us the day of the month you would like the
transaction to occur. If you do not specify a date, we will process the
transaction on or about the 25th day of the month. Call Investor Services at
1-800-222-8222 for more information.
o 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 and
specify an amount of at least $100.
o 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. 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.
o 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. To participate in this
program, you:
o must have a Fund account valued at $10,000 or more; o must have your
distributions reinvested; and o 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 you specified is closed.
Dividend and Capital Gain Distributions
The Fund in this Prospectus pay any dividends and capital gains distributions at
least annually.
We offer the following distribution options:
o 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.
o 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.
o Bank Account Payment Option - Allows you to receive distributions directly
in a checking or savings account through ACH. The bank account must be
linked to your Wells Fargo Fund account. In order to establish a new linked
bank account, you must send a written signature guaranteed instruction
along with a copy of a voided check or deposit slip. Any distribution
returned to us due to an invalid banking instruction will be sent to your
address of record by check at the earliest date possible, and future
distributions will be automatically re-invested.
Additional Services and Other Information (Cont'd)
o Directed Distribution Purchase Option - Lets you buy shares of a different
Wells Fargo Fund of the same share class. The new shares are purchased at
NAV generally on the day the income is paid. In order to establish this
option, you need to identify the Fund and account the distributions are
coming from, and the Fund and account to which the distributions are being
directed. You must meet any required minimum purchases in both Funds prior
to establishing this option.
Remember, distributions have the effect of reducing the NAV per share by the
amount distributed.
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 Fund 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 Fund 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 the 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.
Backup Withholding - The Trust may be required to withhold, subject to certain
exemptions, at a rate of 31% ("backup withholding") on all 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 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 also could subject the
investor to penalties imposed by the IRS.
Portfolio Managers
Faraz Naqvi, M.D.
Dr. Naqvi is a Director of Dresdner RCM Global Investors, with which he has been
associated since 1998. From 1996-1998 he served as an analyst at Montgomery
Securities focusing on biotechnology and pharmaceutical companies. From 1994 -
1996 he served as a healthcare consultant for McKinsey & Company. He received
his BA in chemistry from Colorado College and his M.D. from Harvard Medical
School.
Michael Dauchot, M.D
Dr. Dauchot is a Director of Dresdner RCM Global Investors, with which he has
been associated since 1999. From 1996 - 1999, he served as an equity junior
analyst in the field of medical technology for Robertson Stephens & Co. During
that time, Mr. Dauchot obtained his MBA from the J. L. Kellogg School of
Business at Northwestern University. From 1991 - 1995 he served as a physician
in the Immediate Care Facility at Hammond Clinic in Munster, Indiana.
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 advisor.
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 the 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 BB or lower by S&P or Ba 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 Fund.
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.
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."
Glossary (Cont'd)
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 Fund' total assets. Non-diversified funds are not required to
follow such investment policies.
Dollar-Denominated
Securities issued by foreign banks, companies or governments in U.S. dollars.
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.
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 are commonly known as "Ginnie Maes" and are issued by the
Government National Mortgage Association.
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.
Glossary (Cont'd)
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.
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.
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.
Options
An option is the right to buy or sell a security based on an agreed upon price
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.
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.
Public Offering Price ("POP") The NAV with the sales load added.
Glossary (Cont'd)
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.
Selling Agent
A person who has an agreement with the Fund' 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.
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 Fund.
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.
WELLS FARGO FUNDS
YOU MAY WISH TO REVIEW THE FOLLOWING DOCUMENT:
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, option 0
WRITE TO:
Wells Fargo Funds
PO Box 8266
Boston, MA 02266-8266
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; or
by electronic request at [email protected]
Call: 1-800-SEC-0330 for details
ADDITIONAL SERVICES QUESTIONS CAN BE ANSWERED BY CALLING YOUR SPECIFIC PRODUCT
GROUP AT WELLS FARGO BANK:
Wells Fargo Checking and Savings: 1-800-869-3557
Next Stage IRA or Stagecoach IRA: 1-800-237-8472
Portfolio Advisor - 1-877-689-7882
========================= --------------------------------------------------
ICA Reg. No. 811-09253 NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
WFFT T P (7/00)
--------------------------------------------------
WELLS FARGO FUNDS TRUST
Telephone: 1-800-222-8222
STATEMENT OF ADDITIONAL INFORMATION
Dated February 1, 2001
SPECIALIZED HEALTH SCIENCES FUND
Class A, Class B, and Class C
Wells Fargo Funds Trust (the "Trust") is an open-end, management
investment company. This Statement of Additional Information ("SAI") contains
additional information about the Specialized Health Sciences Fund in the Wells
Fargo Funds Trust family of funds (the "Fund"). The Specialized Health Sciences
Fund is considered to be non-diversified under the Investment Company Act of
1940, as amended (the "1940 Act"). The Specialized Health Sciences Fund offers
Class A, Class B and 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
Fund's Prospectus, also dated February 1, 2001. 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, P.O. Box 8266, Boston, MA 02266-8266.
<TABLE>
<S> <C> <C>
TABLE OF CONTENTS
Page
Investment Policies.................................................................................. 1
Additional Permitted Investment Activities and Associated Risks...................................... 3
Management........................................................................................... 17
Performance Calculations............................................................................. 23
Determination of Net Asset Value..................................................................... 27
Additional Purchase and Redemption Information....................................................... 28
Portfolio Transactions............................................................................... 29
Fund Expenses........................................................................................ 31
Federal Income Taxes................................................................................. 31
Capital Stock........................................................................................ 37
Other................................................................................................ 39
Counsel.............................................................................................. 39
Independent Auditors................................................................................. 39
</TABLE>
INVESTMENT POLICIES
Fundamental Investment Policies
The Fund has adopted the following investment policies, all of which
are fundamental policies; that is, they may not be changed without approval by
the holders of a majority (as defined in 1940 Act) of the outstanding voting
securities of such Fund.
The Fund may not:
(1) borrow money, except to the extent permitted under the 1940 Act, including
the rules, regulations and any orders obtained thereunder;
(2) issue senior securities, except to the extent permitted under the 1940 Act,
including the rules, regulations and any orders obtained thereunder;
(3) make loans to other parties if, as a result, the aggregate value of such
loans would exceed one-third of the 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;
(4) 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 the Fund's investment program may be deemed to be an
underwriting;
(5) 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
(6) purchase or sell commodities, provided that (i) currency will not be deemed
to be a commodity for purposes of this restriction, (ii) this restriction does
not limit the purchase or sale of futures contracts, forward contracts or
options, and (iii) this restriction does not limit the purchase or sale of
securities or other instruments backed by commodities or the purchase or sale of
commodities acquired as a result of ownership of securities or other
instruments.
(7) 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 the Fund's investments in that industry would equal or
exceed 25% of the current value of the Fund's total assets, provided that this
restriction does not limit the Fund's investments in (i) securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, (ii)
securities of other investment companies, (iii) municipal securities, (iv)
repurchase agreements, or (v) securities of any industry or group of industries
considered to be "health sciences" related (by the Securities and Exchange
Commission, including its guidance or interpretation, by the North American
Industry Classification System, or by any other widely accepted industry
classification standards).
Non-Fundamental Investment Policies
The Fund has adopted the following non-fundamental policies which may be
changed by the Trustees of the Trust at any time without approval of such
Fund's shareholders.
(1) The Fund may invest in shares of other investment companies only to the
extent permitted under Section 12(d)(1)(A) and (B) of the 1940 Act, including
the rules, regulations and any orders obtained thereunder.
(2) The 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) The 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.
(4) The Fund may lend securities from its portfolio to approved brokers, dealers
and financial institutions, to the extent permitted under the 1940 Act,
including the rules, regulations and exemptions thereunder, which currently
limit such activities to one-third of the value of the Fund's total assets
(including the value of the collateral received). Any such loans of portfolio
securities will be fully collateralized based on values that are
marked-to-market daily.
(5) The Fund may not make investments for the purpose of exercising control or
management, provided that this restriction does not limit the Fund's investments
in securities of other investment companies or investments in entities created
under the laws of foreign countries to facilitate investment in securities of
that country.
(6) The Fund may not purchase securities on margin (except for short-term
credits necessary for the clearance of transactions).
(7) The Fund may sell securities short, whether or not it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold short
(short sales "against the box").
General
Notwithstanding the foregoing policies, any other investment companies
in which the Fund may invest have adopted their own investment policies, which
may be more or less restrictive than those listed above, thereby allowing the
Fund to participate in certain investment strategies indirectly that are
prohibited under the fundamental and non-fundamental investment policies listed
above.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES AND ASSOCIATED RISKS
Set forth below are descriptions of certain investments and additional
investment policies for the Fund. Not all Funds participate in all of the
investment practices described below. For purposes of monitoring the investment
policies and restrictions of the Fund (with the exception of the loans of
portfolio securities policy described below), the amount of any securities
lending collateral held by the Fund will be excluded in calculating total
assets.
Bank Obligations
The Fund 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, the Fund may be subject to additional investment risks that are different
in some respects from those incurred by the Fund which invests only in debt
obligations of 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 the 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.
Borrowing
The Fund may borrow money for temporary or emergency purposes,
including the meeting of redemption requests. Borrowing involves special risk
considerations. Interest costs on borrowings may fluctuate with changing market
rates of interest and may partially offset or exceed the return earned on
borrowed funds (or on the assets that were retained rather than sold to meet the
needs for which funds were borrowed). Under adverse market conditions, the Fund
might have to sell portfolio securities to meet interest or principal payments
at a time when investment considerations would not favor such sales. Reverse
repurchase agreements, short sales not against the box, dollar roll transactions
and other similar investments that involve a form of leverage have
characteristics similar to borrowings but are not considered borrowings if the
Fund maintains a segregated account.
Commercial Paper
The Fund 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 Fund 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 Fund may invest in convertible securities that provide current
income and that have a strong earnings and credit record. The Fund 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.
Custodial Receipts for Treasury Securities
The Fund 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.
Derivative Securities: Futures and Options Contracts
Futures and options contracts are types of "derivative securities,"
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, the Fund often invests in these securities as a "hedge" against
fluctuations in the value of the other securities in that Fund's portfolio,
although the 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 the
Fund's portfolio does not follow the Advisor's expectations. If the 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, the 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 Fund's 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).
The Advisor uses a variety of internal risk management procedures to
ensure that derivatives use is consistent with the Fund's investment objectives,
does not expose the 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 the Fund also is subject to broadly
applicable investment policies. For example, the 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 the 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 Fund 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 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 the Fund's
investment limitations. In the event of the bankruptcy of the broker that holds
the margin on behalf of the Fund, the Fund may not receive a full refund of its
margin.
Although the Fund 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 the Fund to substantial losses. If it is not
possible, or the 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 Fund may also purchase options on futures contracts. See "Options Trading"
below.
Foreign Currency Futures Contracts and Foreign Currency Transactions.
The Fund may invest in foreign currency futures contracts and foreign currency
transactions which 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.
The Fund may invest in foreign currency transactions. 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 Fund 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, 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, the Fund may sell a Currency
Future as a hedge. If it is anticipated that exchange rates will rise, the 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 the 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 the Fund to be unable
to hedge its securities, and may cause the Fund to lose money on its Currency
Futures investments.
The Fund may also purchase options on Currency Futures. See "Options Trading"
below.
Options Trading. The Fund 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 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 Fund will write call options that are "covered" or "uncovered." In
the case of a call option on a security or currency, the option is "covered" if
the 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 the 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 the Fund holds an offsetting call on the same
instrument or index as the call written. The Fund will write put options they
are "secured" by liquid assets maintained in a segregated account by the Fund's
custodian in an amount not less than the exercise price of the option at all
times during the option period.
The 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 the 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
Fund 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 the Fund's investment portfolio correlate
with price movements of the stock index selected. Accordingly, successful use by
the 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 the 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.
The Fund 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 the 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 the
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, the Fund risks the loss of the premium paid for the option.
The Fund 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 the 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 the Fund with another party of cash flows based
upon the performance of an index of securities. Interest-rate swaps involve the
exchange by the 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 Fund
will usually enter into swaps on a net basis. In so doing, the two payment
streams are netted out, with the Fund receiving or paying, as the case may be,
only the net amount of the two payments. If the 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 the Fund is
contractually obligated to make. There is also a risk of a default by the other
party to a swap, in which case the Fund may not receive net amount of payments
that the Fund contractually is entitled to receive.
Future Developments. The Fund 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 Fund or which are not currently available but which may be developed, to the
extent such opportunities are both consistent with the Fund's investment
objective and legally permissible for the Fund. Before entering into such
transactions or making any such investment, the Fund would provide appropriate
disclosure in its Prospectus or this SAI.
Dollar Roll Transactions
The Fund may enter into "dollar roll" transactions wherein the Fund
sells fixed income securities, typically mortgage-backed securities, and makes a
commitment to purchase similar, but not identical, securities at a later date
from the same party. Like a forward commitment, during the roll period no
payment is made for the securities purchased and no interest or principal
payments on the security accrue to the purchaser, but the Fund assumes the risk
of ownership. A Fund is compensated for entering into dollar roll transactions
by the difference between the current sales price and the forward price for the
future purchase, as well as by the interest earned on the cash proceeds of the
initial sale. Like other when-issued securities or firm commitment agreements,
dollar roll transactions involve the risk that the market value of the
securities sold by the Fund may decline below the price at which the Fund is
committed to purchase similar securities. In the event the buyer of securities
from the Fund under a dollar roll transaction becomes insolvent, the Fund's use
of the proceeds of the transaction may be restricted pending a determination by
the other party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities. The Fund will engage in roll
transactions for the purpose of acquiring securities for its portfolio and not
for investment leverage.
Emerging Market Securities
The Fund may invest in equity securities of companies in "emerging
markets." The Fund consider countries with emerging markets to include the
following: (i) countries with an emerging stock market as defined by the
International Finance Corporation; (ii) countries with low- to middle-income
economies according to the International Bank for Reconstruction and Development
(more commonly referred to as the World Bank); and (iii) countries listed in
World Bank publications as developing. The Advisor may invest in those emerging
markets that have a relatively low gross national product per capita, compared
to the world's major economies, and which exhibit potential for rapid economic
growth. The Advisor believes that investment in equity securities of emerging
market issuers offers significant potential for long-term capital appreciation.
Equity securities of emerging market issuers may include common stock,
preferred stocks (including convertible preferred stocks) and warrants; bonds,
notes and debentures convertible into common or preferred stock; equity
interests in foreign investment funds or trusts and real estate investment trust
securities. The Fund may invest in American Depositary Receipts ("ADRs"),
Canadian Depositary Receipts ("CDRs"), European Depositary Receipts ("EDRs"),
Global Depositary Receipts ("GDRs") and International Depositary Receipts
("IDRs") of such issuers.
Emerging market countries include, but are not limited to: Argentina,
Brazil, Chile, China, the Czech Republic, Columbia, Ecuador, Greece, Hong Kong,
Indonesia, India, Malaysia, Mexico, the Philippines, Poland, Portugal, Peru,
Russia, Singapore, South Africa, Thailand, Taiwan and Turkey. A company is
considered in a country, market or region if it conducts its principal business
activities there, namely, if it derives a significant portion (at least 50%) of
its revenues or profits from goods produced or sold, investments made, or
services performed therein or has at least 50% of its assets situated in such
country, market or region.
There are special risks involved in investing in emerging-market
countries. Many investments in emerging markets can be considered speculative,
and their prices can be much more volatile than in the more developed nations of
the world. This difference reflects the greater uncertainties of investing in
less established markets and economies. The financial markets of emerging
markets countries are generally less well capitalized and thus securities of
issuers based in such countries may be less liquid. Most are heavily dependent
on international trade, and some are especially vulnerable to recessions in
other countries. Many of these countries are also sensitive to world commodity
prices. Some countries may still have obsolete financial systems, economic
problems or archaic legal systems. The currencies of certain emerging market
countries, and therefore the value of securities denominated in such currencies,
may be more volatile than currencies of developed countries. In addition, many
of these nations are experiencing political and social uncertainties.
Floating- and Variable-Rate Obligations
The Fund 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 the 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, the 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
the 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 the Fund, considers on an ongoing basis the creditworthiness of the
issuers of the floating- and variable-rate demand obligations in such Fund's
portfolio. Floating- and variable-rate instruments are subject to interest-rate
and credit risk.
The floating- and variable-rate instruments that the Fund may purchase
include certificates of participation in such instruments.
Foreign Obligations and Securities
The Fund may invest in foreign securities through American Depositary
Receipts ("ADR"s), Canadian Depositary Receipts ("CDR"s), European Depositary
Receipts ("EDR"s), International Depositary Receipts ("IDR"s) and Government
Depositary Receipts ("GDR"s) 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.
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.
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 the 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
The 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.
The 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 Fund 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. 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 the Fund.
Initial Public Offerings
The Fund may also invest in smaller companies and initial public
offerings which typically have additional risks including more limited product
lines, markets and financial resources than larger, more seasoned companies and
their securities may trade less frequently and in more limited volume than those
of larger, more mature companies. The Fund's ability to invest in foreign
companies may expose shareholders to additional risks. Foreign stock markets
tend to be more volatile than the U.S. market due to greater economic and
political instability in some countries.
Loans of Portfolio Securities
The Fund may lend its portfolio securities pursuant to guidelines
approved by the Board of Trustees of the Trust to brokers, dealers and financial
institutions, provided: (1) the loan is secured continuously by collateral
consisting of cash, securities of the U.S. Government, its agencies or
instrumentalities, or an irrevocable letter of credit issued by a bank organized
under the laws of the United States, organized under the laws of a State, or a
foreign bank that has filed an agreement with the Federal Reserve Board to
comply with the same rules and regulations applicable to U.S. banks in
securities credit transactions, and such collateral being maintained on a daily
marked-to-market basis in an amount at least equal to the current market value
of the securities loaned plus any accrued interest or dividends; (2) the Fund
may at any time call the loan and obtain the return of the securities loaned
upon sufficient prior notification; (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.
A Fund will earn income for lending its securities because cash collateral
pursuant to these loans will be invested subject to the investment
objectives, principal investment strategies and policies of the Fund. In
connection with lending securities, the Fund may pay reasonable finders,
administrative and custodial fees. 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, the 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
the 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 securities lending agent. Borrowers and placing brokers may not
be affiliated, directly or indirectly, with the Trust, the Advisor, or the
Distributor.
Money Market Instruments and Temporary Investments
The Fund 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 Fund 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 Fund.
Letters of Credit. Certain of the debt obligations (including
certificates of participation, commercial paper and other short-term
obligations) which the 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 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. The 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 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, the 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 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 Fund's net assets
would be invested in repurchase agreements with maturities of more than seven
days 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 Fund may participate in pooled repurchase agreement
transactions with other funds advised by the Advisor.
Other Investment Companies
The Fund may invest in shares of other investment companies, up to the
limits prescribed in Section 12(d)(1)(A) and (B)of the 1940 Act. Currently,
under the 1940 Act, the Fund that invests directly in a portfolio of securities
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 total assets with respect
to any one investment company and (iii) 10% of such Fund's total assets. Other
investment companies in which the Fund 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 Fund.
Closed-End Investment Companies
The Fund may invest in the securities of closed-end investment
companies that invest primarily in foreign securities. Because of restrictions
on direct investment by U.S. entities in certain countries, other investment
companies may provide the most practical or only way for the Fund to invest in
certain markets. The Fund will invest in such companies when, in the Advisor's
judgment, the potential benefits of the investment justify the payment of any
applicable premium or sales charge. Other investment companies incur their own
fees and expenses.
Participation Interests
The Fund may purchase participation interests in loans or instruments
in which the Fund may invest directly that are owned by banks or other
institutions. A participation interest gives the Fund an undivided proportionate
interest in a loan or instrument. Participation interests may carry a demand
feature permitting the holder to tender the interests back to the bank or other
institution. Participation interests, however, do not provide the Fund with any
right to enforce compliance by the borrower, nor any rights of set-off against
the borrower and the Fund may not directly benefit from any collateral
supporting the loan in which it purchased a participation interest. As a result,
the Fund will assume the credit risk of both the borrower and the lender that is
selling the participation interest.
Privately Issued Securities
The Fund 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 the Fund. Privately issued or Rule 144A
securities that are determined by the investment Advisor to be "illiquid" are
subject to the Fund's 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 the Fund on a case-by-case basis and
will 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).
Reverse Repurchase Agreements
The Fund may enter into reverse repurchase agreements (an agreement
under which the Fund sells its portfolio securities and agrees to repurchase
them at an agreed-upon date and price). At the time the Fund enters into a
reverse repurchase agreement 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 Fund may decline below the
price at which the Fund are obligated to repurchase the securities. Reverse
repurchase agreements may be viewed as a form of borrowing.
Small Company Securities
Investments in small capitalization companies carry greater risk than
investments in larger capitalization companies. Smaller capitalization companies
generally experience higher growth rates and higher failure rates than do larger
capitalization companies; and the trading volume of smaller capitalization
companies' securities is normally lower than that of larger capitalization
companies and, consequently, generally has a disproportionate effect on market
price (tending to make prices rise more in response to buying demand and fall
more in response to selling pressure).
Securities owned by the Fund that are traded in the over-the-counter
market or on a regional securities exchange may not be traded every day or in
the volume typical of securities trading on a national securities exchange. As a
result, disposition by the Fund of a portfolio security, to meet redemption
requests by other investors or otherwise, may require the Fund to sell these
securities at a discount from market prices, to sell during periods when
disposition is not desirable, or to make many small sales over a lengthy period
of time.
Investment in small, unseasoned issuers generally carry greater risk
than is customarily associated with larger, more seasoned companies. Such
issuers often have products and management personnel that have not been tested
by time or the marketplace and their financial resources may not be as
substantial as those of more established companies. Their securities (which the
Fund may purchase when they are offered to the public for the first time) may
have a limited trading market that can adversely affect their sale by the Fund
and can result in such securities being priced lower than otherwise might be the
case. If other institutional investors engaged in trading this type of security,
the Fund may be forced to dispose of its holdings at prices lower than might
otherwise be obtained.
Unrated Investments
The Fund 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 the 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, the 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 Fund 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 Fund may invest in warrants. 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.
Nationally Recognized 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 the 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 the 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 Officers of the Trust are listed below.
The address of each, unless otherwise indicated, is 525 Market Street, 12th
Floor, San Francisco, CA 94105. Trustees deemed to be "interested persons" of
the Trust for purposes of the 1940 Act are indicated by an asterisk.
<TABLE>
<S> <C> <C>
Principal Occupations
Name, Age and Address Position During Past 5 Years
--------------------- -------- -------------------
*Robert C. Brown, 65 Trustee Director, Federal Farm
5038 Kestral Parkway South Corporation Credit Banks and Farm
Sarasota, FL 34231 Credit System Financial
Funding 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.
Peter G. Gordon, 56 Trustee Chairman and Co-Founder of Crystal Geyser Water
Crystal Geyser Water Co. Company and President of Crystal Geyser Roxane
55 Francisco Street, Suite 410 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; Chairman
10 Legare Street of Vault Holdings, LLC.
Charleston, SC 29401
Timothy J. Penny, 45 Trustee Senior Counselor to the public relations firm of
500 North State Street Himle-Horner since January 1995 and Senior Fellow
Waseca, MN 56093 at the Humphrey Institute, Minneapolis, Minnesota
(a public policy organization) since January 1995.
Donald C. Willeke, 59 Trustee Principal on the law firm of Willeke & Daniels.
201 Ridgewood Avenue
Minneapolis, MN 55403
Michael J. Hogan, 41 President Executive Vice President of Wells Fargo Bank, N.A.
since July 1999. Senior Vice President of Wells
Fargo Bank, N.A. from April 1997 to May 1999.
Vice President of American Express Financial
Advisors from May 1996 to April 1997, and Director
of American Express Financial Advisors from March
1993 to May 1996.
Karla M. Rabusch, 41 Treasurer Senior Vice President of Wells Fargo Bank, N.A.,
since May 2000. Vice President of Wells Fargo
Bank, N.A. from December 1997 to May 2000. Prior
thereto, Director of Managed Assets Investment
Accounting of American Express Financial Advisors
from May 1994 to November 1997.
C. David Messman, 40 Secretary Vice President and Senior Counsel of Wells Fargo
Bank, N.A. since January 1996. Prior thereto,
Branch Chief, Division of Investment Management,
</TABLE>
U.S. Securities and Exchange Commission.
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"). All of the non-interested Trustees are also
members of the Audit and Nominating Committees of the Trust, and of each other
trust in the Fund Complex.
Each Trustee receives an annual retainer (payable quarterly) of $40,000
from the Fund Complex, and also receives a combined fee of $1,000 for attendance
at Fund Complex Board meetings, and a combined fee of $250 for attendance at
committee meetings. If a committee meeting is held absent a full Board meeting,
each attending Trustee will receive a $1,000 combined fee. These fees apply
equally for in-person or telephonic meetings, and Trustees are reimbursed for
all out-of-pocket expenses related to attending meetings. The Trustees do not
receive any retirement benefits or deferred compensation from the Trust or any
other member of the Fund Complex. The Trust's officers are not compensated by
the Trust for their services. For the period ended June 30, 2000, the Trustees
received the following compensation:
Compensation Table
Through the Period Ended June 30, 2000
Trustee Compensation
Robert C. Brown $26,435
Donald H. Burkhardt $25,717
Jack S. Euphrat $30587
Thomas S. Goho $30587
Peter G. Gordon $30587
W. Rodney Hughes $30,087
Richard M. Leach $25,435
J. Tucker Morse $30,087
Timothy J. Penny $26,935
Donald C. Willeke $26,935
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. Subject to the general supervision of the Board,
Wells Fargo Bank provides investment advisory services to the Fund. As
investment advisor, Wells Fargo Bank furnishes investment guidance and policy
direction in connection with the daily portfolio management of the Fund. Wells
Fargo Bank furnishes to the Trust's Board of Trustees periodic reports on the
investment strategies and performance of the Fund.
As compensation for its advisory services for the Fund, Wells Fargo
Bank is entitled to receive a monthly fee at the annual rate of 1.05% of the
Fund's average daily net assets.
Investment Sub-Advisor. Wells Fargo has engaged Dresdner RCM Global
Investors LLC ("Dresdner") to serve as investment sub-advisor to the Specialized
Health Sciences 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,
Dresdner makes recommendations regarding the investment and reinvestment of the
Fund's assets. Dresdner is responsible for the day-to-day management of the
Fund. Dresdner furnishes to Wells Fargo Bank periodic reports on the investment
activity and performance of the Fund. Dresdner also furnishes such additional
reports and information as Wells Fargo and the Trust's Board of Trustees and
officers may reasonably request.
As compensation for its sub-advisory services, Dresdner is entitled to
receive a monthly fee equal to an annual rate of 1.00% of the Fund's assets
under $100 million of the Fund's average daily net assets and 0.75% of the
Fund's assets from $100-$500 million, 0.60% of assets from $500-$999.999 million
and 0.50% of assets at $1 billion or more. 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.
Administrator. The Trust has retained Wells Fargo Bank as Administrator
on behalf of the 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 Fund's operations, including
coordination of the services performed by the 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 the 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 Fund's business
together with ordinary clerical and bookkeeping services. The Administrator is
entitled to receive a fee of up to 0.15% of the Fund's average daily net assets
on an annual basis.
Distributor. Stephens Inc. ("Stephens," the "Distributor"), located at
111 Center Street, Little Rock, Arkansas 72201, serves as Distributor for the
Fund. The Specialized Health Sciences 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 Fund 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 Fund 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
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 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
Fund's 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 Fund 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 Fund 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 Fund has 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 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 Shareholder
Servicing Agreements were approved by the Trust's Board of Trustees and provide
that the 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.
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,
and the 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. Wells Fargo Bank Minnesota, N.A. ("Wells Fargo Bank MN"),
located at Norwest Center, 6th and Marquette, Minneapolis, Minnesota 55479, acts
as custodian for the Fund. The custodian, among other things, maintains a
custody account or accounts in the name of the Fund, receives and delivers all
assets for the Fund upon purchase and upon sale or maturity, collects and
receives all income and other payments and distributions on account of the
assets of the Fund and pays all expenses of the Fund. For its services as
custodian, Wells Fargo Bank MN is entitled to receive 0.07% of the average daily
net assets of the Fund.
Fund Accountant. Forum Accounting Services, LLC ("Forum Accounting"),
located at Two Portland Square, Portland, Maine 04101, serves as Fund Accountant
for the Fund. For its services as Fund Accountant, Forum Accounting is entitled
to receive a monthly base fee per Fund of $5,000. In addition, the Fund pays a
monthly fee of $1,000 per class, and Forum Accounting is entitled to receive a
fee equal to 0.0025% of the average annual daily net assets of the Fund.
Transfer and Dividend Disbursing Agent. Boston Financial Data Services,
Inc. ("BFDS"), located at Two Heritage Drive, Quincy, Massachusetts 02171, acts
as Transfer and Dividend Disbursing Agent for the Fund. For providing such
services, BFDS is entitled to receive a per-account fee plus transaction fees
and certain out-of-pocket costs. BFDS is also entitled to receive a
complex-based fee from all the funds or portfolios of the Trust, Wells Fargo
Core Trust and Wells Fargo Variable Trust.
Underwriting Commissions.
------------------------
Stephens serves as the principal underwriter distributing securities of the
Fund on a continuous basis.
PERFORMANCE CALCULATIONS
The Fund may advertise certain yield and total return information.
Quotations of yield and total return reflect only the performance of a
hypothetical investment in the 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 the 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 the Fund or Class of shares in the 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 the Fund and the performance of a Class of shares in the 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 Fund. Annual
and Semi-Annual Reports for the Fund may contain additional performance
information, and are available free of charge upon request.
Average Annual Total Return: The Fund 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, the 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.
From time to time and only to the extent the comparison is appropriate
for the Fund or a Class of shares, the Trust may quote the performance or
price-earning ratio of the 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 Fund 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 Fund'
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 Fund' comparative performance will be based on a comparison of
yields 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 Fund 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 the Fund; (ii) other government statistics,
including, but not limited to, The Survey of Current Business, may be used to
illustrate investment attributes of the Fund or the general economic, business,
investment, or financial environment in which the Fund operates; (iii) the
effect of tax-deferred compounding on the investment returns of the 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 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 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 the Fund has been assigned a rating by an NRRO, 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 NRROs.
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 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
Funds, provides various services to its customers that are also shareholders of
the Fund. 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 Fund 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 June 30, 1999, Wells Fargo
Bank and its affiliates managed over $131 billion in 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 Fund 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 Fund 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 the 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.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for each class of the Fund is determined as
of the close of regular trading (currently 1:00 p.m. (Pacific time), 3:00 p.m.
(Central time), 4:00 p.m. (Eastern 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 Fund's shares.
Securities of the 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. If the values reported on a foreign exchange are materially affected
by events occurring after the close of the foreign exchange, assets may be
valued by a method that the Board of Trustees believes accurately reflects fair
value. 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 the 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 the 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.
Foreign portfolio securities are generally valued on the basis of
quotations from the primary market in which they are traded. However, if, in the
judgment of the Board of Trustees, a security's value has been materially
affected by events occurring after the close of the exchange or the market on
which the security is principally traded (for example, a foreign exchange or
market), that security may be valued by another method that the Board of
Trustees believes accurately reflects fair value. A security's valuation may
differ depending on the method used to determine its value.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares may be purchased on any day the Fund is open for business. The
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 Fund will require, among
other things, that the securities be valued on the day of purchase in accordance
with the pricing methods used by the Fund and that the 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 reserve the right to reject any purchase
orders, and 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
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.
The dealer reallowance for Class A shares of the Specialized Health Sciences
Fund is as follows:
<TABLE>
<S> <C> <C> <C>
---------------------------------------------------------------------------------------
----------------------- -------------------- --------------------- --------------------
FRONT-END SALES FRONT-END SALES DEALER
CHARGE AS % CHARGE AS % ALLOWANCE
AMOUNT OF PUBLIC OF NET AMOUNT AS % OF PUBLIC
OF PURCHASE OFFERING PRICE INVESTED OFFERING PRICE
----------------------- -------------------- --------------------- --------------------
----------------------- -------------------- --------------------- --------------------
----------------------- -------------------- --------------------- --------------------
----------------------- -------------------- --------------------- --------------------
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 over1 0.00% 0.00% 1.00%
----------------------- -------------------- --------------------- --------------------
</TABLE>
1We 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.
Purchases and Redemptions Through Brokers and/or Their Affiliates. A
broker may charge transaction fees on the purchase and/or sale of Fund shares in
addition to those fees described in the Prospectus in the Summary of Expenses.
The Trust has authorized one or more brokers to receive on its behalf purchase
and redemption orders, and such brokers are authorized to designate other
intermediaries to receive purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order for
Fund shares when an authorized broker or, if applicable, a broker's authorized
designee, receives the order.
Reduced Sales Charges for Employees of the Transfer Agent.
---------------------------------------------------------
Employees of Boston Financial Data Services, Inc., transfer agent
for the Trust, may purchase Class A shares at net asset value.
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 the 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 Fund 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 the 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 Fund, may,
in circumstances in which two or more dealers are in a position to offer
comparable results for the 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 the 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 Fund.
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 Fund whenever such changes are believed to be in the best interests of the
Fund 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 Fund, 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 Fund in whole or in part. Any such waiver will reduce expenses and,
accordingly, have a favorable impact on the 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
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 Fund, in a manner proportionate to
the net assets of the 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 Prospectus of the Fund
generally describes the tax treatment of distributions by the Fund. This section
of the SAI includes additional information concerning federal income taxes.
General. The Trust intends to continue to qualify the 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
interests of the Fund's shareholders. The 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
separately to the Fund, rather than to the Trust as a whole. In addition,
capital gains, net investment income, and operating expenses will be determined
separately for the Fund. As a regulated investment company, the Fund will not be
taxed on its net investment income and capital gain distributed to its
shareholders.
Qualification as a regulated investment company under the Code
requires, among other things, that the Fund 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 Fund must also distribute or be deemed to distribute to their
shareholders at least 90% of their net investment income (including, for this
purpose, net short-term capital gain) 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 Fund 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 the 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. The 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 the 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 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 an option granted by the 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 the 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 the 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, the 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 Fund will attempt to monitor Section 988
transactions, where applicable, to avoid adverse Federal income tax impact.
Offsetting positions held by the 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 the
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 the 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 the 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 the 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.
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% of the value of
the Fund's total assets at the close of its taxable year consists of
securities of non-U.S. corporations, the Fund 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. Only the International Equity Fund and International Fund
expect to qualify for the election. However, even if the Fund qualifies for
the election, foreign taxes will only pass-through to the Fund shareholder if
(i) the shareholder holds the Fund shares for at least 16 days during the 30
day period beginning 15 days prior to the date upon which the shareholder
becomes entitled to receive Fund distributions corresponding with the
pass-through of the foreign taxes paid by the Fund, and (ii) with respect to
foreign source dividends received by the Fund on shares giving rise to
foreign tax, the Fund holds the shares for at least 16 days during the 30 day
period beginning 15 days prior to the date upon which the Fund becomes
entitled to the dividend.
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.
Capital Gain Distributions. Distributions which are designated by the 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. 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 all 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 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 also could subject the investor to penalties imposed by
the IRS.
Foreign Shareholders.
--------------------
Under the Code, distributions attributable to net investment income, net
short-term capital gain and certain other items realized by the Fund and paid 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 (each, 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
distribution 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. Capital gain distributions generally are 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, 2000, subject to certain
transition rules. Among other things, the New Regulations will permit the Fund
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 federal income tax withholding.
Prospective investors are urged to consult their own tax advisors regarding the
New Regulations.
Corporate Shareholders. Corporate shareholders of the Fund may be eligible
for the dividends-received deduction on dividends distributed out of the
Fund's income attributable to dividends received from domestic corporations,
which, if received directly by the corporate shareholder, would qualify for
such deduction. A distribution by the 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.
Tax-Deferred Plan. The shares of the Fund 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.
Other Matters. Investors should be aware that the investments to be made by
the Fund may involve sophisticated tax rules that may result in income or
gain recognition by the Fund without corresponding current cash receipts.
Although the Fund will seek to avoid significant noncash income, such noncash
income could be recognized by the Fund, in which case the Fund 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 Fund. 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 Fund is one 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-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 share in the Fund represents an equal, proportionate interest in the Fund
with all other shares. Shareholders 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 the 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 the Fund' 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 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 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 are
issued in uncertificated form only, and, 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 the 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 the 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.
Set forth below as of July 24, 2000 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 the 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 the Fund as a whole.
<TABLE>
<S> <C> <C> <C>
5% OWNERSHIP AS OF February 6, 2000
Name and Type of Percentage
Fund Address Ownership of Class
Specialized Stephens Inc. Record 100%
Health Sciences Fund 111 Center Street, Suite 300
Class A Little Rock, AR 72201
Class B Stephens Inc. Record 100%
111 Center Street, Suite 300
Little Rock, AR 72201
Class C Stephens Inc. Record 100%
111 Center Street, Suite 300
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 Fund 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.
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 Fund's 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.
WELLS FARGO FUNDS TRUST
File Nos. 333-74295; 811-09253
PART C
OTHER INFORMATION
Item 23. Exhibits.
--------
Exhibit
Number Description
(a) - Amended and Restated Declaration of Trust,
incorporated by reference to Post-Effective
Amendment No. 8, filed December 17, 1999.
(b) - Not applicable.
(c) - Not applicable.
(d)(1)(i) - Investment Advisory Agreement with Wells Fargo
Bank, N.A., incorporated by reference to Post-
Effective Amendment No. 16, filed October 30,
2000.
(ii) - Fee and Expense Agreement between Wells Fargo
Funds Trust and Wells Fargo Bank, N.A.,
incorporated by reference to Post-Effective
Amendment No. 16, filed October 30, 2000.
(2)(i) - Sub-Advisory Contract with Barclays Global Fund
Advisors, incorporated by reference to Post-
Effective Amendment No. 16, filed October 30,
2000.
(ii) - Sub-Advisory Contract with Galliard Capital
Management, Inc., incorporated by reference to
Post-Effective Amendment No. 16, filed October
30, 2000.
(iii) - Sub-Advisory Contract with Peregrine Capital
Management, Inc., incorporated by reference to
Post-Effective Amendment No. 16, filed October
30, 2000.
(iv) - Sub-Advisory Contract with Schroder Investment
Management North America Inc., incorporated by
reference to Post-Effective Amendment No. 16,
filed October 30, 2000.
(v) - Sub-Advisory Contract with Smith Asset
Management Group, L.P., incorporated by
reference to Post-Effective Amendment No. 16,
filed October 30, 2000.
(vi) - Sub-Advisory Contract with Wells Capital
Management, Inc., incorporated by reference to
Post-effective Amendment No. 16, filed October
30, 2000.
(e) - Distribution Agreement along with Form of
Selling Agreement, incorporated by reference to
Post-effective Amendment No. 16, filed October
30, 2000.
(f) - Not applicable.
(g)(1) - Custody Agreement with Barclays Global
Investors, N.A., incorporated by reference to
Post-Effective Amendment No. 16, filed October
30, 2000.
(2) - Custody Agreement with Wells Fargo Bank
Minnesota, N.A., incorporated by reference to
Post-Effective Amendment No. 16, filed October
30, 2000.
(i) Delegation Agreement (17f-5) with Wells Fargo
Bank Minnesota, N.A., incorporated by reference
to Post-Effective Amendment No. 16, filed
October 30, 2000.
(3) - Securities Lending Agreement by and among Wells
Fargo Funds Trust, Wells Fargo Bank, N.A. and
Wells Fargo Bank Minnesota, N.A., incorporated
by reference to Post-Effective Amendment No. 8,
filed December 17, 1999.
(h)(1) - Administration Agreement with Wells Fargo Bank,
N.A., incorporated by reference to Post-
Effective Amendment No. 16, filed October 30,
2000.
(2) - Fund Accounting Agreement, incorporated by
reference to Post-Effective Amendment No. 9,
filed February 1, 2000.
(3) - Transfer Agency and Service Agreement with
Boston Financial Data Services, Inc.,
incorporated by reference to Post-Effective
Amendment No. 16, filed October 30, 2000.
(4) - Shareholder Servicing Plan, incorporated by
reference to Post-Effective Amendment No. 16,
filed October 30, 2000.
(5) - Shareholder Servicing Agreement, incorporated
by reference to Post-Effective Amendment No. 8,
filed December 17, 1999.
(i) - Legal Opinion, filed herewith.
(j)(1) - Power of Attorney, Robert C. Brown,
incorporated by reference to Post-Effective
Amendment No. 10, filed May 10, 2000.
(2) - Power of Attorney, Donald H. Burkhardt,
incorporated by reference to Post-Effective
Amendment No. 10, filed May 10, 2000.
(3) - Power of Attorney, Jack S. Euphrat,
incorporated by reference to Post-Effective
Amendment No. 10, filed May 10, 2000.
(4) - Power of Attorney, Thomas S. Goho, incorporated
by reference to Post-Effective Amendment No.
10, filed May 10, 2000.
(5) - Power of Attorney, Peter G. Gordon, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.
(6) - Power of Attorney, W. Rodney Hughes, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.
(7) - Power of Attorney, Richard M. Leach, incorporated by
reference to Post-Effective Amendment No. 16, filed October
30, 2000.
(8) - Power of Attorney, J. Tucker Morse, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.
(9) - Power of Attorney, Timothy J. Perry, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.
(10) - Power of Attorney, Donald C. Willeke, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.
(11) - Power of Attorney, Michael J. Hogan, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.
(12) - Power of Attorney, Karla M. Rabusch, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.
(k) - Not applicable.
(l) - Not applicable.
(m) - Rule 12b-1 Plan, incorporated by reference to
Post-Effective Amendment No. 8, filed December 17, 1999; see
Exhibit (e) above for related Distribution Agreement.
(n) - Rule 18f-3 Plan, incorporated by reference to
Post-Effective Amendment No. 8, filed December 17,
1999.
(p)(1) - Joint Code of Ethics for Funds Trust, Core Trust
and Variable Trust, incorporated by reference to
Post-Effective Amendment No. 15, filed October 2, 2000.
(2) - Wells Fargo Bank, N.A. Code of Ethics, incorporated
by reference to Post-Effective Amendment No. 15, filed
October 2, 2000.
(3) - Barclays Global Investors, N.A. Code of Ethics,
incorporated by reference to Post-Effective Amendment
No. 15, filed October 2, 2000.
(4) - Dresdner RCM Global Investors, Inc. Code of Ethics,
incorporated by reference to Post-Effective Amendment
No. 15, filed October 2, 2000.
(5) - Galliard Capital Management, Inc. Code of Ethics,
incorporated by reference to Post-Effective Amendment
No. 15, filed October 2, 2000.
(6) - Peregrine Capital Management, Inc. Code of Ethics,
incorporated by reference to Post-Effective Amendment
No. 15, filed October 2, 2000.
(7) - Schroder Investment Management North America, Inc.
Code of Ethics, incorporated by reference to
Post-Effective Amendment No. 15, filed October 2, 2000.
(8) - Smith Asset Management Group, L.P. Code of Ethics,
incorporated by reference to Post-Effective Amendment
No. 15, filed October 2, 2000.
(9) - Wells Capital Management, Inc. Code of Ethics,
incorporated by reference to Post-Effective Amendment
No. 15, filed October 2, 2000.
Item 24. Persons Controlled by or Under Common Control with the Fund.
-----------------------------------------------------------
Registrant believes that 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. 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.
----------------------------------------------------
(a) 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 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
and/or its subsidiaries.
(b) Barclays Global Fund Advisors ("BGFA"), a wholly-owned
subsidiary of Barclays Global Investors, N.A. ("BGI"), serves as an adviser or
sub-adviser to various Funds of the Trust and as adviser or sub-adviser to
certain other open-end management investment companies. The description of BGFA
in Parts A and B of this Registration Statement is incorporated by reference
herein. The directors and officers of BGFA also serve as directors or officers
of BGI. To the knowledge of the Registrant, 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.
(c) Wells Capital Management, Inc. ("WCM"), a wholly-owned
subsidiary of Wells Fargo Bank, N.A., serves as sub-adviser to various Funds of
the Trust. The description of WCM in Parts A and B of this Registration
Statement is incorporated by reference herein. None of the directors and
principal executive officers of WCM serves, or has served in the past two fiscal
years, in such capacity for any other entity.
(d) Peregrine Capital Management, Inc. ("Peregrine"), an
indirect wholly-owned subsidiary of Wells Fargo & Company, serves as sub-adviser
to various Funds of the Trust. The description of Peregrine in Parts A and B of
the Registration Statement is incorporated by reference herein. To the knowledge
of the Registrant, none of the directors or executive officers of this
sub-adviser is or has been at any time during the last two fiscal years engaged
in any other business, profession, vocation or employment of a substantial
nature.
(e) Schroder Investment Management North America Inc. ("SIMNA"), serves as
sub-adviser to various Funds of the Trust. The description of SIMNA in
Parts A and B of the Registration Statement is incorporated by reference
herein. The address is 787 Seventh Avenue, 34th Floor, New York, NY 10019.
Schroder Capital Management International Limited ("Schroder Ltd.") is a
United Kingdom affiliate of SIMNA which provides investment management
services to international clients located principally in the United States.
Schroder Ltd. and Schroders p.l.c. are located at 31 Gresham St., London
ECZV 7QA, United Kingdom. To the knowledge of the Registrant, none of the
directors or executive officers of this sub-adviser is or has been at any
time during the last two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature.
(f) Galliard Capital Management, Inc. ("Galliard"), an indirect,
wholly-owned subsidiary of Wells Fargo & Company serves as sub-adviser to
various Funds of the Trust. The descriptions of Galliard in Parts A and B of the
Registration Statement are incorporated by reference herein. The address of
Galliard is LaSalle Plaza, Suite 2060, 800 LaSalle Avenue, Minneapolis,
Minnesota 55479. To the knowledge of the Registrant, none of the directors or
executive officers of this sub-adviser is or has been at any time during the
last two fiscal years engaged in any other business, profession, vocation or
employment of a substantial nature.
(g) Smith Asset Management, L.P. ("Smith"), an indirect,
partially-owned subsidiary of Wells Fargo & Company serves as sub-adviser to
various Funds of the Trust. The descriptions of Smith in Parts A and B of the
Registration Statement are incorporated by reference herein. The address of
Smith is 300 Crescent Court, Suite 750, Dallas, Texas 75201. To the knowledge of
the Registrant, none of the directors or executive officers of this sub-adviser
is or has been at any time during the last two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature.
(h) Golden Capital Management ("Golden"), a division of Smith
Asset Management, L.P. serves as sub-advisor to the OTC Growth Fund of the
Trust. The descriptions of Golden in Parts A and B of the Registration Statement
are incorporated by reference herein. The address of Golden is 10926 David
Taylor Drive, Suite 180, Charlotte, North Carolina 28262. To the knowledge of
the Registrant, none of the directors or executive officers of this sub-adviser
is or has been at any time during the last two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature.
(i) Dresdner RCM Global Investors LLC ("Dresdner"), an indirect,
wholly owned subsidiary of Dresdner Bank AG, serves as sub-advisor for the
Specialized Technology Fund of the Trust. The descriptions of Dresdner in Parts
A and B of the Registration Statement are incorporated by reference herein. The
address of Dresdner is Four Embarcadero Center, San Francisco, California 94111.
To the knowledge of the Registrant, none of the directors or executive officers
of this sub-adviser is or has been at any time during the last two fiscal years
engaged in any other business, profession, vocation or employment of a
substantial nature.
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 Barclays Global Investors
Funds, Inc., Nations Fund, Inc., Nations Fund Trust, Nations Annuity Trust,
Nations LifeGoal Funds, Inc., Nations Reserves, Nations Funds Trust, Wells Fargo
Variable Trust and Wells Fargo Funds Trust, and is the exclusive placement agent
for Nations Master Investment Portfolio and Wells Fargo Core Trust, 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 Advisers Act of 1940 (file No. 501-15510).
(c) Not applicable.
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 Wells Fargo Bank, N.A.,
525 Market Street, San Francisco, California 94105.
(b) Wells Fargo Bank maintains all Records relating to its
services as investment adviser and administrator 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, at 45 Fremont Street, San Francisco,
California 94105.
(d) Stephens maintains all Records relating to its services
as distributor at 111 Center Street, Little Rock, Arkansas 72201.
(e) Wells Fargo Bank Minnesota, N.A. maintains all Records
relating to its services as custodian at 6th & Marquette, Minneapolis, Minnesota
55479-0040.
(f) Wells Capital Management, Inc. maintains all Records
relating to its services as investment sub-adviser at 525 Market Street, San
Francisco, California 94105.
(g) Peregrine Capital Management, Inc. maintains all
Records relating to its services as investment sub-adviser at 800 LaSalle
Avenue, Minneapolis, Minnesota 55479.
(h) Galliard Capital Management, Inc. ("Galliard")
maintains all Records relating to its services as investment sub-adviser at 800
LaSalle Avenue, Suite 2060, Minneapolis, Minnesota 55479.
(i) Smith Asset Management Group, LP maintains all Records
relating to its services as investment sub-adviser at 500 Crescent Court, Suite
250, Dallas, Texas 75201.
(j) Golden Capital Management maintains all Records relating to
its services as investment sub-adviser at 10926 David Taylor Drive, Suite 180,
Charlotte, North Carolina 28262.
(k) Schroder Investment Management North America Inc.
maintains all Records relating to its services as investment sub-adviser at 787
Seventh Avenue, New York, New York 10019.
(l) Dresdner RCM Global Investors, Inc. maintains all
Records relating to its services as investment sub-adviser at Four Embarcadero
Center, San Francisco, California 94111.
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. Not applicable.
------------
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized in the City of San Francisco, State of California on the
17th day of November, 2000.
WELLS FARGO FUNDS TRUST
By /s/ Dorothy A. Peters
------------------------------------
Dorothy A. Peters
Assistant Secretary
(Attorney-in-Fact for Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 18 to its 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
* Trustee
Donald C. Willeke
*By: /s/ Dorothy A. Peters
-------------------------------
Dorothy A. Peters
As Attorney-in-Fact
November 17, 2000
WELLS FARGO FUNDS TRUST
FILE NOS. 333-74295; 811-09253
EXHIBIT INDEX
Exhibit Number Description
EX-99.B(i) Opinion and Consent of Counsel
[GRAPHIC OMITTED][GRAPHIC OMITTED]
[MORRISON & FOERSTER LLP LETTERHEAD]
November 17, 2000
Wells Fargo Funds Trust
111 Center Street
Little Rock, Arkansas 72201
Re: Shares of Beneficial Interest 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 beneficial interest 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 has been duly and
validly authorized by all appropriate action of the Trust, and assuming delivery
by sale or in accord with the Trust's dividend reinvestment plan in accordance
with the description set forth in the Funds' current prospectuses under the
Securities Act of 1933, as amended, the Shares will be legally issued, fully
paid and nonassessable by the Trust.
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
