<PAGE>
As filed with the Securities and Exchange Commission
on March 26, 1999
Registration No. 333-74283; 811-09255
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Pre-Effective Amendment No. [ ]
---
Post-Effective Amendment No. 1 [X]
---
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 2 [X]
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________________________
WELLS FARGO VARIABLE TRUST
(Exact Name of Registrant as specified in Certificate of Trust)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
__________________________
Registrant's Telephone Number, including Area Code: (800) 643-9691
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With a copy to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster LLP
2000 Pennsylvania Ave., N.W.
Washington, D.C. 20006
It is proposed that this filing will become effective (check appropriate box):
[X] Immediately upon filing pursuant to Rule 485(b), or
[_] on _________ pursuant to Rule 485(b)
[_] 60 Days after filing pursuant to Rule 485(a)(1), or
[_] on _________ pursuant to Rule 485(a)(1)
[_] 75 days after filing pursuant to Rule 485(a)(2), or
[_] on _________ pursuant to Rule 485(a)(2)
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
EXPLANATORY NOTE
----------------
This Post-Effective Amendment No. 1 to the Registration Statement of
Wells Fargo Variable Trust is being filed to register the definitive forms of
prospectus and statement of additional information for the Trust, and to make
certain other non-material changes.
<PAGE>
Wells Fargo Variable Trust
PROSPECTUS
Corporate Bond Fund
Large Company Growth Fund
Small Cap Fund
Please read this prospectus and keep it for future reference. It is designed
to provide you with important information and to help you decide if a Fund's
goals match your own.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") NOR HAS THE SEC PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
FUND SHARES ARE NOT DEPOSITS OF WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") OR
ANY OF ITS AFFILIATES. FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC") OR ANY OTHER GOVERNMENT AGENCY.
AN INVESTMENT IN A FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
June 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
OVERVIEW.................. 3
This section contains
important summary
information about
the Funds.
Objectives and Principal
Strategies............. 3
Important Risks......... 3
THE FUNDS................. 4
This section contains
important information
about the individual
Funds.
Corporate Bond Fund..... 5
Large Company Growth
Fund................... 6
Small Cap Fund.......... 7
General Investment
Risks.................. 8
Organization and
Management of the
Funds.................. 13
YOUR INVESTMENT........... 14
Turn to this section for
information on your
investments including
how to
buy and sell Fund
shares.
Investing in the Funds.. 15
Other Information....... 15
GLOSSARY.................. 17
</TABLE>
2
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WELLS FARGO VARIABLE TRUST FUNDS OVERVIEW
<TABLE>
<CAPTION>
Fund Objective Principal Strategy
---- --------- ------------------
<C> <C> <S>
Corporate Bond Fund Seeks a high level of We invest in corporate debt
current income, securities of any maturity with
consistent with attractive yields based on
reasonable risk. current economic conditions. We
generally maintain an average
portfolio maturity of 10-15
years.
Large Company Growth Seeks long-term We invest in common stocks of
Fund capital appreciation. large, high-quality domestic
companies that we believe
possess superior growth
potential.
Small Cap Fund Seeks long-term We invest in equity securities
capital appreciation. of domestic and foreign
companies whose market
capitalization falls within the
range of the Russell 2000 Index,
which is considered a small
capitalization index. We buy
stocks that we believe have
above-average prospects for
capital growth, or that may be
involved in new or innovative
products, services and
processes.
</TABLE>
IMPORTANT RISKS
This section summarizes important risks that are common to all of the Funds
described in this Prospectus, and important risks that relate specifically to
particular Funds. Both are important to your investment choice. Additional
information about these and other risks is included in the individual Fund
Descriptions later in this Prospectus and under General Investment Risks
beginning on page 10. An investment in a Fund is not a deposit of Wells Fargo
Bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Common Risks for the Funds
Equity Securities. The Large Company Growth and Small Cap Funds invest in
equity securities, which are subject to equity market risk. This is the risk
that stock prices will fluctuate and can decline and reduce the value of a
Fund's portfolio. Certain types of stock and certain individual stocks
selected for a Fund's portfolio may underperform or decline in value more than
the overall market. As of the date of this Prospectus, the equity markets, as
measured by the S&P 500 Index and other commonly used indexes, are trading at
or close to record levels. There can be no guarantee that these levels will
continue. The Small Cap Fund invests in smaller companies, and in emerging
markets, and both Funds invest in foreign companies (including investments
made through American Depositary Receipts and similar instruments) that are
subject to additional risks, including less liquidity and greater price
volatility. A Fund's investments in foreign companies and emerging markets are
also subject to special risks associated with international investing,
including currency, political, regulatory and diplomatic risks.
Debt Securities. The Corporate Bond Fund invests in debt instruments, such
as notes and bonds, which are subject to credit risk and interest rate risk.
Credit risk is the possibility that an issuer of a securities will be unable
to make interest payments or repay principal. Changes in the financial
strength of an issuer or changes in the credit rating of a security may affect
its value. Interest rate risk is the risk that interest rates may increase,
which will reduce the resale value of securities in a Fund's portfolio,
including U.S. Government obligations. Debt securities with longer maturities
are generally more sensitive to interest rate changes than those with shorter
3
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maturities. Changes in market interest rates do not affect the rate payable on
debt securities held in a Fund, unless the securities has adjustable or
variable rate features, which can reduce interest rate risk. Changes in market
interest rates may also extend or shorten the duration of certain types of
securities, such as asset-backed securities, thereby affecting their value and
the return on your investment. The Large Company Growth Fund may invest some
of its assets in debt securities.
<TABLE>
<CAPTION>
Fund Specific Risks
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<C> <S>
Corporate Bond Fund This Fund may invest in securities regardless of
their rating, or in securities that are unrated
or are in default at the time of purchase.
Large Company Growth Fund The advisor selects growth stocks based in part
on prospects for future earnings, which may not
grow as expected. In addition, at times, growth
stocks may underperform the overall market or
the market for value stocks.
Small Cap Fund This Fund may invest in companies that pay low
or no dividends, have smaller market
capitalizations, have less market liquidity,
have no or relatively short operating histories,
or are newly public companies. Some of these
companies have aggressive capital structures,
including high debt levels, or are involved in
rapidly growing or changing industries and/or
new technologies. Because the Fund may invest in
such aggressive securities, share prices may
rise and fall more than the share prices of
other funds. In addition, our active trading
investment strategy may result in a higher-than-
average portfolio turnover ratio, increased
trading expenses, and higher short-term capital
gains. The advisor selects stocks for this Fund
based in part on their prospects for future
earnings, which may not grow as expected. In
addition, at times, growth stocks may
underperform the overall market or the market
for value stocks.
</TABLE>
Performance History
The Funds in this prospectus will commence operation in September 1999, and
have not included a bar chart showing total return information because they
have not been in operation for a full calendar year.
The summary information described above is designed to provide you with an
overview of each Fund. The sections that follow provide more detailed
information about the investments and management of each Fund.
Important information you should look for:
Investment Objective and Investment Policies
What is the Fund trying to achieve? How do we intend to invest your money?
What makes a Fund different from the other Funds offered in this Prospectus?
4
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Permitted Investments
A summary of the Fund's key permitted investments and practices.
Important Risk Factors
What are key risk factors for the Fund? They include the factors described in
"General Investment Risks" together with any special risk factors for each
Fund.
5
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CORPORATE BOND FUND
Investment Objective
The Corporate Bond Fund seeks a high level of current income, consistent
with reasonable risk. Changes to this objective do not require a shareholder
vote.
Investment Policies
We seek a high rate of current income by actively managing a diversified
portfolio consisting primarily of corporate debt securities. When purchasing
these securities we consider, among other things, the yield differences for
various corporate sectors, and the current economic cycle's potential effect
on the various types of bonds. We may invest in securities of any maturity.
Under normal market conditions, we expect to maintain a dollar-weighted
average maturity for portfolio securities of between 10 and 15 years. We also
may invest in U.S. Government obligations.
Permitted Investments
Under normal market conditions, we invest:
. at least 65% of our total assets in corporate debt securities;
. in U.S. Government obligations;
. up to 25% of our total assets in debt securities that are below
investment-grade; and
. up to 25% of our total assets in securities of foreign issuers.
Important Risk Factors
We may invest in securities regardless of their rating, or in securities
that are unrated or are in default at the time of purchase.
We may temporarily hold some or all of the Fund's assets in cash or 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 temporary defensive purposes when we
believe it is in the best interests of shareholders to do so. To the extent
the Fund is so invested, it may not achieve its investment objective.
You should consider the Common Risks on page 3, the General Investment Risks
beginning on page 10 and the specific risks listed here. They are all
important to your investment choice.
Portfolio Managers
. N. Graham Allen, FCMA
Managing Director of Global Fixed Income Investing
Will manage the Corporate Bond Fund upon inception. Mr. Allen has been
with Wells Capital Management, Inc. ("WCM") since January 1998. Before
joining WCM, Mr. Allen managed international fixed-income portfolios for
Bradford & Marzec, Inc. for ten years. He has over thirteen years of
investment management experience.
. John W. (Jack) Burgess
Will co-manage the Corporate Bond Fund upon inception. Mr. Burgess has
been a portfolio manager with WCM since January 1998, and was an
independent financial advisor from 1995 until joining the firm. Before
that, he managed equity and fixed-income portfolios for Aurora National
Life Assurance Company and related entities since 1988. Mr. Burgess has
over ten years of investment management experience.
6
<PAGE>
. Jacqueline A. Flippin
Principal
Will co-manage the Corporate Bond Fund upon inception, and has been with
WCM since January 1998. Before joining the firm, Ms. Flippin was a short-
term debt securities trader and portfolio manager for McMorgan & Company
since 1994. Ms. Flippin has over ten years of investment management
experience.
. Daniel J. Kokoska, CFA
Principal
Will co-manage the Corporate Bond Fund upon inception, and has been with
Wells Fargo since January 1998. Before joining WCM, Mr. Kokoska co-
managed international fixed-income portfolios for Bradford & Marzec, Inc.
since 1993. Mr. Kokoska has over twelve years of investment management
experience.
. Scott Smith, CFA
Principal
Will co-manage the Corporate Bond Fund upon inception, and has been with
Wells Fargo/ WCM since 1987, specializing in corporate and mortgage-
backed securities investments. Mr. Smith has over eleven years of
investment management experience.
LARGE COMPANY GROWTH FUND
Investment Objective
The Large Company Growth Fund seeks long-term capital appreciation. Changes
to this objective do not require a shareholder vote.
Investment Policies
We invest primarily in common stocks of large, high-quality domestic
companies that have superior growth potential. We look for companies that are
attractively valued with fundamental characteristics that we believe are
significantly better than the market average and support internal earnings
growth capability. We may also invest in the securities of companies whose
growth potential we believe is generally unrecognized or misperceived by the
market.
Permitted Investments
Under normal market conditions, we invest:
. at least 65% of our total assets in equity securities, including common
and preferred stocks, and securities convertible into common stocks;
. the majority of our total assets in issues of companies with market
capitalization that is greater than the median of the Russell 1000 Index
(As of March 31, 1999, this median was $3.7 billion. The range is
expected to change frequently.); and
. up to 20% of our total assets in foreign companies through American
depositary receipts and similar instruments.
We will normally limit our investment in a single issuer to 10% or less of
our total assets. We may hedge against currency risk in the portfolio by using
foreign currency forward contracts.
7
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Important Risk Factors
This Fund is primarily subject to the equity market risks described in the
Common Risks section.
We may temporarily hold some or all of the Fund's assets in cash or 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 temporary defensive purposes when we
believe it is in the best interests of shareholders to do so. To the extent
the Fund is so invested, it may not achieve its investment objective.
You should consider the Common Risks on page 3, and the General Investment
Risks beginning on page 10. They are all important to your investment choice.
Portfolio Managers
. John S. Dale, CFA
Senior Vice President Will manage the Large Company Growth Fund upon
inception, and has been with Peregrine Capital Management, Inc.
("Peregrine") and its affiliates since 1968. Mr. Dale has over thirty
years of equity investment management experience.
. Gary E. Nussbaum
Senior Vice President Will co-manage the Large Company Growth Fund upon
inception, and has been with Peregrine and its affiliates since 1990.
Mr. Nussbaum has over nine years of investment management experience.
SMALL CAP FUND
Investment Objective
The Small Cap Fund seeks long-term capital appreciation. Changes to this
objective do not require a shareholder vote.
Investment Policies
We actively manage a diversified portfolio of common stocks issued by
companies whose market capitalization falls within the range of the Russell
2000 Index. As of March 31, 1999, the range was $3.8 million to $8.55 billion,
but it is expected to change frequently. We will sell the stock of any company
whose market capitalization exceeds the range of this index for
sixty consecutive days.
We invest in the common stocks of domestic and foreign companies we believe
have above-average prospects for capital growth, or that may be involved in
new or innovative products, services and processes.
Permitted Investments
Under normal market conditions, we invest:
. in an actively managed, broadly diversified portfolio of growth-oriented
common stocks;
. in at least 20 common stock issues spread across multiple industry groups
and sectors of the economy;
8
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. up to 40% of our assets in initial public offerings or recent start-ups
and newer issues;
. no more than 25% of our assets in foreign companies through American
Depositary Receipts or similar issues; and
. up to 15% of our portfolio in emerging markets.
Important Risk Factors
This Fund is designed for investors willing to assume above-average risk. We
may invest in companies that:
. pay low or no dividends;
. have smaller market capitalization;
. have less market liquidity;
. have no or relatively short operating histories, or are new public
companies or are initial public offerings;
. have aggressive capital structures including high debt levels; or
. are involved in rapidly growing or changing industries and/or new
technologies.
Because we may invest in such aggressive securities, share prices may rise
and fall more than the share prices of other funds. In addition, our active
trading investment strategy may result in a higher-than-average portfolio
turnover ratio, increased trading expenses, and higher short-term capital
gains.
We may temporarily hold some or all of the Fund's assets in cash or 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 temporary defensive purposes when we
believe it is in the best interests of shareholders to do so. To the extent
the Fund is so invested, it may not achieve its investment objective.
You should consider the Common Risks on page 3, the General Investment Risks
beginning on page 10, and the specific risks listed here. They are all
important to your investment choice.
Portfolio Managers
. Kenneth Lee
Principal
Will manage the Small Cap Fund upon inception, and has been with Wells
Fargo/Wells Capital Management since 1993. Mr. Lee has seven years of
experience in the investment industry, and has managed equity investment
portfolios since 1995.
. Thomas Zeifang, CFA
Will co-manage the Small Cap Fund upon inception, and has been with
Wells Fargo/Wells Capital Management since 1995. Mr. Zeifang provided
fundamental security analysis for Fleet Investment Advisors for three
years prior to joining Wells Fargo. He has over five years of equity
investment management experience.
9
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GENERAL INVESTMENT RISKS
Understanding the risks involved in mutual fund investing will help you make
an informed decision that takes into account your risk tolerance and
preferences. You should carefully consider the risks common to investing in
all mutual funds, including the Wells Fargo Funds. Certain common risks are
identified in the Summary of Important Risks on page 3. Other risks of mutual
fund investing include the following:
. Unlike bank deposits such as CDs or savings accounts, mutual funds are
not insured by the FDIC.
. We cannot guarantee that we will meet our investment objectives.
. We do not guarantee the performance of a Fund, nor can we assure you that
the market value of your investment will not decline. We will not "make
good" any investment loss you may suffer, nor can anyone we contract with
to provide certain services, such as selling agents or investment
advisors, offer or promise to make good any such losses.
. Share prices--and therefore the value of your investment--will increase
and decrease with changes in the value of the underlying securities and
other investments. This is referred to as price volatility.
. Investing in any mutual fund, including those deemed conservative,
involves risk, including the possible loss of any money you invest.
. An investment in a single Fund, by itself, does not constitute a complete
investment plan.
. The Funds that invest in smaller companies, foreign companies (including
investments made through American Depositary Receipts and similar
instruments), and in emerging markets are subject to additional risks,
including less liquidity and greater price volatility. A Fund's
investment in foreign and emerging markets may also be subject to special
risks associated with international trade, including currency, political,
regulatory and diplomatic risk.
. The Funds may invest a portion of their assets in U.S. Government
obligations. It is important to recognize that the U.S. Government does
not guarantee the market value or current yield of those obligations. Not
all U.S. Government obligations are backed by the full faith and credit
of the U.S. Treasury, and the U.S. Government's guarantee does not extend
to the Funds themselves.
. The Large Company Growth Fund 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.
. The Corporate Bond Fund also invests a portion of its assets in GNMAs,
FNMAs and FHLMCs. Each are mortgage-backed securities representing
partial ownership of a pool of residential mortgage loans. A "pool" or
group of such mortgages is assembled and, after being approved by the
issuing entity, is offered to invest through securities dealers.
Mortgage-backed securities are subject to prepayment risk, which can
alter the maturity of the securities and also reduce the rate of return
on such investments. Collateralized mortgage obligations ("CMOs")
represent principal-only and interest-only portions of such securities
that are subject to increased interest-rate and credit risk.
. The Corporate Bond and Large Company Growth Funds may enter into forward
currency exchange contracts ("forward contracts") to try to reduce
currency exchange risks to the Funds from foreign securities investments.
A forward contract is an obligation to buy or sell a specific currency
for an agreed price at a future date which is individually negotiated and
privately traded by currency traders and their customers.
10
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. The market value of lower-rated debt securities, also known as "junk
bonds," and unrated securities of comparable quality that the Corporate
Bond Fund may invest in tends to reflect individual developments
affecting the issuer to a greater extent than the market value of higher-
rated securities, which react primarily to fluctuations in the general
level of interest rates. Lower-rated securities also tend to be more
sensitive to economic conditions than higher-rated securities. These
lower-rated debt securities are considered by the rating agencies, on
balance, to be predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms
of the obligation and generally involve more credit risk than securities
in higher-rating categories. Even securities rate "BBB" by S&P or by
Moody's ratings which are considered investment-grade, possess some
speculative characteristics.
Investment practices and risk levels are carefully monitored. Every attempt
is made to ensure that the risk exposure for each Fund remains within the
parameters of its objective.
What follows is a general list of the types of risks (some of which are
described above) that may apply to a given Fund and a table showing some of
the additional investment practices that each Fund may use and the risks
associated with them. Additional information about these practices is
available in the Statement of Additional Information.
Counter-Party Risk--The risk that the other party in a repurchase agreement
or other transaction will not fulfill its contract obligation.
Credit Risk--The risk that the issuer of a debt security will be unable to
make interest payments or repay principal on schedule. If an issuer does
default, the affected security could lose all of its value, or be renegotiated
at a lower interest rate or principal amount. Affected securities might also
lose liquidity. Credit risk also includes the risk that a party in a
transaction may not be able to complete the transaction as agreed.
Currency Risk--The risk that a change in the exchange rate between U.S.
dollars and a foreign currency may reduce the value of an investment made in a
security denominated in that foreign currency.
Diplomatic Risk--The risk that an adverse change in the diplomatic relations
between the United States and another country might reduce the value of
liquidity of investments in either country.
Emerging Market Risk--The risk that the emerging market, as defined in the
glossary, may be more sensitive to certain economic changes. For example,
emerging market countries are often dependent on international trade and are
therefore often vulnerable to recessions in other countries. They may have
obsolete financial systems, have volatile currencies and may be more sensitive
than more mature markets to a variety of economic factors. Emerging market
securities may also be less liquid than securities of more developed countries
and could be difficult to sell, particularly during a market downturn.
Experience Risk--The risk presented by a new or innovative security. The
risk is that insufficient experience exists to forecast how the security's
value might be affected by various economic conditions:
Information Risk--The risk that information about a security is either
unavailable, incomplete or is inaccurate.
Interest Rate Risk--The risk that changes in interest rates can reduce the
value of an existing security. Generally, when interest rates increase, the
value of a debt security decreases. The effect is usually more pronounced for
securities with longer maturities.
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Leverage Risk--The risk that an investment practice, such as lending
portfolio securities, may increase a Fund's exposure to market risk, interest
rate risk or other risks by, in effect, increasing assets available for
investment.
Liquidity Risk--The risk that a security cannot be sold, or cannot be sold
without adversely affecting the price.
Market Risk--The risk that the value of a stock, bond or other security will
be reduced by market activity. This is a basic risk associated with all
securities.
Political Risk--The risk that political actions, events or instability may
be unfavorable for investments made in a particular nation's or region's
industry, government or markets.
Prepayment Risk--The risk that consumers will prepay mortgage loans, which
can alter the maturity of a mortgage-backed security, increase interest-rate
risk, and reduce rates of return.
Regulatory Risk--The risk that changes in government regulations will
adversely affect the value of a security. Also the risk that an insufficiently
regulated market might permit inappropriate trading practices.
Year 2000 Risk--The Funds' principal service providers have advised the
Funds that they are working on the necessary changes to their computer systems
to avoid any system failure based on an inability to distinguish the year 2000
from the year 1900, and that they expect their systems to be adapted in time.
There can, of course, be no assurance of success. In addition, the companies
or entities in which the Funds invest also could be adversely impacted by the
Year 2000 issue. The extent of such impact cannot be predicted.
Investment Practice/Risk
The following table lists some of the additional investment practices of the
Funds, including some not disclosed in the Investment Objective and Investment
Policies sections of the Prospectus. The risks indicated after the description
of the practice are NOT the only potential risks associated with that
practice, but are among the more prominent. Market risk is assumed for each.
See the Investment Objective and Investment Policies for each Fund or the
Statement of Additional Information for more information on these practices.
These Investment Practices and Risks are Common to all the Funds:
<TABLE>
<CAPTION>
Investment Practice Risk
- ------------------- ----
<S> <C>
Floating and Variable Rate Debt
Instruments with interest rates that are adjusted Interest Rate and
either Interest on a schedule or when an index or Credit Risk
benchmark changes.
Repurchase Agreements
A transaction in which the seller of a security Credit and
agrees to Credit and buy back a security at an agreed Counter-Party Risk
upon time and price, Counter-Party Risk usually with
interest.
Other Mutual Funds
The temporary investment in shares of another mutual Market Risk
Market Risk fund. A pro rata portion of the other
fund's expenses, in addition to the expenses paid by
the Funds, will be borne by Fund shareholders.
</TABLE>
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<TABLE>
<S> <C>
Foreign Securities
Securities issued by a non-U.S. company or debt of a Information, Political,
Information, Political, foreign government in the Regulatory, Diplomatic,
form of an American Depositary Receipt or similar Liquidity and Currency
instrument.
Privately Issued Securities
Securities that are not publicly traded but which may Liquidity Risk
be resold in accordance with Rule 144A of the
Securities Act of 1933.
Loans of Portfolio Securities
The practice of loaning securities to brokers, Credit, Counter-Party
dealers and financial institutions to increase return and Leverage Risk
on those securities. Loans may be made up to 1940 Act
limits (currently 33 1/3% of total assets).
Borrowing Policies
The ability to borrow from banks for temporary Leverage Risk
purposes to meet shareholder redemptions.
Illiquid Securities
A security that cannot be readily sold, or cannot be Liquidity Risk
readily sold without negatively affecting its fair
price. Limited to 15% of total assets.
</TABLE>
These Investment Practices and Risks are common to the Large Company Growth and
Small Cap Funds:
<TABLE>
<CAPTION>
Investment Practice Risk
- ------------------- ----
<S> <C>
Options
The right or obligation to receive or deliver a Credit, Information
security or cash payment depending on the security's and Liquidity Risk
price or the performance of an index or benchmark.
Types of options used may include: options on
securities, options on a stock index, stock index
futures and options on stock index futures to protect
liquidity and portfolio value.
Emerging Markets
Investments in companies located or operating in
countries considered developing or to have "emerging"
stock markets. Generally, these investments have the
same type of risks as foreign securities, but to a
higher degree. Limited to [15%] of total assets for
all Funds.
</TABLE>
These Investment Practices and Risks are common to the Corporate Bond Fund:
<TABLE>
<CAPTION>
Investment Practice Risk
- ------------------- ----
<S> <C>
Forward Commitments, When-Issued Securities, Delayed
Delivery Transactions
Securities bought or sold for delivery at a later date or Interest Rate,
bought or sold for a fixed price at a fixed date. Leverage, Credit
and Experience Risk
Mortgage- and Asset-Backed Securities
Securities consisting of an undivided fractional interests Interest Rate,
in pools of consumer loans, such as mortgage loans, loans, Credit, Prepayment
car credit card debt, or receivables held in trust. and Experience Risk
</TABLE>
13
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<TABLE>
<S> <C>
High Yield Securities
Debt securities of lower quality, also known as "junk Interest Rate
bonds," that produce generally higher rates of return. and Credit Risk
These securities tend to be more sensitive to economic
conditions and during sustained periods of rising interest
rates, may experience increased interest and/or principal
defaults.
Stripped Obligations
Securities that give ownership to either future payments of Interest Rate Risk
interest or a future payment of principal, but not both.
These securities tend to have greater interest rate sensi-
tivity than conventional debt obligations.
Loan Participations
Debt obligations that represent a portion of a larger Credit Risk
Credit Risk loan made by a bank. Generally sold without
guarantee or recourse, some participations sell at a dis-
count because of the borrower's credit problems.
</TABLE>
14
<PAGE>
ORGANIZATION AND MANAGEMENT OF THE FUNDS
A number of different entities provide services to the Funds. This section
shows how the Funds are organized, the entities that perform different
services, and how they are compensated. Further information is available in
the Statement of Additional Information for the Funds.
About Wells Fargo Variable Trust
Wells Fargo Variable Trust (the "Trust") was organized as a Delaware
business trust on March 10, 1999. The Board of Trustees of the Trust
supervises each Fund's activities, monitors its contractual arrangements with
various service providers and decides upon matters of general policy.
The Funds are available for purchase through certain variable annuity
contracts ("VA Contracts") and variable life insurance policies ("VLI
Policies") offered by the separate accounts of Participating Insurance
Companies. Individual holders of VA Contracts and VLI Policies are not the
"shareholders" of or "investors" in the Funds. Rather, the Participating
Insurance Companies and their separate accounts are the shareholders or
investors, although such companies will pass through voting rights to the
holders of VA Contracts and VLI Policies. The Trust currently does not foresee
any disadvantages to the holders of VA Contracts and VLI Policies arising from
the fact that the interests of the holders of VA Contracts and VLI Policies
arising from the fact that the interests of the holders of VA Contracts and
VLI Policies may differ. Nevertheless, the Trust's Board of Trustees intends
to monitor events in order to identify any conflicts which may arise and to
determine what action, if any, should be taken in response to such conflicts.
The VA Contracts and VLI Policies are described in the separate prospectuses
issued by the Participating Insurance Companies. The Trust assumes no
responsibility for such prospectuses.
In the following sections, the percentages shown are the percentages of the
average daily net assets of each Fund class paid on an annual basis for the
services described.
Shareholders
Financial Services Firms and Selling Agents
Advise current and prospective shareholders on their Fund investments
<TABLE>
<CAPTION>
DISTRIBUTOR ADMINISTRATOR FOR TRANSFER AGENT
- ----------- ----------------- --------------
<S> <C> <C>
Stephens Inc. Wells Fargo Bank, N.A. BFDS
111 Center St. 525 Market St. Two Heritage Drive
Little Rock, AR San Francisco,CA Quincy, MA
Markets the Funds and Manages the Funds' Maintains records of
distributes shares business activities shares and supervises
the paying of
dividends
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT SUB-ADVISORS
-----------------------
<S> <C> <C> <C>
Peregrine
Capital
Wells Capital Management, Inc. Management, Inc.
800 LaSalle
Avenue, Suite
525 Market Street 1850
San Francisco, CA Minneapolis, MN
Manages the Corporate Bond and Manages the
Small Cap Funds' investment Large Company
activities Growth Fund's
investment
activities
<CAPTION>
INVESTMENT ADVISOR CUSTODIAN
------------------ ---------
<S> <C> <C> <C>
Norwest Bank
Wells Fargo Bank, N.A. Minnesota, N.A.
6th St. &
Marquette,
525 Market St., San Francisco, CA Minneapolis, MN
Provides
safekeeping for
Manages the Funds' investment the Funds'
activities assets
</TABLE>
BOARD OF TRUSTEES
Supervises the Funds' activities
15
<PAGE>
The Investment Advisor
Wells Fargo Bank provides portfolio management and fundamental security
analysis services as the advisor for each of the Funds. Wells Fargo Bank,
founded in 1852, is the oldest bank in the western United States and is one of
the largest banks in the United States. Wells Fargo Bank is a wholly owned
subsidiary of Wells Fargo & Company, a national bank holding company. As of
December 31, 1999, Wells Fargo Bank and its affiliates provided advisory
services for over $202 billion in assets.
For providing these services, Wells Fargo Bank is entitled to receive the
following fees:
<TABLE>
<S> <C>
Corporate Bond Fund...................................................... .80
Large Company Growth Fund................................................ .75
Small Cap Fund........................................................... .90
</TABLE>
The Sub-Advisors
Wells Capital Management ("WCM"), a wholly owned subsidiary of Wells Fargo
Bank N.A., is the sub-advisor for the Corporate Bond and Small Cap Funds. In
this capacity, it is responsible for the day-to-day investment management
activities of the Funds. As of December 31, 1998, WCM provided advisory
services for over $39 billion in assets.
Peregrine Capital Management, Inc., a wholly owned subsidiary of Norwest
Bank Minnesota, N.A., is the sub-advisor for the Large Company Growth Fund. As
of March 31, 1999, Peregrine provided investment advisory services for
approximately $6.3 billion in assets.
The Administrator
Wells Fargo Bank provides the Funds with administrative services, including
general supervision of each Fund's operation, coordination of the other
services provided to each Fund, compilation of information for reports to the
SEC and state securities commissions, preparation of proxy statements and
shareholder reports, and general supervision of data compilation in connection
with preparing periodic reports to the Trust's Trustees and officers. Wells
Fargo Bank also furnishes office space and certain facilities to conduct each
Fund's business. For providing these services, Wells Fargo Bank is entitled to
receive a fee of .15% of the average annual net assets of each Fund.
The Distributor
Stephens, as the principal underwriter of the Funds within the meaning of
the 1940 Act, has entered into a Distribution Agreement with the Trust
pursuant to which Stephens has the responsibility for distributing shares of
the Funds.
Distribution Plan
We have adopted a distribution plan for each Fund. The plan authorizes the
payment of all or part of the cost of preparing and distributing prospectuses,
annual and semi-annual reports and other materials to shareholders. For these
services each Fund pays up to 0.25% of its annual net assets.
Investing in the Funds
The Funds are available for purchase through certain VA Contracts and VLI
Policies offered by the separate accounts of Participating Insurance
Companies. The separate accounts of the
16
<PAGE>
Participating Insurance Companies place orders to purchase and redeem shares
of each Fund based on, among other things, the amount of premium payments to
be invested and the amount of surrender and transfer requests (as defined in
the prospectuses describing the VA Contracts and VLI Policies issued by the
Participating Insurance Companies) to be effected on that day pursuant to VA
Contracts and VLI policies. Please refer to the prospectus provided by your
selling agent for more detailed information describing the separate accounts.
The Trust does not assess any fees, either when it sells or when it redeems
its shares. Surrender charges, mortality and expense risk fees and other
charges may be assessed by Participating Insurance Companies under the VA
Contracts or VLI Policies. These fees and charges are described in the
Participating Insurance Companies' prospectuses.
Should any conflict between VA Contract and VLI Policy holders arise which
would require that a substantial amount of net assets be withdrawn from a Fund
of the Trust, orderly portfolio management could be disrupted to the potential
detriment of the VA Contract and VLI Policy holders.
Dividends and Distributions
Each Fund is treated separately in determining the amounts of dividends of
net investment income and distributions of capital gains payable to its
shareholders. Dividends and distributions are automatically reinvested on the
payment date for each shareholder's account in additional shares of the Fund
that paid the dividend or distribution at NAV or are paid in cash at the
election of the Participating Insurance Company.
The Funds in this Prospectus pay dividends, if any, periodically, and make
any capital gains distributions annually. The Corporate Bond Fund pays any
dividends monthly, the Large Company Growth Fund pays any dividends quarterly,
and the Small Cap Fund pays any dividends annually. Participating Insurance
Companies will be informed by January 31 about the amount and character of
dividends and distributions.
Taxes
The following discussion regarding taxes is based on tax laws which were in
effect as of the date of this Prospectus and summarizes only some of the
important tax considerations generally affecting a Fund and Participating
Insurance Companies as its shareholders. You should consult your own tax
advisor and refer to the prospectus provided by your selling agent to
determine your tax consequences of your investment in a VA Contract or VLI
Policy. Further federal income tax considerations are discussed in the SAI.
We will pass on to Participating Insurance Companies net investment income
and any net short-term capital gain (generally, the excess of net short-term
capital gains over net long-term capital losses) earned by a Fund as dividend
distributions taxable to them as ordinary income. We will pass on to
Participating Insurance Companies any net capital gain (generally, the excess
of net long-term capital gains over net short-term capital losses) earned by a
Fund as capital gain distributions. In general, these distributions will be
taxable to them as long-term capital gain.
In general, all distributions from a Fund are taxable to Participating
Insurance Companies when paid, even though such distributions are
automatically reinvested in additional Fund shares. However, distributions
declared in October, November and December of one year and distributed in
January of the following year will be taxable as if they were paid on December
31 of the first year. At the end of each year, Participating Insurance
Companies will be notified as to the federal income tax status of your
distributions from a Fund during the year.
17
<PAGE>
Redemptions (including redemptions in-kind) and exchanges of Fund shares
will ordinarily result in a taxable capital gain or loss, depending on the
amount received for the shares (or are deemed to receive in the case of
exchanges) and the amount paid (or are deemed to have paid) for them.
Pricing Fund Shares:
. As with all mutual fund investments, the price you pay to purchase shares
or the price you receive when you redeem shares is not determined until
after a request has been received in proper form.
. We determine the Net Asset Value ("NAV") of each class of the Funds'
shares each business day as of the close of regular trading on the NYSE.
We determine the NAV by subtracting the Fund class' 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 disclosure.
. We process requests to buy or sell shares 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). Any request
we receive in proper form before the close of regular trading on the NYSE
is processed the same day. Requests we receive after the close are
processed the next business day.
. The Funds are open for business on each day the NYSE is open for
business. NYSE holidays include New Year's Day, Martin Luther King, Jr.
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. When any holiday falls on a
weekend, the NYSE typically is closed on the weekday immediately before
or after such holiday.
18
<PAGE>
GLOSSARY
We provide the following definitions to assist you in reading this
prospectus. For a more complete understanding of these terms you should
consult your financial adviser.
ACH
Refers to the "Automated Clearing House" system maintained by the Federal
Reserve Bank which allows banks to process checks, transfer funds and perform
other tasks.
American Depositary Receipts ("ADRS")
Receipts for non-U.S. company stocks. The stocks underlying ADRs are
typically held in bank vaults. The ADR's owner is entitled to any capital
gains or dividends. ADRs are one way of owning an equity interest in foreign
companies.
Annual and Semi-Annual Report
A document that provides certain financial and other important information
for the most recent reporting period and each Fund's portfolio of investments.
Asset-Backed Securities
Securities consisting of an undivided fractional interest in pools of
consumer loans, such as car loans or credit card debt, or receivables held in
trust.
Below Investment-Grade
Securities rated BBB or lower by S&P or Baa or lower by Moody's Investor
Services, or that may be unrated securities or securities considered to be
"high risk."
Business Day
Any day the New York Stock Exchange is open is a business day for the Funds.
Capital Appreciation, Capital Growth
The increase in the value of a security. See also "total return."
Capitalization
When referring to the size of a company, capitalization means the total
number of a company's outstanding shares of stock multiplied by the price per
share. This is an accepted method of determining a company's size and is
sometimes referred to as "market capitalization."
Capital Structure
Refers to how a company has raised money to operate. Can include, for
example, borrowing or selling stock.
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."
19
<PAGE>
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-backed
securities and can include securities in which the right to receive interest
and principal repayment have been sold separately.
Derivatives
Securities whose values are derived in part from the value of another
security or index. An example is a stock option.
Distributions
Dividends and/or capital gains paid by a Fund on its shares.
Diversified
A diversified fund, as defined by the Investment Company Act of 1940, is one
that invests in cash, Government securities, other investment companies and no
more than 5% of its total assets in a single issuer. These policies must apply
to 75% of the Funds' total assets.
Dollar-Denominated
Securities issued by foreign banks, companies or governments in U.S.
dollars.
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.
Emerging Markets
Markets associated with a country that is considered by international
financial organizations, such as the International Finance Corporation and the
International Bank for Reconstruction and Development, and the international
financial community to have an "emerging" stock market. Such markets may be
under-capitalized, have less-developed legal and financial systems or may have
less stable currencies than markets in the developed world.
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.
20
<PAGE>
Hedge
Strategy used to offset investment risk. A perfect hedge is one eliminating
the possibility of future gain or loss.
Illiquid Security
A security which cannot be readily sold, or cannot be readily sold without
negatively affecting its fair price.
Initial Public Offering
The first time a company's stock is offered for sale to the public.
Investment-Grade Debt
A type of bond rated in the top four investment categories by a nationally
recognized ratings organization. Generally these are bonds whose issuers are
considered to have a strong ability to pay interest and repay principal,
although some investment-grade bonds may have some speculative
characteristics.
Liquidity
The ability to readily sell a security at a fair price.
Moody's
A nationally recognized ratings organization.
Nationally Recognized Rating Organization (NRRO)
A company that examines the ability of a bond issuer to meet its obligations
and which rates the bonds accordingly.
Net Asset Value (NAV)
The value of a single fund share. It is determined by adding together all of
a Fund's assets, subtracting accrued expenses and other liabilities, then
dividing by the total number of shares. The NAV is calculated separately for
each class of the Fund, and is determined as of the close of regular trading
on each business day the NYSE is open, typically 1:00 P.M. (Pacific time)/3:00
p.m. (Central time).
Options
An option is the right to buy or sell a security based on an agreed upon
price for at a specified time. For example, an option may give the holder of a
stock the right to sell the stock to another party, allowing the seller to
profit if the price has fallen below the agreed price. Options may also be
based on the movement of an index such as the S&P 500.
Preservation of Capital
The attempt by a fund's manager to reduce drops in the net asset value of
fund shares in order to preserve the initial investment.
Principal Stability
The degree to which share prices for a fund remain steady. Money market
funds attempt to achieve the highest degree of principal stability by
maintaining a $1.00 per share net asset value. More aggressive funds may not
consider principal stability an objective.
Public Offering Price (POP)
The NAV with the sales load added.
21
<PAGE>
Price-to-Earnings Ratio
The ratio between a stock's price and its historical, current or anticipated
earnings. Low ratios typically indicate a high yield. High ratios are
characteristic of growth stocks which generally have low current yields.
Repurchase Agreement
An agreement between a buyer and seller of a security in which the seller
agrees to repurchase the security at an agreed upon price and time.
Russell 1000 Index
An index comprised of 1000 largest firms listed on the Russell 3000 Index.
The Russell 3000 Index is a listing of 3000 corporations by the Frank Russell
Company that is intended to be representative of the U.S. economy. The Russell
1000 is considered a "large cap" index.
Russell 2000 Index
An index comprised of the 2000 smallest firms listed on the Russell 3000
Index. The Russell 3000 Index is a listing of 3000 corporations by the Frank
Russell Company that is intended to be representative of the U.S. economy. The
Russell 2000 is considered a "small cap" index.
Selling Agent
A person who has an agreement with the Funds' distributors that allows them
to sell a Fund's shares.
Shareholder Servicing Agent
Anyone appointed by the Fund to maintain shareholder accounts and records,
assist and provide information to shareholders or perform similar functions.
Signature Guarantee
A guarantee given by a financial institution that has verified the identity
of the maker of the signature.
S&P, S&P 500 Index
Standard and Poors, a nationally recognized ratings organization. S&P's also
publishes various indexes or lists of companies representative of sectors of
the U.S. economy.
Statement of Additional Information
A document that supplements the disclosure made in the Prospectus.
Stripped Treasury Securities
Debt obligations in which the interest payments and the repayment of
principal are separated and sold as securities.
Taxpayer Identification Number
Usually the social security number for an individual or the Employer
Identification Number for a corporation.
Total Return
The total value of capital growth and the value of all distributions,
assuming that distributions were used to purchase additional shares of the
Funds.
22
<PAGE>
Turnover Ratio
The percentage of the securities held in a Fund's portfolio, other than
short-term securities, that were bought or sold within a year.
Undervalued
Describes a stock that is believed to be worth more than its current price.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Value Strategy
A strategy of investing which tries to identify and buy undervalued stocks
under the assumption that the stock will eventually rise to its "fair market"
value.
Warrants
The right to buy a stock at a set price for a set time.
Weighted-Average Maturity
The average maturity for the debt securities in a portfolio on a dollar-for-
dollar basis.
Zero Coupon Bonds
Bonds that make no periodic interest payments and which are usually sold at
a discount of their face value. Zero coupon bonds are subject to interest rate
and credit risk.
23
<PAGE>
WELLS FARGO VARIABLE TRUST
You may wish to review the following documents:
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 1-800-680-8920, or Write to:
Wells Fargo Variable Trust, PO Box 7066, San Francisco, CA 94120-7066, or
Visit the SEC's web site: http://www.sec.gov, or
Request copies for a fee by writing to: SEC Public Reference Room,
Washington, DC 20549-6009 (call: 1-800-SEC-0330 for details).
24
<PAGE>
WELLS FARGO VARIABLE TRUST
800-680-8920
STATEMENT OF ADDITIONAL INFORMATION
DATED JUNE 1, 1999
CORPORATE BOND FUND
LARGE COMPANY GROWTH FUND
SMALL CAP FUND
Wells Fargo Variable Trust (the "Trust") is an open-end series investment
company. This Statement of Additional Information ("SAI") contains additional
information about three of the series of the Trust -- the CORPORATE BOND FUND,
LARGE COMPANY GROWTH FUND, and the SMALL CAP FUND (each, a "Fund" and
collectively, the "Funds"). The investment objective of each Fund is described
in the Prospectus.
This SAI is not a prospectus and should be read in conjunction with the Funds'
Prospectus, dated June 1, 1999. All terms used in this SAI that are defined in
the Prospectus have the meanings assigned in the Prospectus. A copy of the
Prospectus may be obtained without charge by calling (800) 780-7743 or by
writing to Fortis Benefits Insurance Company, P.O. Box 64272, St. Paul, MN
55164; or by calling (800) 680-8920 or by writing to American Skandia, P.O. Box
883, Shelton, Connecticut 06484-0883, Attn: Wells Fargo Variable Annuity
Administration.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Historical Fund Information............................................... 1
Investment Restrictions................................................... 2
Additional Permitted Investment Activities and Associated Risks........... 5
Management................................................................ 17
Performance Calculations.................................................. 24
Determination of Net Asset Value.......................................... 28
Additional Purchase and Redemption Information............................ 28
Portfolio Transactions.................................................... 29
Fund Expenses............................................................. 31
Federal Income Taxes...................................................... 31
Capital Stock............................................................. 35
Other..................................................................... 37
Counsel................................................................... 37
Independent Auditors...................................................... 37
Appendix.................................................................. A-1
</TABLE>
i
<PAGE>
HISTORICAL FUND INFORMATION
On March 25, 1999, the Board of Trustees of Norwest Select Funds
("Norwest"), the Board of Trustees of Life & Annuity Trust ("Annuity Trust") and
the Board of Trustees of the Trust approved an Agreement and Plan of
Reorganization providing for, among other things, the transfer of the assets and
stated liabilities of various predecessor Select and Annuity Trust portfolios to
the Funds. Prior to September 17, 1999, the effective date of the consolidation
of the Funds and the predecessor Select and Annuity Trust portfolios (the
"Consolidation"), the Funds had only nominal assets.
The CORPORATE BOND FUND will commence operations on September 17, 1999, as
successor to U.S. Government Allocation Fund of Annuity Trust and the Income
Fund of Norwest. The predecessor Annuity Trust U.S. Government Allocation Fund
commenced operations on October 27, 1993. The predecessor Norwest Income Fund
commenced operations on June 1, 1994.
The LARGE COMPANY GROWTH FUND will commence operations on September 17,
1999, as successor to the ValuGrowth Stock Fund of Norwest. The predecessor
Norwest ValuGrowth Stock Fund commenced operations on June 1, 1994.
The SMALL CAP FUND will commence operations on September 17, 1999, as
successor to the Strategic Growth Fund of Annuity Trust and the Small Company
Stock Fund of Norwest. The predecessor Annuity Trust Strategic Growth Fund
commenced operations on May 1, 1998. The predecessor Norwest Small Company
Stock Fund commenced operations on May 1, 1995.
1
<PAGE>
INVESTMENT RESTRICTIONS
Fundamental Investment Policies
-------------------------------
Each Fund has adopted the following investment restrictions, all of which are
fundamental policies; that is, they may not be changed, without approval by the
holders of a majority (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the outstanding voting securities of such Fund.
The Funds may not:
(1) purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of a Fund's investments in that industry would equal 25% of
the current value of the Fund's total assets, provided that there is no
limitation with respect to investment in (i) securities issued or guaranteed by
the United States Government, its agencies or instrumentalities, and (ii) in
municipal securities.
(2) purchase securities of any issuer if, as a result, with respect to 75%
of a Fund's total assets, more than 5% of the value of its total assets would be
invested in the securities of any one issuer or, with respect to 100% of its
assets, the Fund's ownership would be more than 10% of the outstanding voting
securities of such issuer. This policy does not restrict a Fund's ability to
invest in securities issued or guaranteed by the U.S. Government, its agencies
and instrumentalities.
(3) borrow money except to the extent permitted by the 1940 Act, and the
rules, regulations and exemptions thereunder;
(4) issue senior securities except to the extent permitted by the 1940
Act, and the rules, regulations and exemptions thereunder;
(5) make loans to other parties if, as a result, the aggregate value of
such loans would exceed one-third of a Fund's total assets. For the purposes of
this limitation, entering into repurchase agreements, lending securities and
acquiring any debt securities are not deemed to be the making of loans;
(6) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with a Fund's investment program may be deemed to be an underwriting;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund from
investing in securities or other
2
<PAGE>
instruments backed by real estate or securities of companies engaged in the real
estate business); nor
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Funds from purchasing or selling options and futures contracts, or from
investing in securities or other instruments backed by physical commodities, and
[(III) IN THE CASE OF THE LARGE COMPANY GROWTH FUND PURCHASING SECURITIES OF AN
ISSUER WHICH INVESTS OR DEALS IN COMMODITIES OR COMMODITY CONTRACTS.]
Non-Fundamental Investment Policies
-----------------------------------
Each Fund has adopted the following non-fundamental policies which may be
changed by a vote of a majority of the Trustees of the Trust or at any time
without approval of such Fund's shareholders.
(1) Each Fund may invest in shares of other open-end management investment
companies, subject to the limitations of the 1940 Act, the rules thereunder, and
any orders obtained thereunder now or in the future. Funds in a master/feeder
or core/gateway structure, such as the Income Equity Fund, generally invest in
the securities of one or more open-end management investment companies pursuant
to various provisions of the 1940 Act. Other investment companies in which the
Funds invest can be expected to charge fees for operating expenses, such as
investment advisory and administration fees, that would be in addition to those
charged by a Fund.
(2) Each Fund may not invest or hold more than 15% of the Fund's net
assets in illiquid securities. For this purpose, illiquid securities include,
among others, (a) securities that are illiquid by virtue of the absence of a
readily available market or legal or contractual restrictions on resale, (b)
fixed time deposits that are subject to withdrawal penalties and that have
maturities of more than seven days, and (c) repurchase agreements not terminable
within seven days.
(3) Each Fund may invest in futures or options contracts regulated by the
CFTC for (i) bona fide hedging purposes within the meaning of the rules of the
CFTC and (ii) for other purposes if, as a result, no more than 5% of the Fund's
net assets would be invested in initial margin and premiums (excluding amounts
"in-the-money") required to establish the contracts.
Each Fund (i) will not hedge more than [50%] of its total assets by selling
futures contracts, buying put options, and writing call options (so called
"short positions"), (ii) will not buy futures contracts or write put options
whose underlying value exceeds [25%] of the Fund's total assets, and (iii) will
not buy call options with a value exceeding [5%] of the Fund's total assets.
(4) Each Fund may lend securities from its portfolio to brokers, dealers
and financial institutions, in amounts not to exceed (in the aggregate) up to
the limits established by and under the 1940 Act, including any exemptive relief
obtained thereunder, which limits are currently generally one-third of a Fund's
total assets. Any such loans of portfolio securities will be fully
3
<PAGE>
collateralized based on values that are marked to market daily. [A FUND WILL NOT
ENTER INTO ANY PORTFOLIO SECURITY LENDING ARRANGEMENT HAVING A DURATION OF
LONGER THAN ONE YEAR.]
(5) Each Fund may not make investments for the purpose of exercising
control or management. (Investments by the Fund in entities created under the
laws of foreign countries solely to facilitate investment in securities in that
country will not be deemed the making of investments for the purpose of
exercising control.)
(6) Each Fund may not purchase securities on margin (except for short-term
credits necessary for the clearance of transactions).
(7) Each Fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short (short sales "against the box"), and provided that transactions in futures
contracts and options are not deemed to constitute selling securities short.
(8) Each Fund may not purchase interests, leases, or limited partnership
interests in oil, gas, or other mineral exploration or development programs.
4
<PAGE>
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES AND ASSOCIATED RISKS
ASSET-BACKED SECURITIES. The Corporate Bond Fund may purchase asset-backed
securities unrelated to mortgage loans. These asset-backed securities may
consist of undivided fractional interests in pools of consumer loans or
receivables held in trust. Examples include certificates for automobile
receivables (CARS) and credit card receivables (CARDS). Payments of principal
and interest on these asset-backed securities are "passed through" on a monthly
or other periodic basis to certificate holders and are typically supported by
some form of credit enhancement, such as a letter of credit, surety bond,
limited guaranty, or subordination. The extent of credit enhancement varies, but
usually amounts to only a fraction of the asset-backed security's par value
until exhausted. Ultimately, asset-backed securities are dependent upon payment
of the consumer loans or receivables by individuals, and the certificate holder
frequently has no recourse to the entity that originated the loans or
receivables. The actual maturity and realized yield will vary based upon the
prepayment experience of the underlying asset pool and prevailing interest rates
at the time of prepayment. Asset-backed securities are relatively new
instruments and may be subject to greater risk of default during periods of
economic downturn than other instruments. Also, the secondary market for certain
asset-backed securities may not be as liquid as the market for other types of
securities, which could result in the Fund experiencing difficulty in valuing or
liquidating such securities.
BANK OBLIGATIONS. The Funds may invest in bank obligations, including
certificates of deposit, time deposits, bankers' acceptances and other short-
term obligations of domestic banks, foreign subsidiaries of domestic banks,
foreign branches of domestic banks, and domestic and foreign branches of foreign
banks, domestic savings and loan associations and other banking institutions.
With respect to such securities issued by foreign branches of domestic banks,
foreign subsidiaries of domestic banks, and domestic and foreign branches of
foreign banks, a Fund may be subject to additional investment risks that are
different in some respects from those incurred by a Fund which invests only in
debt obligations of U.S. domestic issuers. Such risks include possible future
political and economic developments, the possible imposition of foreign
withholding taxes on interest income payable on the securities, the possible
establishment of exchange controls or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and interest
on these securities and the possible seizure or nationalization of foreign
deposits. In addition, foreign branches of U.S. banks and foreign banks may be
subject to less stringent reserve requirements and to different accounting,
auditing, reporting and recordkeeping standards than those applicable to
domestic branches of U.S. banks.
Certificates of deposit are negotiable certificates evidencing the obligation
of a bank to repay funds deposited with it for a specified period of time.
Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Time deposits which
may be held by a Fund will not benefit from insurance from the Bank Insurance
Fund or the Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation ("FDIC"). Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft drawn on it by a
customer. These instruments reflect the obligation both of the bank and of the
drawer to pay the face
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amount of the instrument upon maturity. The other short-term obligations may
include uninsured, direct obligations, bearing fixed, floating- or variable-
interest rates.
BONDS. Certain of the debt instruments purchased by the Corporate Bond Fund
may be bonds. The Fund invests no more than 25% in bonds that are below
investment grade. A bond is an interest-bearing security issued by a company or
governmental unit. The issuer of a bond has a contractual obligation to pay
interest at a stated rate on specific dates and to repay principal (the bond's
face value) periodically or on a specified maturity date. An issuer may have the
right to redeem or "call" a bond before maturity, in which case the investor may
have to reinvest the proceeds at lower market rates. The value of fixed-rate
bonds will tend to fall when interest rates rise and rise when interest rates
fall. The value of "floating-rate" or "variable-rate" bonds, on the other hand,
fluctuate much less in response to market interest rate movements than the value
of fixed rate bonds.
Bonds may be senior or subordinated obligations. Senior obligations generally
have the first claim on a corporation's earnings and assets and, in the event of
liquidation, are paid before subordinated debt. Bonds may be unsecured (backed
only by the issuer's general creditworthiness) or secured (also backed by
specified collateral).
COMMERCIAL PAPER. The Funds may invest in commercial paper (including
variable amount master demand notes) which refers to short-term, unsecured
promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a maturity at the
time of issuance not exceeding nine months. Variable amount master demand notes
are demand obligations which permit the investment of fluctuating amounts at
varying market rates of interest pursuant to arrangements between the issuer and
a commercial bank acting as agent for the payee of such notes whereby both
parties have the right to vary the amount of the outstanding indebtedness on the
notes. Investments by the Funds in commercial paper (including variable rate
demand notes and variable rate master demand notes issued by domestic and
foreign bank holding companies, corporations and financial institutions, as well
as similar instruments issued by government agencies and instrumentalities) will
consist of issues that are rated in one of the two highest rating categories by
a Nationally Recognized Statistical Ratings Organization ("NRRO"). Commercial
paper may include variable- and floating-rate instruments.
CONVERTIBLE SECURITIES. The Funds may invest in convertible securities that
provide current income and are issued by companies that have a strong earnings
and credit record. The Funds may purchase convertible securities that are fixed-
income debt securities or preferred stocks, and which may be converted at a
stated price within a specified period of time into a certain quantity of the
common stock of the same issuer. Convertible securities, while usually
subordinate to similar nonconvertible securities, are senior to common stocks in
an issuer's capital structure. Convertible securities offer flexibility by
providing the investor with a steady income stream (which generally yield a
lower amount than similar nonconvertible securities and a higher amount than
common stocks) as well as the opportunity to take advantage of increases in the
price of the issuer's common stock through the conversion feature. Fluctuations
in the convertible security's price can reflect changes in the market value of
the common stock or changes in market interest rates. At most, 5% of each Fund's
net assets will be invested, at the
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time of purchase, in convertible securities that are not rated in the four
highest rating categories by one or more Narrows, such as Moody's Investors
Service, Inc. ("Moody's") or S&P, or unrated but determined by the advisor to be
of comparable quality.
DERIVATIVE SECURITIES. The Corporate Bond Fund may invest in various
instruments that may be considered "derivatives," including structured notes,
bonds or other instruments with interest rates that are determined by reference
to changes in the value of other interest rates, indices or financial indicators
("References") or the relative change in two or more References. Some
derivative securities represent relatively recent innovations in the bond
markets, and the trading market for these instruments is less developed than the
markets for traditional types of debt instruments. It is uncertain how these
instruments will perform under different economic and interest rate scenarios.
Because certain of these instruments are leveraged, their market values may be
more volatile than other types of bonds and may present greater potential for
capital gain or loss. Derivative securities and their underlying instruments
may experience periods of illiquidity, which could cause the Fund to hold a
security it might otherwise sell or could force the sale of a security at
inopportune times or for prices that do not reflect current market value. The
possibility of default by the issuer or the issuer's credit provider may be
greater for these structured and derivative instruments than for other types of
instruments. As new types of derivative securities are developed and offered to
investors, the advisor will, consistent with the Fund's investment objective,
policies and quality standards, consider making investments in such new types of
derivative securities.
EMERGING MARKETS. The Large Company Growth and Small Cap Funds may invest up
to [15%] of their assets in equity securities of companies in "emerging
markets." The Funds consider the following factors, among others, in determining
which countries have emerging markets: (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
believes that investment in equity securities of emerging market issuers offers
significant potential for long-term capital appreciation.
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.
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FLOATING- AND VARIABLE-RATE OBLIGATIONS. The Funds may purchase floating-and
variable-rate obligations such as demand notes and bonds. Variable-rate demand
notes include master demand notes that are obligations that permit a Fund to
invest fluctuating amounts, which may change daily without penalty, pursuant to
direct arrangements between the Fund, as lender, and the borrower. The interest
rate on a floating-rate demand obligation is based on a known lending rate, such
as a bank's prime rate, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable-rate demand obligation is adjusted
automatically at specified intervals. The issuer of such obligations ordinarily
has a right, after a given period, to prepay in its discretion the outstanding
principal amount of the obligations plus accrued interest upon a specified
number of days' notice to the holders of such obligations. Frequently, such
obligations are secured by letters of credit or other credit support
arrangements provided by banks.
There generally is no established secondary market for these obligations
because they are direct lending arrangements between the lender and borrower.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, a Fund's right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. Such
obligations frequently are not rated by credit rating agencies and each Fund may
invest in obligations which are not so rated only if the Advisor determines that
at the time of investment the obligations are of comparable quality to the other
obligations in which such Fund may invest. The Advisor, on behalf of each Fund,
considers on an ongoing basis the creditworthiness of the issuers of the
floating- and variable-rate demand obligations in such Fund's portfolio. No
Fund will invest more than 15% of the value of its total net assets in floating-
or variable-rate demand obligations whose demand feature is not exercisable
within seven days. Such obligations may be treated as liquid, if an active
secondary market exists. Floating- and variable-rate instruments are subject to
interest-rate risk and credit risk.
The floating- and variable-rate instruments that the Funds may purchase
include certificates of participation in such instruments.
FOREIGN OBLIGATIONS. The Funds may invest in foreign securities through
American Depositary Receipts ("ADRs"), Canadian Depositary Receipts ("CDRs"),
European Depositary Receipts ("EDRs"), International Depositary Receipts
("IDRs") and Global Depositary Receipts ("GDRs") or other similar securities
convertible into securities of foreign issuers. These securities may not
necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs (sponsored or unsponsored) are receipts typically
issued by a U.S. bank or trust company and traded on a U.S. stock exchange, and
CDRs are receipts typically issued by a Canadian bank or trust company that
evidence ownership of underlying foreign securities. Issuers of unsponsored
ADRs are not contractually obligated to disclose material information in the
U.S. and, therefore, such information may not correlate to the market value of
the unsponsored ADR. EDRs and IDRs are receipts typically issued by European
banks and trust companies, and GDRs are receipts issued by either a U.S. or non-
U.S. banking institution, that evidence ownership of the underlying foreign
securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets and EDRs and IDRs in bearer form are designed primarily for
use in Europe. Each Fund may not invest 25% or more of its assets in foreign
obligations.
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Investments in foreign obligations involve certain considerations that are not
typically associated with investing in domestic securities. There may be less
publicly available information about a foreign issuer than about a domestic
issuer. Foreign issuers also are not generally subject to the same accounting,
auditing and financial reporting standards or governmental supervision as
domestic issuers. In addition, with respect to certain foreign countries, taxes
may be withheld at the source under foreign tax laws, and there is a possibility
of expropriation or confiscatory taxation, political, social and monetary
instability or diplomatic developments that could adversely affect investments
in, the liquidity of, and the ability to enforce contractual obligations with
respect to, securities of issuers located in those countries.
Investment income on certain foreign securities in which a Fund may invest may
be subject to foreign withholding or other taxes that could reduce the return on
these securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which the Fund
would be subject.
Foreign Currency Transactions. The Funds may enter into forward currency
exchange contracts in order to protect against uncertainty in the level of
future foreign exchange rates. A forward currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts are entered
into the interbank market conducted between currency traders (usually large
commercial banks) and their customers. Forward currency exchange contracts may
be bought or sold to protect the Funds against a possible loss resulting from an
adverse change in the relationship between foreign currencies and the U.S.
dollar, or between foreign currencies. 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.
FORWARD COMMITMENTS, WHEN-ISSUED PURCHASES AND DELAYED-DELIVERY TRANSACTIONS.
Each Fund may purchase or sell securities on a when-issued or delayed-delivery
basis and make contracts to purchase or sell securities for a fixed price at a
future date beyond customary settlement time. Securities purchased or sold on a
when-issued, delayed-delivery or forward commitment basis involve a risk of loss
if the value of the security to be purchased declines, or the value of the
security to be sold increases, before the settlement date.
Each Fund will segregate cash, U.S. Government obligations or other high-
quality debt instruments in an amount at least equal in value to the Fund's
commitments to purchase when-issued securities. If the value of these assets
declines, the Fund will segregate additional liquid assets on a daily basis so
that the value of the segregated assets is equal to the amount of such
commitments.
ILLIQUID SECURITIES. The Funds may invest in securities not registered under
the 1933 Act and other securities subject to legal or other restrictions on
resale. Because such securities may be less liquid than other investments, they
may be difficult to sell promptly at an acceptable price. Delay or difficulty in
selling securities may result in a loss or be costly to the Fund. Each Fund may
invest up to 15% of its net assets in illiquid securities.
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LOANS OF PORTFOLIO SECURITIES. Each Fund may lend its portfolio securities to
brokers, dealers and financial institutions, provided: (1) the loan is secured
continuously by collateral consisting of U.S. Government securities or cash or
letters of credit maintained on a daily marked-to-market basis in an amount at
least equal to the current market value of the securities loaned; (2) the Fund
may at any time call the loan and obtain the return of the securities loaned
within five business days; (3) the Fund will receive any interest or dividends
paid on the loaned securities; and (4) the aggregate market value of securities
loaned will not at any time exceed the limits imposed by the 1940 Act.
A Fund will earn income for lending its securities because cash collateral
pursuant to these loans will be invested in short-term money market instruments.
In connection with lending securities, a Fund may pay reasonable finders,
administrative and custodial fees. A Fund will not enter into any security
lending arrangement having a duration longer than one year. Loans of securities
involve a risk that the borrower may fail to return the securities or may fail
to provide additional collateral. In either case, a Fund could experience delays
in recovering securities or collateral or could lose all or part of the value of
the loaned securities. Although voting rights, or rights to consent, attendant
to securities on loan pass to the borrower, such loans may be called at any time
and will be called so that the securities may be voted by a Fund if a material
event affecting the investment is to occur. A Fund may pay a portion of the
interest or fees earned from securities lending to a borrower or placing broker.
Borrowers and placing brokers may not be affiliated, directly or indirectly,
with Wells Fargo Bank, Stephens Inc. or any of their affiliates.
LOWER RATED SECURITIES. The Corporate Bond Income Fund may invest up to
[100%] of its net assets in non-investment grade bonds. These are commonly
known as "junk bonds." Their default and other risks are greater than those of
higher rated securities. You should carefully consider these risks before
investing in the Fund.
Various investment services publish ratings of some of the types of securities
in which the Fund may invest. Higher yields are ordinarily available from
securities in the lower rating categories, such as securities rated Ba or lower
Moody's Investors Service, Inc. ("Moody's) or BB or lower by Standard & Poor's
Ratings Group ("S&P"), or from unrated securities deemed by the Advisor to be of
comparable quality. These ratings represent the opinions of the rating services
with respect to the issuer's ability to pay interest and repay principal. They
do not purport to reflect the risk of fluctuations in market value and are not
absolute standards of quality. The Advisor will consider these ratings in
connection with the investment of the Fund's assets but they will not be a
determining or limiting factor.
The Corporate Bond Fund may invest in securities regardless of their rating or
in securities that are unrated, including up to 5% of their assets in securities
that are in default at the time of purchase. As an operating policy, however,
the Funds will generally invest in securities that are rated at least Caa by
Moody's or CCC by S&P, except for defaulted securities as noted below, or that
are unrated but of comparable quality as determined by the Advisor.
The Corporate Bond Fund may also buy debt securities of issuers that are not
currently paying interest, as well as issuers who are in default, and may keep
an issue that has defaulted. The
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Fund will buy defaulted debt securities if, in the opinion of advisors, they
present an opportunity for later price recovery, the issuer may resume interest
payments, or other advantageous developments appear likely in the near future.
In general, securities that default lose much of their value before the actual
default so that the security, and thus the net asset value of the Funds would be
impacted before the default. Defaulted debt securities may be illiquid and, as
such, will be part of the 15% limit discussed under "Illiquid Investments."
If the rating on an issue held in the Fund's portfolio is changed by the
rating service or the security goes into default, this event will be considered
by the Fund in its evaluation of the overall investment merits of that security
but will not generally result in an automatic sale of the security.
Certain of the high yielding, fixed-income securities in which the Fund may
invest may be purchased at a discount. When held to maturity or retired, these
securities may include an element of capital gain. Capital losses may be
realized when securities purchased at a premium, that is, in excess of their
stated or par value, are held to maturity or are called or redeemed at a price
lower than their purchase price. Capital gains or losses also may be realized
upon the sale of securities.
MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENTS. The Funds may invest in
the following types of high quality money market instruments that have remaining
maturities not exceeding one year: (i) U.S. Government obligations; (ii)
negotiable certificates of deposit, bankers' acceptances and fixed time deposits
and other obligations of domestic banks (including foreign branches) that have
more than $1 billion in total assets at the time of investment and are members
of the Federal Reserve System or are examined by the Comptroller of the Currency
or whose deposits are insured by the FDIC; (iii) commercial paper rated at the
date of purchase "Prime-1" by Moody's or "A-1" or "A-1--" by S&P, or, if
unrated, of comparable quality as determined by Wells Fargo Bank, as investment
advisor; and (iv) repurchase agreements. The Funds also may invest in short-
term U.S. dollar-denominated obligations of foreign banks (including U.S.
branches) that at the time of investment: (i) have more than $10 billion, or the
equivalent in other currencies, in total assets; (ii) are among the 75 largest
foreign banks in the world as determined on the basis of assets; (iii) have
branches or agencies in the United States; and (iv) in the opinion of Wells
Fargo Bank, as investment advisor, are of comparable quality to obligations of
U.S. banks which may be purchased by the Funds.
Letters of Credit. Certain of the debt obligations (including certificates of
participation, commercial paper and other short-term obligations) which the
Funds may purchase may be backed by an unconditional and irrevocable letter of
credit of a bank, savings and loan association or insurance company which
assumes the obligation for payment of principal and interest in the event of
default by the issuer. Only banks, savings and loan associations and insurance
companies which, in the opinion of Wells Fargo Bank, are of comparable quality
to issuers of other permitted investments of the Fund may be used for letter of
credit-backed investments.
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Repurchase Agreements. A Fund may enter into repurchase agreements, wherein
the seller of a security to the Fund agrees to repurchase that security from the
Fund at a mutually agreed upon time and price. A Fund may enter into repurchase
agreements only with respect to securities that could otherwise be purchased by
the Fund. All repurchase agreements will be fully collateralized at 102% based
on values that are marked to market daily. The maturities of the underlying
securities in a repurchase agreement transaction may be greater than twelve
months, although the maximum term of a repurchase agreement will always be less
than twelve months. If the seller defaults and the value of the underlying
securities has declined, a Fund may incur a loss. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security, the Fund's
disposition of the security may be delayed or limited. Each Fund may not enter
into a repurchase agreement with a maturity of more than seven days, if, as a
result, more than 15% (10% for the Money Market Fund) of the market value of
such Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. A Fund will only enter into repurchase agreements with primary
broker/dealers and commercial banks that meet guidelines established by the
Board of Trustees and that are not affiliated with the investment advisor. The
Funds may participate in pooled repurchase agreement transactions with other
funds advised by Wells Fargo Bank.
MORTGAGE-RELATED SECURITIES. The Corporate Bond Fund may invest in mortgage-
related securities. Mortgage pass-through securities are securities
representing interests in "pools" of mortgages in which payments of both
interest and principal on the securities are made monthly, in effect "passing
through" monthly payments made by the individual borrowers on the residential
mortgage loans which underlie the securities (net of fees paid to the issuer or
guarantor of the securities). Payment of principal and interest on some
mortgage pass-through securities (but not the market value of the securities
themselves) may be guaranteed by the full faith and credit of the U.S.
Government or its agencies or instrumentalities. Mortgage pass-through
securities created by non- government issuers (such as commercial banks, savings
and loan institutions, private mortgage insurance companies, mortgage bankers
and other secondary market issuers) may be supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance, and letters of credit, which may be issued by governmental entities,
private insurers or the mortgage poolers.
Prepayment Risk. The stated maturities of mortgage-related securities may be
shortened by unscheduled prepayments of principal on the underlying mortgages.
Therefore, it is not possible to predict accurately the average maturity of a
particular mortgage-related security . Variations in the maturities of
mortgage-related securities will affect the yield of the Fund. Early repayment
of principal on mortgage-related securities may expose the Fund to a lower rate
of return upon reinvestment of principal. Also, if a security subject to
prepayment has been purchased at a premium, in the event of prepayment the value
of the premium would be lost. Like other fixed-income securities, when interest
rates rise, the value of a mortgage-related security generally will decline;
however, when interest rates decline, the value of mortgage-related securities
with prepayment features may not increase as much as other fixed-income
securities.
Collateralized Mortgage Obligations ("CMOs") and Adjustable Rate Mortgages
("ARMs"). The Corporate Bond Fund may also invest in investment grade CMOs.
CMOs may be
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collateralized by whole mortgage loans but are more typically collateralized by
portfolios of mortgage pass-through securities guaranteed by the Government
National Mortgage Association ("GNMA"), the Federal Home Loan Mortgage
Corporation ("FHLMC") or Federal National Mortgage Association ("FNMA"). CMOs
are structured into multiple classes, with each class bearing a different stated
maturity. Payments of principal, including prepayments, are first returned to
investors holding the shortest maturity class; investors holding the longer
maturity classes receive principal only after the first class has been retired.
As new types of mortgage-related securities are developed and offered to
investors, the Advisor will, consistent with the Fund's investment objective,
policies and quality standards, consider making investments in such new types of
mortgage-related securities.
The Fund may invest in ARMs issued or guaranteed by the GNMA, FNMA or the
FHLMC. The full and timely payment of principal and interest on GNMA ARMs is
guaranteed by GNMA and backed by the full faith and credit of the U.S.
Government. FNMA also guarantees full and timely payment of both interest and
principal, while FHLMC guarantees full and timely payment of interest and
ultimate payment of principal. FNMA and FHLMC ARMs are not backed by the full
faith and credit of the United States. However, because FNMA and FHLMC are
government-sponsored enterprises, these securities are generally considered to
be high quality investments that present minimal credit risks. The yields
provided by these ARMs have historically exceeded the yields on other types of
U.S. Government securities with comparable maturities, although there can be no
assurance that this historical performance will continue.
The mortgages underlying ARMs guaranteed by GNMA are typically insured or
guaranteed by the Federal Housing Administration, the Veterans Administration or
the Farmers Home Administration, while those underlying ARMs issued by FNMA or
FHLMC are typically conventional residential mortgages which are not so insured
or guaranteed, but which conform to specific underwriting, size and maturity
standards.
The interest rates on the mortgages underlying the ARMs and some of the CMOs
in which the Fund may invest generally are readjusted at periodic intervals
ranging from one year or less to several years in response to changes in a
predetermined commonly-recognized interest rate index. The adjustable rate
feature should reduce, but will not eliminate, price fluctuations in such
securities, particularly when market interest rates fluctuate. The net asset
value of the Fund's shares may fluctuate to the extent interest rates on
underlying mortgages differ from prevailing market interest rates during interim
periods between interest rate reset dates. Accordingly, investors could
experience some loss if they redeem their shares of the Fund or if the Fund
sells these portfolio securities before the interest rates on the underlying
mortgages are adjusted to reflect prevailing market interest rates. The holder
of ARMs and CMOs are also subject to repayment risk.
The Corporate Bond Fund will not invest in CMOs that, at the time of purchase,
are "high-risk mortgage securities" as defined in the then current Federal
Financial Institutions Examination Council Supervisory Policy Statement on
Securities Activities. High-risk mortgage securities are generally those with
long durations or those which are likely to be more sensitive to interest-rate
fluctuations.
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OPTIONS TRADING. The Large Company Growth and Small Cap Funds may purchase
or sell options on individual securities or options on indices of securities as
described below. 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 Funds will write call options only if they are "covered." In the case of
a call option on a security or currency, the option is "covered" if a Fund owns
the instrument underlying the call or has an absolute and immediate right to
acquire that instrument without additional cash consideration (or, if additional
cash consideration is required, cash, U.S. Government securities or other liquid
high grade debt obligations, in such amount are held in a segregated account by
the Fund's custodian) upon conversion or exchange of other securities held by
it. For a call option on an index, the option is covered if a Fund maintains
with its custodian a diversified portfolio of securities comprising the index or
liquid assets equal to the contract value. A call option is also covered if a
Fund holds an offsetting call on the same instrument or index as the call
written. The Funds will write put options only if they are "secured" by liquid
assets maintained in a segregated account by the Funds' custodian in an amount
not less than the exercise price of the option at all times during the option
period.
Each Fund may buy put and call options and write covered call and secured put
options. Options trading is a highly specialized activity which entails greater
than ordinary investment risk. Options may be more volatile than the underlying
instruments, and therefore, on a percentage basis, an investment in options may
be subject to greater fluctuation than an investment in the underlying
instruments themselves. Purchasing options is a specialized investment
technique that entails a substantial risk of a complete loss of the amounts paid
as premiums to the writer of the option. If the Advisor is incorrect in its
forecast of market value or other factors when writing options, the Fund would
be in a worse position than it would have been had if it had not written the
option. If a Fund wishes to sell an underlying instrument (in the case of a
covered call option) or liquidate assets in a segregated account (in the case of
a secured put option), the Fund must purchase an offsetting option if available,
thereby incurring additional transactions costs.
Below is a description of some of the types of options in which the Funds may
invest.
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A stock index option is an option contract whose value is based on the value
of a stock index at some future point in time. Stock indexes fluctuate with
changes in the market values of the stocks included in the index. The
effectiveness of purchasing or writing stock index options will depend upon the
extent to which price movements in a Fund's investment portfolio correlate with
price movements of the stock index selected. Accordingly, successful use by a
Fund of options on stock indexes will be subject to the Advisor's ability to
correctly analyze movements in the direction of the stock market generally or of
particular industry or market segments. When a Fund writes an option on a stock
index, the Fund will place in a segregated account with the Fund's custodian
cash or liquid securities in an amount at least equal to the market value of the
underlying stock index and will maintain the account while the option is open or
otherwise will cover the transaction.
The Funds may invest in stock index futures contracts and options on stock
index futures contracts. A stock index futures contract is an agreement in
which one party agrees to deliver to the other an amount of cash equal to a
specific dollar amount multiplied by the difference between the value of a
specific stock index at the close of the last trading day of the contract and
the price at which the agreement is made. Stock index futures contracts may be
purchased to protect a Fund against an increase in the prices of stocks that
Fund intends to purchase. The purchase of options on stock index futures
contracts are similar to other options contracts as described above, where a
Fund pays a premium for the option to purchase or sell a stock index futures
contract for a specified price at a specified date. With options on stock index
futures contracts, a Fund risks the loss of the premium paid for the option.
The Funds may also invest in interest-rate futures contracts and options on
interest-rate futures contracts. These securities are similar to stock index
futures contracts and options on stock index futures contracts, except they
derive their price from an underlying interest rate rather than a stock index.
Interest-rate and index swaps involve the exchange by a Fund with another
party of their respective commitments to pay or receive interest (for example,
an exchange of floating-rate payments for fixed-rate payments). Index swaps
involve the exchange by a Fund with another party of cash flows based upon the
performance of an index of securities. Interest-rate swaps involve the exchange
by a Fund with another party of cash flows based upon the performance of a
specified interest rate. In each case, the exchange commitments can involve
payments to be made in the same currency or in different currencies. The Funds
will usually enter into swaps on a net basis. In so doing, the two payment
streams are netted out, with a Fund receiving or paying, as the case may be,
only the net amount of the two payments. If a Fund enters into a swap, it will
maintain a segregated account on a gross basis, unless the contract provides for
a segregated account on a net basis. The risk of loss with respect to swaps
generally is limited to the net amount of payments that a Fund is contractually
obligated to make. There is also a risk of a default by the other party to a
swap, in which case a Fund may not receive net amount of payments that the Fund
contractually is entitled to receive
OTHER INVESTMENT COMPANIES. The Funds may invest in shares of other
registered investment companies, up to the limits prescribed in Section 12(d) of
the 1940 Act. Under the 1940 Act, a Fund's investment in such securities
currently is generally limited to, subject to certain exceptions, (i) 3% of the
total voting stock of any one investment company, (ii) 5% of
15
<PAGE>
such Fund's net assets with respect to any one investment company and (iii) 10%
of such Fund's net assets in aggregate. Other investment companies in which the
Funds invest can be expected to charge fees for operating expenses such as
investment advisory and administration fees, that would be in addition to those
charged by the Funds.
Privately Issued Securities. The Funds may invest in privately issued
securities, including those which may be resold only in accordance with Rule
144A under the Securities Act of 1933 ("Rule 144A Securities"). Rule 144A
Securities are restricted securities that are not publicly traded. Accordingly,
the liquidity of the market for specific Rule 144A Securities may vary. Delay or
difficulty in selling such securities may result in a loss to a Fund. Privately
issued or Rule 144A securities that are determined by the investment advisor to
be "illiquid" are subject to the Funds' policy of not investing more than 15% of
its net assets in illiquid securities. The investment advisor, under guidelines
approved by Board of Trustees of the Trust, will evaluate the liquidity
characteristics of each Rule 144A Security proposed for purchase by a Fund on a
case-by-case basis and will 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).
STRIPPED SECURITIES. The Funds may purchase Treasury receipts and other
"stripped" securities that evidence ownership in either the future interest
payments or the future principal payments on U.S. Government and other
obligations. The stripped securities the Funds may purchase are issued by the
U.S. Government (or a U.S. Government agency or instrumentality) or by private
issuers such as banks, corporations and other institutions at a discount to
their face value. The Funds will not purchase stripped mortgage-backed
securities ("SMBS"). The stripped securities purchased by the Funds generally
are structured to make a lump-sum payment at maturity and do not make periodic
payments of principal or interest. Hence, the duration of these securities
tends to be longer and they are therefore more sensitive to interest rate
fluctuations than similar securities that offer periodic payments over time.
The stripped securities purchased by the Funds are not subject to prepayment or
extension risk.
U.S. GOVERNMENT OBLIGATIONS. The Funds may invest in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities ("U.S.
Government obligations"). Payment of principal and interest on U.S. Government
obligations (i) may be backed by the full faith and credit of the United States
(as with U.S. Treasury bills and Government National Mortgage Association
("GNMA") certificates) or (ii) may be backed solely by the issuing or
guaranteeing agency or instrumentality itself (as with Federal National Mortgage
Association ("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
16
<PAGE>
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. Each of the Funds may invest no more than 5% of its net assets at
the time of purchase in warrants (other than those that have been acquired in
units or attached to other securities), and not more than 2% of its net assets
in warrants which are not listed on the New York or American Stock Exchange.
Warrants represent rights to purchase securities at a specific price valid for a
specific period of time. The prices of warrants do not necessarily correlate
with the prices of the underlying securities. The Funds may only purchase
warrants on securities in which the Fund may invest directly.
ZERO COUPON BONDS. The Corporate Bond Fund may invest in zero coupon bonds.
Zero coupon bonds are securities that make no periodic interest payments, but
are instead sold at discounts from face value. The buyer of such a bond
receives the rate of return by the gradual appreciation of the security, which
is redeemed at face value on a specified maturity date. Because zero coupon
bonds bear no interest, they are more sensitive to interest-rate changes and are
therefore more volatile. When interest rates rise, the discount to face value
of the security deepens and the securities decrease more rapidly in value, when
interest rates fall, zero coupon securities rise more rapidly in value because
the bonds carry fixed interest rates that become more attractive in a falling
interest rate environment.
NATIONALLY RECOGNIZED RATINGS ORGANIZATIONS. The ratings of Moody's Investors
Service, Inc., Standard & Poor's Ratings Group, Division of McGraw Hill, Duff &
Phelps Credit Rating Co., Fitch Investors Service, Inc. Thomson Bank Watch and
IBCA Inc. represent their opinions as to the quality of debt securities. It
should be emphasized, however, that ratings are general and not absolute
standards of quality, and debt securities with the same maturity, interest rate
and rating may have different yields while debt securities of the same maturity
and interest rate with different ratings may have the same yield. Subsequent to
purchase by a Fund, an issue of debt securities may cease to be rated or its
rating may be reduced below the minimum rating required for purchase by a Fund.
The advisor will consider such an event in determining whether the Fund involved
should continue to hold the obligation.
MANAGEMENT
The following information supplements, and should be read in conjunction with,
the section in the Prospectus entitled "Organization and Management of the
Funds." The principal occupations during the past five years of the Trustees
and executive officers of Wells Fargo Variable Trust are listed below. The
address of each, unless otherwise indicated, is 111 Center Street, Little Rock,
Arkansas 72201. Trustees deemed to be "interested persons" of Wells Fargo
Variable Trust for purposes of the 1940 Act are indicated by an asterisk.
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<PAGE>
<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- -------------------
<S> <C> <C>
*Robert C. Brown, 65 Trustee Director, Federal Farm Credit Banks Funding
1431 Landings Place Corporation and Farm Credit System Financial
Sarasota, FL 34231 Assistance Corporation since February 1993.
Donald H. Burkhardt, 70 Trustee Principal of the Burkhardt Law Firm.
777 South Steele Street
Denver, CO 80209
Jack S. Euphrat, 77 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.
Thomas S. Goho, 56 Trustee Business Associate Professor, Wake Forest
321 Beechcliff Court University, Calloway School of Business and
Winston-Salem, NC 27104 Accountancy since 1994; previously Associate
Professor of Finance.
Peter G. Gordon, 56 Trustee Chairman and Co-Founder of Crystal Geyser
Crystal Geyser Water Co. Water Company and President of Crystal Geyser
55 Francisco Street, Suite 410 Roxane Water Company since 1977.
San Francisco, CA 94133
*W. Rodney Hughes, 72 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Richard M. Leach, 63 Trustee President of Richard M. Leach Associates (a
P.O. Box 1888 financial consulting firm) since 1992.
New London, NH 03257
*J. Tucker Morse, 54 Trustee Private Investor/Real Estate Developer;
Four Beaufain Street Chairman of Vault Holdings, LLC.
Charleston, SC 29401
Timothy J. Penny, 45 Trustee Senior Counselor to the public relations firm
500 North State Street of Himle-Horner since January 1995 and Senior
Waseca, MN 56095 Fellow at the Humphrey Institute, Minneapolis,
Minnesota (a public policy organization) since
January 1995.
Richard H. Blank, Jr., 42 Chief Operating Vice President of Stephens Inc.; Director of
Officer, Stephens Sports Management Inc.; and Director
Secretary and of Capo Inc.
</TABLE>
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<PAGE>
Treasurer
Compensation Table
------------------
Aggregate Total Compensation
Compensation from Registrant and
Name and Position from Registrant Fund Complex
- ------------------ --------------- ------------
Robert C. Brown N/A N/A
Trustee
Donald H. Burkhardt N/A N/A
Trustee
Jack S. Euphrat N/A N/A
Trustee
Thomas S. Goho N/A N/A
Trustee
Peter G. Gordon N/A N/A
Trustee
W. Rodney Hughes N/A N/A
Trustee
Richard M. Leach N/A N/A
Trustee
J. Tucker Morse N/A N/A
Trustee
Timothy J. Penny N/A N/A
Trustee
Each of the Trustees and Officers listed above, act in the identical
capacities for Wells Fargo Variable Trust and Wells Fargo Core Trust
(collectively the "Fund Complex"). Trustees are compensated annually by the
Trust and by all the registrants in each fund complex they serve beginning
September 17, 1999, and beginning March 26, 1999, receive a per-meeting fee of
$250. Trustees also are reimbursed for all out-of-pocket expenses relating to
attendance at board meetings. Each of the Trustees and Officers of the Trust
serves in the identical capacity as trustees and/or officers of each registered
open-end management investment company in the Fund Complex. The Trustees are
compensated by other companies and trusts within a fund complex for their
services as directors/trustees to such companies and trusts. Currently the
Trustees do not
19
<PAGE>
receive any retirement benefits or deferred compensation from the Trust or any
other member of each fund complex.
As of the date of this SAI, Trustees and officers of the Trust, as a group,
beneficially owned less than 1% of the outstanding shares of the Trust.
INVESTMENT ADVISOR. Each of the Funds is advised by Wells Fargo Bank pursuant
to an Advisory Contract. The Advisory Contracts provide that Wells Fargo Bank
shall furnish to the Funds investment guidance and policy direction in
connection with the daily portfolio management of each Fund. Under the Advisory
Contracts, Wells Fargo Bank furnishes to the Board of Trustees periodic reports
on the investment strategy and performance of each Fund. Wells Fargo Bank has
agreed to provide to the Funds, among other things, money market and fixed-
income research, analysis and statistical and economic data and information
concerning interest rate and security market trends, portfolio composition,
credit conditions and, in the case of the Corporate Bond Fund, average
maturities of the portfolios. As compensation for its advisory services, Wells
Fargo Bank is entitled to receive a monthly fee at the annual rate of 0.60% of
each Fund's average daily net assets, with the exceptions of the Corporate Bond
Fund, from which Wells Fargo Bank is entitled to receive 0.50% of the Fund's
average daily net assets.
General. Each Fund's Advisory Contract will continue in effect for more than
-------
two years from the effective date provided the continuance is approved annually
(i) by the holders of a majority of the respective Fund's outstanding voting
securities or by Wells Fargo Variable Trust's Board of Trustees and (ii) by a
majority of the Trustees of Wells Fargo Variable Trust who are not parties to
the Advisory Contract or "interested persons" (as defined in the 1940 Act) of
any such party. A Fund's Advisory Contract may be terminated on 60 days' written
notice by either party and will terminate automatically if assigned.
INVESTMENT SUB-ADVISORS. Wells Capital Management ("WCM") serves as sub-
advisor to the Corporate Bond and Small Cap Funds. As sub-advisor, WCM makes
recommendations regarding the investment and reinvestment of the Funds' assets,
furnishes to Wells Fargo Bank periodic reports on the investment activity and
performance of the Funds, and furnishes such additional reports and information
as Wells Fargo Bank and the Trust's Board of Trustees and officers may
reasonably request. As compensation for its sub-advisory services, WCM is
entitled to receive a monthly fee equal to an annual rate of 0.25% of the first
$200 million of the Corporate Bond and Small Cap Funds' average daily net
assets, 0.20% of the next $200 million of such funds' net assets, and 0.15% of
net assets over $400 million. As compensation for sub-advisory services for the
Corporate Bond Fund, WCM is entitled to receive a monthly fee equal to an annual
rate of 0.15% of the first $400 million of the Corporate Bond Fund's average
daily net assets, 0.125% of the next $400 million of such Fund's net assets, and
0.10% of net assets over $800 million. WCM receives a minimum annual fee from
each Fund of $120,000. This minimum annual fee does not increase the advisory
fees paid by the Funds to Wells Fargo Bank.
Peregrine Capital Management, Inc. ("Peregrine") to serve as sub-advisor
to the Large Company Growth Fund. Subject to the direction of the
20
<PAGE>
Trust's Board of Trustees and the overall supervision and control of Wells Fargo
Bank and the Trust, Peregrine makes recommendations regarding the investment and
reinvestment of the Funds' assets. Peregrine furnishes to Wells Fargo Bank
periodic reports on the investment activity and performance of the Funds.
Peregrine also furnishes such additional reports and information as Wells Fargo
Bank and the Trust's Board of Trustees and officers may reasonably request.
General. Each Fund's Sub-Advisory Contract will continue in effect for more
-------
than two years from the effective date provided the continuance is approved
annually (i) by the holders of a majority of the respective Fund's outstanding
voting securities or (ii) by the Trust's Board of Trustees, including a majority
of the Trustees of the Company who are not parties to the Sub-Advisory Contract
or "interested persons" (as defined in the 1940 Act) of any such party. A
Fund's Sub-Advisory Contract may be terminated on 60 days written notice by
either party and will terminate automatically if assigned.
PORTFOLIO MANAGERS.
------------------
N. GRAHAM ALLEN, FCMA
MANAGING DIRECTOR OF GLOBAL FIXED INCOME INVESTING, WCM
Will manage the Corporate Bond Fund upon inception. Mr. Allen has been with
Wells Capital Management, Inc. ("WCM") since January 1998. Before joining WCM,
Mr. Allen managed international fixed-income portfolios for Bradford & Marzec,
Inc. for ten years. He has over thirteen years of investment management
experience.
JOHN W. (JACK) BURGESS
WCM
Will co-manage the Corporate Bond Fund upon inception. Mr. Burgess has been a
portfolio manager with WCM since January 1998, and was an independent financial
advisor from 1995 until joining the firm. Before that, he managed equity and
fixed-income portfolios for Aurora National Life Assurance Company and related
entities since 1988. Mr. Burgess has over ten years of investment management
experience.
JOHN S. DALE, CFA
SENIOR VICE PRESIDENT, PEREGRINE
Will manage the Large Company Growth Fund upon inception, and has been with
Peregrine and its affiliates since 1968. Mr. Dale has over thirty years of
equity investment management experience.
21
<PAGE>
JACQUELINE A. FLIPPIN
PRINCIPAL, WCM
Will co-manage the Corporate Bond Fund upon inception, and has been with WCM
since January 1998. Before joining the firm, Ms. Flippin was a short-term debt
securities trader and portfolio manager for McMorgan & Company since 1994.
Ms. Flippin has over ten years of investment management experience.
DANIEL J. KOKOSKA, CFA
PRINCIPAL, WCM
Will co-manage the Corporate Bond Fund upon inception, and has been with Wells
Fargo since January 1998. Before joining WCM, Mr. Kokoska co-managed
international fixed-income portfolios for Bradford & Marzec, Inc. since 1993.
Mr. Kokoska has over twelve years of investment management experience.
KENNETH LEE
PRINCIPAL, WCM
Mr. Lee will be responsible as portfolio manager of the Small Cap Fund upon
inception. He is also generally responsible for portfolio management and
fundamental security analysis on the small and mid cap growth equity team. Prior
to his current position, he worked as an associate in the high-net-worth
portfolio management group. He has 7 years of investment experience, including
5 years at this firm. Mr. Lee holds a B.A. in Economics and a B.A. in
Organizational Studies from the University of California at Davis and is
currently a Chartered Financial Analyst Level III candidate.
GARY E. NUSSBAUM
Senior Vice President, Peregrine
Will co-manage the Large Company Growth Fund upon inception, and has been with
Peregrine and its affiliates since 1990. Mr. Nussbaum has over nine years of
investment management experience.
SCOTT SMITH, CFA
PRINCIPAL, WCM
Will co-manage the Corporate Bond Fund upon inception, and has been with Wells
Fargo/WCM since 1987, specializing in corporate and mortgage-backed securities
investments. Mr. Smith has over eleven years of investment management
experience.
THOMAS M. ZEIFANG, CFA
WCM
Mr. Zeifang will be responsible as co-manager of the Small Cap Fund upon
inception. He is also responsible for fundamental security analysis on the
small and mid cap growth equity team. Prior to joining the firm in 1995, he
spent 3 years as an analyst at Fleet Investment Advisors and 3 years as an
assistant portfolio manager at Marine Midland Bank. Mr. Zeifang holds an M.B.A.
in Finance and Business Policy from the William E. Simon School of Business
Administration and a B.B.A. in Finance from Saint Bonaventure University. Mr.
Zeifang is a Chartered Financial Analyst and a member of the Association for
Investment Management and Research (AIMR).
22
<PAGE>
ADMINISTRATOR. The Trust has retained Wells Fargo Bank as Administrator on
-------------
behalf of each Fund. Under the Administration Agreement between Wells Fargo
Bank and the Trust, Wells Fargo Bank shall provide as administration services,
among other things: (i) general supervision of the Funds' operations, including
coordination of the services performed by each Fund's investment Advisor,
transfer agent, custodian, shareholder servicing agent(s), independent auditors
and legal counsel, regulatory compliance, including the compilation of
information for documents such as reports to, and filings with, the SEC and
state securities commissions; and preparation of proxy statements and
shareholder reports for each Fund; and (ii) general supervision relative to the
compilation of data required for the preparation of periodic reports distributed
to the Trust's officers and Board of Trustees. Wells Fargo Bank also furnish
office space and certain facilities required for conducting the Funds' business
together with ordinary clerical and bookkeeping services. The Administrator is
entitled to receive a fee of 0.15%, of the average daily net assets on an annual
basis of each Fund.
CUSTODIAN. Norwest Bank Minnesota, N.A. ("Norwest Bank") acts as Custodian
---------
for each Fund. The Custodian, among other things, maintains a custody account
or accounts in the name of each Fund, receives and delivers all assets for each
Fund upon purchase and upon sale or maturity, collects and receives all income
and other payments and distributions on account of the assets of each Fund and
pays all expenses of each Fund. For its services as Custodian, Norwest Bank is
entitled to receive fees as follows: 0.02% of the average daily net assets of
each Fund.
FUND ACCOUNTANT. Forum acts as Fund Accountant for the Funds. The Fund
---------------
Accountant, among other things, computes net asset values on a daily basis and
performance calculations on a regular basis and as requested by the Funds. For
providing such services, Forum is entitled to receive a fee of [___%.]
TRANSFER AND DIVIDEND DISBURSING AGENT. State Street Bank, acting through its
--------------------------------------
affiliate Boston Financial Data Services ("BFDS") acts as Transfer and Dividend
Disbursing Agent for the Funds. For providing such services, BFDS is entitled
to receive a per-account fee of [0.04% OF THE AVERAGE DAILY NET ASSETS OF EACH
SUCH ACCOUNT ON AN ANNUAL BASIS].
SHAREHOLDER SERVICING AGENT. Wells Fargo Variable Trust has approved a
Servicing Plan on behalf of each Fund and has approved the Funds' entry into
related shareholder servicing agreements with financial institutions, including
Fortis Benefits Insurance Company and American Skandia Life Insurance Company.
Under the agreements, Shareholder Servicing Agents (including these companies)
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 Company
to a shareholder may reasonably request. For providing shareholder services, a
Servicing Agent is entitled to a fee from the applicable Fund, on an annualized
basis, of the average daily net assets of the class of shares owned of record or
beneficially by the customers of the Servicing Agent during the period for which
payment is being made. For providing these services, a shareholder servicing
agent is entitled to a fee from the Fund of up to 0.25%, on an annualized basis,
of the average daily net asset value of the Fund shares owned by or
23
<PAGE>
attributable to such customers of the Shareholder Servicing Agent. The Servicing
Plan and related shareholder servicing agreements were approved by Wells Fargo
Variable Trust's Board of Trustees including a majority of the Trustees who were
not "interested persons" (as defined in the Act) of the Funds and who had no
direct or indirect financial interest in the operation of the Servicing Plan or
in any agreement related to the Servicing Plan (the "Servicing Plan Qualified
Trustees"). The actual fee payable to servicing agents under the Servicing Plan
for the Funds is determined, within such limits, from time to time by mutual
agreement between Wells Fargo Variable Trust and each servicing agent and will
not exceed the maximum amounts payable by mutual funds sold by members of the
NASD under the Conduct Rules of the NASD.
General. The Servicing Plan for the Funds will continue in effect from year
-------
to year if such continuance is approved by a majority vote of the Trustees of
Wells Fargo Variable Trust, including the Trustees who are not "interested"
persons, as defined under the 1940 Act. Any form of servicing agreement related
to the Servicing Plan also must be approved by such vote of the Trustees.
Servicing agreements may be terminated at any time, without payment of any
penalty, by vote of a majority of the Trustees who are not "interested" persons,
as defined under the 1940 Act. No material amendment to the Servicing Plan may
be made except by a majority vote of the Trustees, including the Trustees who
are not "interested" persons, as defined under the 1940 Act.
The Servicing Plan for the Funds requires that the administrator shall provide
to the Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended (and purposes therefor) under the Servicing Plan.
PERFORMANCE CALCULATIONS
The Funds may advertise certain yield and total return information.
Quotations of yield and total return reflect only the performance of a
hypothetical investment in a Fund or class of shares during the particular time
period shown. Yield and total return vary based on changes in the market
conditions and the level of a Fund's expenses, and no reported performance
figure should be considered an indication of performance which may be expected
in the future.
In connection with communicating its performance to current or prospective
shareholders, these figures may also be compared to the performance of other
mutual funds tracked by mutual fund rating services or to unmanaged indices
which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
Performance information for a Fund or Class of shares in a Fund may be useful
in reviewing the performance of such Fund or Class of shares and for providing a
basis for comparison with investment alternatives. The yield of a Fund and the
yield of a Class of shares in a Fund, however, may not be comparable to the
yields from investment alternatives because of differences in the foregoing
variables and differences in the methods used to value portfolio securities,
compute expenses and calculate yield.
24
<PAGE>
Performance information may be advertised for non-standardized periods,
including year-to-date and other periods less than a year for the Funds.
AVERAGE ANNUAL TOTAL RETURN: Each Fund may advertise certain total return
information. Any Fund advertising would be accompanied by performance
information of the related insurance company separate accounts or by an
explanation that Fund performance information does not reflect separate account
fees and charges. As and to the extent required by the SEC, an average annual
total rate of return ("T") is computed by using the redeemable value at the end
of a specified period ("ERV") of a hypothetical initial investment of $1,000
("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 Funds may advertise cumulative total return of shares. Cumulative total
return of shares is computed on a per share basis and assumes the reinvestment
of dividends and distributions. Cumulative total return of shares generally is
expressed as a percentage rate which is calculated by combining the income and
principal charges for a specified period and dividing by the net asset value per
share at the beginning of the period. Advertisements may include the percentage
rate of total return of shares or may include the value of a hypothetical
investment in shares at the end of the period which assumes the application of
the percentage rate of total return.
YIELD CALCULATIONS: The Corporate Bond Fund may advertise certain yield
information. As and to the extent required by the SEC, yield is calculated based
on a 30-day (or one month) period, computed by dividing the net investment
income per share earned during the period by the net asset value per share on
the last day of the period, according to the following formula: YIELD = 2[((a-
b/cd)+1)/6/-1], where a = dividends and interest earned during the period; b =
expenses accrued for the period (net of reimbursements); c = the average daily
number of shares outstanding during the period that were entitled to receive
dividends; and d = the net asset value per share on the last day of the period.
The net investment income of each Fund includes actual interest income, plus or
minus amortized purchase discount (which may include original issue discount) or
premium, less accrued expenses. Realized and unrealized gains and losses on
portfolio securities are not included in the Fund's net investment income.
The yields for the Corporate Bond Fund will fluctuate from time to time,
unlike bank deposits or other investments that pay a fixed yield for a stated
period of time, and do not provide a basis for determining future yields since
they are based on historical data. Yield is a function of portfolio quality,
composition, maturity and market conditions as well as the expenses allocated to
the Fund.
In addition, investors should recognize that changes in the net asset value of
shares of the Corporate Bond Fund will affect the yield of the Fund for any
specified period, and such changes should be considered together with the Fund's
yield in ascertaining the Fund's total return to shareholders for the period.
Yield information for the Funds may be useful in reviewing the performance of
the Funds and for providing a basis for comparison with investment alternatives.
The yield of a Fund, however, may not be comparable to the yields from
investment alternatives
25
<PAGE>
because of differences in the foregoing variables and differences in the methods
used to value portfolio securities, compute expenses and calculate yield.
From time to time, and only to the extent the comparison is appropriate for a
Fund, Wells Fargo Variable Trust may quote the Fund's performance or price-
earning ratio in advertising and other types of literature as compared to the
performance of the S&P 500 Index, the Dow Jones Industrial Average, the Wilshire
5000 Equity Index, the Lehman Brothers 20+ Treasury Index, the Lehman Brothers
5-7 Year Treasury Index, Donoghue's Money Fund Averages, Real Estate Investment
Averages (as reported by the National Association of Real Estate Investment
Trusts), Gold Investment Averages (provided by the World Gold Council), Bank
Averages (which is calculated from figures supplied by the U.S. League of
Savings Institutions based on effective annual rates of interest on both
passbook and certificate accounts), average annualized certificate of deposit
rates (from the Federal Reserve G-13 Statistical Releases or the Bank Rate
Monitor), the Salomon One Year Treasury Benchmark Index, the Consumer Price
Index (as published by the U.S. Bureau of Labor Statistics), Ten Year U.S.
Government Bond Average, S&P's Corporate Bond Yield Averages, Schabacter
Investment Management Indices, Salomon Brothers High Grade Bond Index, Lehman
Brothers Long-Term High Quality Government/Corporate Bond Index, other managed
or unmanaged indices or performance data of bonds, 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 500 Index and the Dow Jones Industrial
Average are unmanaged indices of selected common stock prices. Unmanaged indices
may assume the reinvestment of dividends, but generally do not reflect
deductions for administrative and management costs and expenses. Managed indices
generally do reflect such deductions.
The Funds' performance also may be compared to those of other mutual funds
having similar objectives. This comparative performance could be expressed as a
ranking prepared by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Bloomberg Financial Markets or Morningstar, Inc.,
independent services which monitor the performance of mutual funds. The Funds'
performance is 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 Money Market Fund's comparative performance will be based on a
comparison of yields, as described above, or total return, as reported by
Lipper, Survey Publications, Donoghue or Morningstar, Inc.
Any such comparisons may be useful to investors who wish to compare a Fund's
past performance with that of its competitors. Of course, past performance
cannot be a guarantee of future results. Wells Fargo Variable 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 holder being
contacted by a selected broker or dealer. General mutual fund statistics
provided by the Investment Company Institute may also be used.
Wells Fargo Variable Trust also may disclose, in advertising and other types
of literature, information and statements that Wells Capital Management, Inc.
("WCM" formerly, WFIM), a division of Wells Fargo Bank, is listed in the top 100
by Institutional Investor magazine in its
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July 1997 survey "America's Top 300 Money Managers." This survey ranks money
managers in several asset categories. Wells Fargo Variable Trust also may
disclose in advertising and other types of sales literature the assets and
categories of assets under management by its investment advisor or sub-advisor
and the total amount of assets and mutual fund assets managed by Wells Fargo
Bank. As of October 31, 1998, Wells Fargo Bank and its affiliates provided
investment advisory services for approximately $62 billion of assets of
individuals, trusts, estates and institutions and $23 billion of mutual fund
assets.
In addition, Wells Fargo Variable 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. Wells Fargo Variable 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."
Wells Fargo Variable Trust also may use the following information in
advertisements and other types of literature, only to the extent the information
is appropriate for a Fund: (i) the Consumer Price Index may be used to assess
the real rate of return from an investment in a Fund; (ii) other government
statistics, including, but not limited to, The Survey of Current Business, may
be used to illustrate investment attributes of a Fund or the general economic,
business, investment, or financial environment in which a Fund operates; (iii)
the effect of tax-deferred compounding on the investment returns of a Fund, or
on returns in general, may be illustrated by graphs, charts, etc., where such
graphs or charts would compare, at various points in time, the return from an
investment in a Fund (or returns in general) on a tax deferred basis (assuming
reinvestment of capital gains and dividends and assuming one or more tax rates)
with the return on a taxable basis; and (iv) the sectors or industries in which
a Fund invests may be compared to relevant indices of stocks or surveys (e.g.,
S&P Industry Surveys) to evaluate a Fund's historical performance or current or
potential value with respect to the particular industry or sector.
Wells Fargo Variable Trust also may discuss in advertising and other types of
literature that a Fund has been assigned a rating by an NRSRO, such as Standard
& Poor's Corporation. Such rating would assess the creditworthiness of the
investments held by a Fund. The assigned rating would not be a recommendation to
purchase, sell or hold a Fund's shares since the rating would not comment on the
net asset value 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. Wells Fargo Variable
Trust may compare a Fund's performance with other investments which are assigned
ratings by NRSROs. Any such comparisons may be useful to investors who wish to
compare the Fund's past performance with other rated investments.
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DETERMINATION OF NET ASSET VALUE
Net asset value per share for each of the Funds is determined by the custodian
of the Fund at 1:00 p.m. (Pacific time) on each day the New York Stock Exchange
("NYSE") is open for trading. Net asset value per share for the Money Market
Fund is determined by the custodian at 9:00 a.m. (Pacific time) on each day
Wells Fargo Bank is open for business.
Securities for which market quotations are available are valued at latest
prices. Securities for which the primary market is a national securities
exchange or the National Association of Securities Dealers Automated Quotations
National Market System are valued at last sale prices. In the absence of any
sale of such securities on the valuation date and in the case of other
securities, including U.S. Government obligations but excluding debt instruments
maturing in 60 days or less, the valuations are based on latest quoted bid
prices. Debt instruments maturing in 60 days or less are valued at amortized
cost. Futures contracts are marked to market daily at their respective
settlement prices determined by the relevant exchange. These prices are not
necessarily final closing prices but are intended to represent prices prevailing
during the final 30 seconds of the trading day. Options listed on a national
exchange are valued at the last sale price on the exchange on which they are
traded at the close of the NYSE, or, in the absence of any sale on the valuation
date, at latest quoted bid prices. Options not listed on a national exchange are
valued at latest quoted bid prices. In all cases, bid prices are furnished by a
reputable independent pricing service approved by the 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 Funds for which current
market quotations are not readily available are valued at fair value as
determined in good faith by Wells Fargo Variable Trust's Trustees and in
accordance with procedures adopted by the Trustees.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Payment for shares may, in the discretion of the advisor, be made in the form
of securities that are permissible investments for the Funds as described in the
Prospectuses. For further information about this form of payment please contact
Stephens. In connection with an in-kind securities payment, the Funds will
require, among other things, that the securities be valued on the day of
purchase in accordance with the pricing methods used by a Fund and that such
Fund receives satisfactory assurances that (i) it will have good and marketable
title to the securities received by it; (ii) that the securities are in proper
form for transfer to the Fund; and (iii) adequate information will be provided
concerning the basis and other matters relating to the securities.
As indicated in the Prospectus, 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 Wells Fargo Variable Trust's responsibilities under the 1940 Act.
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PORTFOLIO TRANSACTIONS
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.
Purchases and sales of non-equity securities are usually principal
transactions. Non-equity securities normally are purchased or sold from or to
dealers serving as market makers for the securities at a net price. Each of the
Funds also may purchase portfolio securities in underwritten offerings and may
purchase securities directly from the issuer. Generally, money market securities
are traded on a net basis and do not involve brokerage commissions. The cost of
executing non-equity securities transactions consists primarily of dealer
spreads and underwriting commissions. Under the 1940 Act, persons affiliated
with Wells Fargo Variable Trust are prohibited from dealing with Wells Fargo
Variable Trust as principals in the purchase and sale of securities unless an
exemptive order allowing such transactions is obtained from the SEC or an
exemption is otherwise available.
Wells Fargo Variable 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 Wells Fargo Variable Trust's Board of Trustees, Wells
Fargo Bank, as advisor, is responsible for each Fund's portfolio decisions and
the placing of portfolio transactions. In placing orders, it is the policy of
Wells Fargo Variable 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. Wells Fargo Bank generally seeks reasonably competitive
spreads or commissions.
In assessing the best overall terms available for any transaction, Wells Fargo
Bank considers factors deemed relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. As a result,
the Fund may pay a broker/dealer which furnishes brokerage and research services
a higher commission than that which may be charged by another broker/dealer for
effecting the same transaction. Such brokerage and research services might
consist of reports and statistics relating to specific companies or industries,
general summaries of groups of stocks or bonds and their comparative earnings
and yields, or broad overviews of the stock, bond and government securities
markets and the economy.
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by Wells Fargo Bank and does not
reduce the advisory fees payable by
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a Fund. The Board of Trustees will periodically review the commissions paid by
each Fund to consider whether the commissions paid over representative periods
of time appear to be reasonable in relation to the benefits inuring to the Fund.
It is possible that certain of the supplementary research or other services
received will primarily benefit one or more other investment companies or other
accounts for which investment discretion is exercised. Conversely, a Fund may be
the primary beneficiary of the research or services received as a result of
portfolio transactions effected for such other account or investment company.
Under Section 28(e) of the Securities Exchange Act of 1934, an advisor shall
not be "deemed to have acted unlawfully or to have breached its fiduciary duty"
solely because under certain circumstances it has caused the account to pay a
higher commission than the lowest available. To obtain the benefit of Section
28(e), an advisor must make a good faith determination that the commissions paid
are "reasonable in relation to the value of the brokerage and research services
provided . . . viewed in terms of either that particular transaction or its
overall responsibilities with respect to the accounts as to which it exercises
investment discretion and that the services provided by a broker provide an
advisor with lawful and appropriate assistance in the performance of its
investment decision-making responsibilities." Accordingly, the price to a Fund
in any transaction may be less favorable than that available from another
broker/dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered.
Broker/dealers may furnish statistical, research and other information or
services which are deemed to be beneficial to a Fund's investment programs.
Research services received from brokers supplement the advisors' own research
and may include the following types of information: statistical and background
information on industry groups and individual companies; forecasts and
interpretations with respect to U.S. and foreign economies, securities, market,
specific industry groups and individual companies; information on political
developments; portfolio management strategies; performance information on
securities and information concerning prices of securities; and information
supplied by specialized services with respect to the performance, investment
activities and fees and expenses of other mutual funds. Such information may be
communicated electronically, orally or in written form. Research services may
also include the providing of equipment used to communicate research
information, the arranging of meetings with management of companies and the
providing of access to consultants who supply research information.
The outside research assistance may be useful, since the brokers utilized by
the funds as a group may follow a broader universe of securities and other
matters than the staff of Wells Fargo Bank can follow. In addition, this
research may provide Wells Fargo Bank with a diverse perspective on financial
markets. Research services which are provided to Wells Fargo Bank by brokers are
available for the benefit of all accounts managed or advised by Wells Fargo
Bank. It is the opinion of Wells Fargo Bank that this material is beneficial in
supplementing their research and analysis; and, therefore, it may benefit the
Funds by improving the qualify of Wells Fargo Bank's investment advice. The
advisory fees paid by the Funds are not reduced because Wells Fargo Bank may
receive such services.
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FUND EXPENSES
From time to time, Wells Fargo Bank and Stephens may waive fees from the Funds
in whole or in part. Any such waiver will reduce expenses of a Fund and,
accordingly, have a favorable impact on such Fund's performance. Except for the
expenses borne by Wells Fargo Bank and Stephens, the Funds bear all costs of
their respective operations, including the compensation of Wells Fargo Variable
Trust's trustees who are not officers or employees of Wells Fargo Bank or
Stephens or any of their affiliates; advisory, shareholder servicing, and
administration fees; payments pursuant to any Plans; interest charges; taxes;
fees and expenses of independent auditors; legal counsel, transfer agent and
dividend disbursing agent; expenses of redeeming Fund 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' or investors' 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 the custodian, including those of keeping books and accounts and
calculating the net asset value of each Fund; expenses of shareholders' or
investors' meetings; expenses relating to the issuance, registration and
qualification of shares of the Funds; pricing services; organizational expenses;
and any extraordinary expenses. Expenses attributable to a Fund are charged
against the respective assets of the Fund. A pro rata portion of the expenses of
Wells Fargo Variable Trust are charged against the assets of a Fund.
FEDERAL INCOME TAXES
The following information supplements and should be read in conjunction with
the Prospectus section entitled "Taxes." The Prospectus of the Funds describes
generally the tax treatment of the Funds and their shareholders (i.e., the
Participating Insurance Companies and their separate accounts). This section of
the SAI includes additional information concerning federal income taxes.
IN GENERAL. The Trust intends to qualify each Fund as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), as long as such qualification is in the best interest of the Fund's
shareholders. Each Fund will be treated as a separate entity for federal income
tax purposes. Thus, the provisions of the Code applicable to regulated
investment companies generally will be applied to each Fund, rather than to the
Company as a whole. In addition, net capital gains, net investment income, and
operating expenses will be determined separately for each Fund. As a regulated
investment company, each Fund will not be taxed on its net investment income and
capital gains distributed to its shareholders.
For a Fund to qualify as a regulated investment company under the Code, the
following requirements must also be satisfied: (a) at least 90% of the Fund's
annual gross income must be derived 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 Fund's principal business of investing in stock or
securities) and other income (including but not limited to gains from options,
futures or forward contracts)
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derived with respect to its business of investing in such stock, securities or
currencies; (b) the Fund must 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; and (c) for taxable years beginning before August 5, 1997, the Fund,
in general, must derive less than 30% of its gross income in a taxable year from
the sale or other disposition of securities or options thereon held for less
than three months.
Each Fund must also distribute or be deemed to distribute to its shareholders
at least 90% of its net investment income (which, for this purpose, includes net
short-term capital gains) earned in each taxable year. Although a Fund must
ordinarily make such distributions during the taxable year in which it realized
the net investment income, in certain circumstances, the Fund may make such
distributions in the following taxable year. Furthermore, distributions to a
shareholder of record declared in October, November or December of one taxable
year and paid by January 31 of the following taxable year are treated as paid by
December 31 of the first taxable year. The Funds intend to pay out substantially
all of their net investment income and net realized capital gains (if any) for
each year.
EXCISE TAX. A 4% non-deductible excise tax will be imposed on each Fund to
the extent it does not meet certain minimum distribution requirements by the end
of each calendar year. Each Fund intends to actually or be deemed to distribute
substantially all of its net investment income and net capital gains by the end
of each calendar year and, thus, expects not to be subject to the excise tax.
TAXATION OF PORTFOLIO INVESTMENTS. Except as provided herein, gains and
losses on the sale of portfolio securities by a Fund will generally be capital
gains and losses. Such gains and losses will ordinarily be long-term capital
gains and losses if the securities have been held by the Fund for more than one
year at the time of disposition of the securities.
Gains recognized on the disposition of a debt obligation (including tax-exempt
obligations purchased after April 30, 1993) purchased by a Fund at a market
discount (generally at a price less than its principal amount) will be treated
as ordinary income to the extent of the portion of market discount which
accrued, but was not previously recognized pursuant to an available election,
during the term the Fund held the debt obligation.
If an option granted by a Fund lapses or is terminated through a closing
transaction, such as a repurchase by the Fund of the option from its holder, the
Fund will realize a short-term capital gain or loss, depending on whether the
premium income is greater or less than the amount paid by the Fund in the
closing transaction. Some realized capital losses may be deferred if they
result from a position which is part of a "straddle," discussed below. If
securities are sold by a 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
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the sale. If securities are purchased by a Fund pursuant to the exercise of a
put option written by it, the Fund will subtract the premium received from its
cost basis in the securities purchased.
The amount of any gain or loss realized by a Fund on closing out a regulated
futures contract, dealer equity option, or a nonequity option will generally
result in a realized capital gain or loss for federal income tax purposes. Such
contracts and options 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.
Under Section 1256 of the Code, sixty percent (60%) of any net gain or loss
recognized on these deemed sales and sixty percent (60%) of any net realized
gain or loss from any actual sales, will generally be treated as long-term
capital gain or loss, and the remainder will be treated as short-term capital
gain or loss. Transactions that qualify as designated hedges are excepted from
the "mark-to-market" rule and the "60%/40%" rule.
Under Section 988 of the Code, a Fund will generally recognize ordinary income
or loss to the extent gain or loss realized on the disposition of portfolio
securities is attributable to changes in foreign currency exchange rates. In
addition, gain or loss realized on the disposition of a foreign currency forward
contract, futures contract, option or similar financial instrument, or of
foreign currency itself, will generally be treated as ordinary income or loss.
The Funds will attempt to monitor Section 988 transactions, where applicable, to
avoid adverse federal tax impact.
Offsetting positions held by the Funds involving certain financial forward,
futures or options contracts may be considered, for federal income 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 of the Code,
described above. If a Fund were treated as entering into "straddles" by
engaging in certain financial forward, futures or option contracts, such
straddles could be characterized as "mixed straddles" if the futures, forwards,
or options comprising a part of such straddles were governed by Section 1256 of
the Code. A 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 a Fund, losses realized by the Fund may be
deferred to the extent of unrealized gain in any offsetting positions.
Moreover, as a result of the straddle and the conversion transaction rules,
short-term capital loss on straddle positions may be recharacterized as long-
term capital loss, and long-term capital gain may be characterized as short-term
capital gain or ordinary income.
If a Fund enters into a "constructive sale" of any appreciated position in
stock, a partnership interest, or certain debt instruments, the Fund must
recognize gain (but not loss) with respect to that position. For this purpose,
a constructive sale occurs when the Fund enters into one of the following
transactions with respect to the same or substantially identical property: (i) a
short sale; (ii) an offsetting notional principal contract; or (iii) a futures
or forward contract.
If a Fund purchases shares in a "passive foreign investment company" ("PFIC"),
the Fund may be subject to federal income tax and an interest charge imposed by
the Internal Revenue
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Service (the "IRS") upon certain distributions from the PFIC or the Fund's
disposition of its PFIC shares. If a Fund invests in a PFIC, the Fund intends to
make an available election to mark-to-market its interest in PFIC shares. Under
the election, the Fund will be treated as recognizing at the end of each taxable
year the difference, if any, between the fair market value of its interest in
the PFIC shares and its basis in such shares. In some circumstances, the
recognition of loss may be suspended. The Fund will adjust its basis in the PFIC
shares by the amount of income (or loss) recognized. Although such income (or
loss) will be taxable to the Fund as ordinary income (or loss) notwithstanding
any distributions by the PFIC, the Fund will not be subject to federal income
tax or the interest charge with respect to its interest in the PFIC under the
election.
Income and dividends received by the Fund from sources within foreign
countries and gains on the disposition of foreign securities may be subject to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes.
TAXATION OF A SEPARATE ACCOUNT OF A PARTICIPATING INSURANCE COMPANY. Under
the Code, the investments of a segregated asset account, such as the separate
accounts of the Participating Insurance Companies, must be "adequately
diversified" in order for the holders of the VA Contracts or VLI Policies
underlying the account to receive the tax-favored tax treatment generally
afforded holders of annuities or life insurance policies.
In general, the investments of a segregated asset account are considered to be
"adequately diversified" only if (i) no more than 55% of the value of the total
assets of the account is represented by any one investment; (ii) no more than
70% of the value of the total assets of the account is represented by any two
investments; (iii) no more than 80% of the value of the total assets of the
account is represented by any three investments; and (iv) no more than 90% of
the value of the total assets of the account is represented by any four
investments. In general, all securities of the same issuer are treated as a
single investment for such purposes. However, Treasury Regulations provide a
"look-through rule" with respect to a segregated asset account's investments in
a regulated investment company for purposes of the applicable diversification
requirements, provided certain conditions are satisfied by the regulated
investment company. In particular, if the beneficial interests in the regulated
investment company are held by one or more segregated asset accounts of one or
more insurance companies, and if public access to such regulated investment
company is available exclusively through the purchase of a VA Contract or VLI
Policy, then a segregated asset account's beneficial interest in the regulated
investment company is not treated as a single investment. Instead, a pro rata
portion of each asset of the regulated investment company is treated as an asset
of the segregated asset account.
Each Fund intends to satisfy the relevant conditions at all times to enable
the corresponding separate accounts to be "adequately diversified."
Accordingly, each separate account of the Participating Insurance Companies will
be able to treat its interests in a Fund as ownership of a pro rata portion of
each asset of the Fund, so that individual holders of the VA Contracts or VLI
Policies underlying the separate account will qualify for favorable federal
income tax treatment under the Code.
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For information concerning the federal income tax consequences for the holders
of VA Contracts and VLI Policies, such holders should consult the prospectus
used in connection with the issuance of their particular contracts or policies
and should consult their own tax advisors.
CAPITAL GAIN DISTRIBUTIONS
Distributions which are designated by a Fund as capital gain distributions
will be taxed to shareholders as long-term term capital gain (to the extent of
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 ordinarily will result in a taxable capital gain or
loss, depending on the amount received for the shares (or 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 90 days of
having acquired such shares and if, as 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 acquiring the Fund's shares shall not be taken into account
(to the extent such previous sales charges do not exceed the reduction in sales
charges on the new purchase) for the purpose of determining the amount of gain
or loss on the disposition, but will be treated as having been incurred in the
acquisition of such other shares. Also, any loss realized on a redemption or
exchange of shares of the Fund will be disallowed to the extent that
substantially identical shares are acquired within the 61-day period beginning
30 days before and ending 30 days after the shares are disposed of.
If a shareholder receives a designated capital gain distribution (to be
treated by the shareholder as a long-term capital gain) with respect to any Fund
share and such Fund share is held for six months or less, then (unless otherwise
disallowed) any loss on the sale or exchange of that Fund share will be treated
as a long-term capital loss to the extent of the designated capital gain
distribution. In addition, if a shareholder holds Fund shares for six months or
less, any loss on the sale or exchange of those shares will be disallowed to the
extent of the amount of exempt-interest dividends received with respect to the
shares. The Treasury Department is authorized to issue regulations reducing the
six-month holding requirement to a period of not less than the greater of 31
days or the period between regular dividend distributions where a Fund regularly
distributes at least 90% of its net tax-exempt interest, if any. No such
regulations have been issued as of the date of this SAI. The loss disallowance
rules described in this paragraph do not apply to losses realized under a
periodic redemption plan.
FEDERAL INCOME TAX RATES. As of the printing of this SAI, the maximum
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gain is 20%; and the maximum corporate tax rate applicable to
ordinary income and net capital gain is 35% (marginal tax rates may be higher
for some corporations to reduce or eliminate the benefit of lower marginal
income tax rates). The amount of tax payable by an individual or corporation,
however, may be affected by a combination of tax laws covering, for example,
deductions, credits, deferrals, exemptions, sources of income and other matters.
OTHER MATTERS. Investors should be aware that the investments to be made by
the Funds may involve sophisticated tax rules that may result in income or gain
recognition by the Funds without corresponding current cash receipts. Although
each Fund will seek to avoid significant noncash income, such noncash income
could be recognized by a 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 Portfolio. Each investor is urged to consult his
or her tax advisor regarding specific questions as to Federal, state, local or
foreign taxes.
CAPITAL STOCK
Wells Fargo Variable Trust, an open-end, management investment company, was
organized as a Delaware Business Trust on March 10, 1999. As of the date of
this SAI, Wells Fargo Variable Trust's Board of Trustees has authorized the
issuance of three series of shares, each representing an unlimited number of
beneficial interests -- the Corporate Bond Fund, the Large Company Growth Fund,
and the Small Cap Fund -- and the Board of Trustees may, in the future,
authorize the creation of additional investment portfolios.
All shares of a Fund have equal voting rights and will be voted in the
aggregate, and not by series, except where voting by a series is required by law
or where the matter involved only affects one series. For example, a change in a
Fund's fundamental investment policy would be voted upon only by shareholders of
the Fund involved. Additionally, approval of an advisory contract is a matter to
be determined separately by Fund. Approval by the shareholders of one Fund is
effective as to that Fund whether or not sufficient votes are received from the
Shareholders of the other investment portfolios to approve the proposal as to
those investment portfolios. As used in the Prospectus and in this SAI, 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 shareholders of more than 50% of the
35
<PAGE>
outstanding interests 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 Wells Fargo
Variable Trust as a whole, means the vote of the lesser of (i) 67% of Wells
Fargo Variable Trust's shares represented at a meeting if the shareholders of
more than 50% of Wells Fargo Variable Trust's outstanding shares are present in
person or by proxy, or (ii) more than 50% of Wells Fargo Variable Trust's
outstanding shares. Shareholders are entitled to one vote for each full share
held and fractional votes for fractional shares held.
Wells Fargo Variable Trust may dispense with an annual meeting of shareholders
in any year in which it is not required to elect Trustees under the 1940 Act.
However, Wells Fargo Variable Trust has undertaken to hold a special meeting of
its shareholders for the purpose of voting on the question of removal of a
Trustee or Trustees if requested in writing by the shareholders of at least 10%
of Wells Fargo Variable Trust's outstanding voting shares, and to assist in
communicating with other shareholders as required by Section 16(c) of the 1940
Act.
Each share of a Fund represents an equal proportional interest in the Fund
with each other share 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
Wells Fargo Variable Trust, shareholders of a Fund are entitled to receive the
assets attributable to 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.
Shareholders are not entitled to any preemptive rights. All shares, when
issued as described in the Prospectus, will be fully paid and non-assessable by
Wells Fargo Variable Trust.
Set forth below 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 the voting
securities of a Fund as a whole.
5% OWNERSHIP AS OF JUNE 1, 1999
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE
NAME OF FUND OF SHAREHOLDER OF CLASS CAPACITY
------------ -------------- -------- --------
<S> <C> <C> <C>
Corporate Bond Fund Stephens Inc. 100% Record
111 Center Street
Little Rock, AR 72201
Large Company Growth Stephens Inc. 100% Record
111 Center Street
Little Rock, AR 72201
</TABLE>
36
<PAGE>
<TABLE>
<S> <C> <C> <C>
Small Cap Stephens Inc. 100% Record
111 Center Street
Little Rock, AR 72201
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one or
more controlled companies more than 25% of the voting securities of a company is
presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class (or Fund), or is identified as the holder of
record of more than 25% of a class (or Fund) and has voting and/or investment
powers, it may be presumed to control such class (or Fund).
OTHER
The Registration Statement, including the Prospectus, the SAI and the exhibits
filed therewith, may be examined at the office of the SEC in Washington, D.C.
Statements contained in the Prospectus or the SAI as to the contents of any
contract or other document referred to herein or in the Prospectus are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
COUNSEL
Morrison & Foerster LLP, 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C. 20006, as counsel for the Trust, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance of the
shares of beneficial interest being sold pursuant to the Funds' Prospectus.
INDEPENDENT AUDITORS
KPMG LLP has been selected as the independent auditors for Wells Fargo
Variable Trust. KPMG LLP provides audit services, tax return preparation and
assistance and consultation in connection with review of certain SEC filings.
KPMG LLP's address is Three Embarcadero Center, San Francisco, California 94111.
37
<PAGE>
APPENDIX
The following is a description of the ratings given by Moody's and S&P to
corporate bonds and commercial paper.
CORPORATE BONDS
MOODY'S: The four highest ratings for corporate bonds are "Aaa,""Aa","A" and
"Baa." Bonds rated "Aaa" are judged to be of the "best quality" and carry the
smallest amount of investment risk. Bonds rated "Aa" are of "high quality by all
standards," but margins of protection or other elements make long-term risks
appear somewhat greater than "Aaa" rated bonds. Bonds rated "A" possess many
favorable investment attributes and are considered to be upper medium grade
obligations. Bonds rated "Baa" are considered to be medium grade obligations;
interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds have speculative
characteristics as well. Moody's applies numerical modifiers: 1, 2 and 3 in each
rating category from "Aa" through "Baa" in its rating system. The modifier 1
indicates that the security ranks in the higher end of its category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end.
S&P: The four highest ratings for corporate bonds are "AAA,""AA,""A" and
"BBB." Bonds rated "AAA" have the highest ratings assigned by S&P and have an
extremely strong capacity to pay interest and repay principal. Bonds rated "AA"
have a "very strong capacity to pay interest and repay principal" and differ
"from the highest rated issued only in small degree." Bonds rated "A" have a
"strong capacity" to pay interest and repay principal, but are "somewhat more
susceptible" to adverse effects of changes in economic conditions or other
circumstances than bonds in higher rated categories. Bonds rated "BBB" are
regarded as having an "adequate capacity" to pay interest and repay principal,
but changes in economic conditions or other circumstances are more likely to
lead to a "weakened capacity" to make such repayments. The ratings from "AA" to
"BBB" may be modified by the addition of a plus or minus sign to show relative
standing within the category.
CORPORATE COMMERCIAL PAPER
MOODY'S: The highest rating for corporate commercial paper is "P-1" (Prime-
1). Issuers rated "P-1" have a "superior capacity for repayment of short-term
promissory obligations." Issuers rated "P-2" (Prime-2) "have a strong capacity
for repayment of short-term promissory obligations," but earnings trends, while
sound, will be subject to more variation.
S&P: The "A-1" rating for corporate commercial paper indicates that the
"degree of safety regarding timely payment is either overwhelming or very
strong." Commercial paper with "overwhelming safety characteristics" will be
rated "A-1+." Commercial paper with a strong capacity for timely payments on
issues will be rated "A-2."
A-1
<PAGE>
WELLS FARGO VARIABLE TRUST
FILE NOS. 333-74283; 811-09255
PART C
OTHER INFORMATION
Item 23. Exhibits.
---------
Exhibit
Number Description
------ -----------
(a) - Form of Amended and Restated Declaration of Trust, filed
herewith.
(b) - Not applicable.
(c) - Not applicable.
(d)(1) - Form of Investment Advisory Contract with Wells Fargo Bank,
N.A., filed herewith.
(2)(i) - Form of Sub-Advisory Contract with Barclays Global Fund
Advisors, filed herewith.
(ii) - Form of Sub-Advisory Contract with Peregrine Capital
Management, Inc., filed herewith.
(iii) - Form of Sub-Advisory Contract with Wells Capital Management,
Inc., filed herewith.
(e) - Form of Distribution Agreement along with Form of Selling
Agreement, filed herewith.
(f) - Not applicable.
(g)(1) - Form of Custody Agreement with Barclays Global Investors,
N.A., filed herewith.
(2) - Form of Custody Agreement with Norwest Bank Minnesota, N.A.,
filed herewith.
(h)(1) - Form of Administration Agreement with Wells Fargo Bank,
N.A., filed herewith.
(2) - Form of Fund Accounting Agreement, filed herewith.
(3) - Form of Transfer Agency and Service Agreement with Boston
Financial Data Services, Inc., filed herewith.
(i) - Legal Opinion, filed herewith.
(j) - Not applicable.
(k) - Not applicable.
C-1
<PAGE>
(l) - Not applicable.
(m) - Rule 12b-1 Plan, filed herewith.
(n) - Not applicable.
(o) - Not applicable.
Item 24. Persons Controlled by or Under Common Control with the Fund.
-----------------------------------------------------------
No person is controlled by or under common control with Registrant.
Item 25. Indemnification.
---------------
Article V of the Registrant's Declaration of Trust limits the
liability and, in certain instances, provides for mandatory indemnification of
the Registrant's trustees, officers, employees, agents and holders of beneficial
interests in the Trust and its four Funds. In addition, the Trustees are
empowered under Section 3.9 of the Registrant's Declaration of Trust to obtain
such insurance policies as they deem necessary.
Item 26. Business and Other Connections of Investment Adviser.
----------------------------------------------------
Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly owned subsidiary
of Wells Fargo & Company, serves as investment adviser to all of the
Registrant's investment portfolios, and to certain other registered open-end
management investment companies. Wells Fargo Bank's business is that of a
national banking association with respect to which it conducts a variety of
commercial banking and trust activities.
To the knowledge of Registrant, none of the directors or executive
officers of Wells Fargo Bank, except those set forth below, is or has been at
any time during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
executive officers also hold various positions with and engage in business for
Wells Fargo & Company. Set forth below are the names and principal businesses
of the directors and executive officers of Wells Fargo Bank who are or during
the past two fiscal years have been engaged in any other business, profession,
vocation or employment of a substantial nature for their own account or in the
capacity of director, officer, employee, partner or trustee. All the directors
of Wells Fargo Bank also serve as directors of Wells Fargo & Company.
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
H. Jesse Arnelle Senior Partner of Arnelle, Hastie, McKee, Willis &
Director Greene
455 Market Street
San Francisco, CA 94105
Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408
Michael R. Bowlin Chairman of the Board, Chief Executive Officer,
Chief Operating
C-2
<PAGE>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
Officer and President of Atlantic
Richfield Co. (ARCO)
Highway 150
Santa Paula, CA 93060
Edward Carson Chairman of the Board and Chief Executive Officer
of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Director of Aztar Corporation
2390 East Camelback Road Suite 400
Phoenix, AZ 85016
Director of Castle & Cook, Inc.
10900 Wilshire Blvd.
Los Angeles, CA 90024
William S. Davila President and Director of The Vons Companies, Inc.
Director 618 Michillinda Avenue
Arcadia, CA 91007
Officer of Western Association of Food Chains
825 Colorado Blvd. #203
Los Angeles, CA 90041
Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065
Director of Tejon Ranch Co.
P.O. Box 1000
Lebec, CA 93243
Director of Turner Casting Corp.
P.O. Box 1099
Cudahy, CA 90201
Director of The Bakersfield Californian
P.O. Box 440
1707 I Street
Bakersfield, CA 93302
Director of Kern County Economic Development Corp.
P.O. Box 1229
2700 M Street, Suite 225
Bakersfield, CA 93301
Chairman of the Board of Trustees of Whittier
College
13406 East Philadelphia Avenue
P.O. Box 634
Whittier, CA 90608
Paul Hazen Chairman of the Board of Directors
Chairman of the and Chief Executive Officer of
C-3
<PAGE>
Board of Directors Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105
Director of Pacific Telesis Group
130 Kearny Street
San Francisco, CA 94108
Director of Phelps Dodge Corp.
2600 North Central Avenue
Phoenix, AZ 85004
Director of Safeway Inc.
Fourth and Jackson Streets
Oakland, CA 94660
Robert K. Jaedicke Accounting Professor and Dean Emeritus of
Director Graduate School of Business, Stanford University
Stanford, CA 94305
Director of Homestake Mining Co.
650 California Street
San Francisco, CA 94108
Director of California Water Service Company
1720 North First Street
San Jose, CA 95112
Director of Boise Cascade Corp.
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728
Director of Enron Corp.
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333
C-4
<PAGE>
Thomas L. Lee Chairman and Chief Executive Officer
of The Newhall Land and Farming Company
10302 Avenue 7 1-2
Firebaugh, CA 93622
Director of Calmat Co.
501 El Charro Rod
Pleasanton, CA 94588
Director of the Los Angeles Area Chamber of
Commerce
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Ellen M. Newman President of Ellen Newman Associates
Director 323 Geary Street, Suite 507
San Francisco, CA 94102
Chair of Board of Trustees of
University of California at San Francisco
Foundation
250 Executive Park Blvd., Suite 2000
San Francisco, CA 94143
Director of American Conservatory Theater
30 Grant Avenue
San Francisco, CA 94108
Director of California Chamber of Commerce
1201 K Street, 12th Floor
Sacramento, CA 95814
Philip J. Quigley Chairman, Chief Executive Officer and
Director Director of Pacific Telesis Group
130 Kearney Street, Rm. 3700
San Francisco, CA 94108
Director of Varian Associates
3050 Hansen Way
P.O. Box 10800
Palo Alto, CA 94303
Carl E. Reichardt Director of Ford Motor Company
Director The American Road
Dearborn, MI 48121
Director of Hospital Corporation of America,
HCA-Hospital Corp. of America
One Park Plaza
Nashville, TN 37203
C-5
<PAGE>
Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Donald B. Rice President, Chief Operating Officer and Director of
Director Teledyne, Inc.
2049 Century Park East
Los Angeles, CA 90067
Director of Vulcan Materials Company
One Metroplex Drive
Birmingham, AL 35209
Retired Secretary of the Air Force
Richard J. Stegemeier Chairman (Emeritus) of Unocal Corp
44141 Yucca Avenue
Lancaster, CA 93534
Director of Foundation Health Corporation
166 4th
Fort Irwin, CA 92310
Director of Halliburton Company
3600 Lincoln Plaza
500 North Alcard Street
Dallas, TX 75201
Director of Northrop Grumman corp.
1840 Century Park East
Los Angeles, CA 90067
Director of Outboard Marine Corporation
100 Seahorse Drive
Waukegan, IL 60085
Director of Pacific Enterprises
555 West Fifth Street Suite 2900
Los Angeles, CA 90031
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Susan G. Swenson President and Chief Executive Officer of
Director Cellular One 651 Gateway Blvd.
San Francisco, CA 94080
C-6
<PAGE>
David M. Tellep Chairman of the Board of Directors and
Chief Executive Officer of Lockheed Martin Corp.
6801 Rockledge Drive
Bethesda, MD 20817
Director of Edison International and
Southern California Edison Company
2244 Walnut Grove Ave.
Rosemead, CA 91770
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Chang-Lin Tien Chancellor of University of California at Berkeley
Director UC at Berkeley
Berkeley, CA 94720
John A. Young President, Director and Chief Executive Officer of
Director Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104
William F. Zuendt President and Chief Operating Officer of
President Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105
Director of 3Com Corp.
5400 Bayfront Plaza
P.O. Box 58145
Santa Clara, CA 95052
Director of MasterCard International
888 Seventh Avenue
New York, NY 10106
Trustee of Golden Gate University
536 Mission Street
San Francisco, CA 94163
Barclays Global Fund Advisors ("BGFA"), a wholly-owned subsidiary of
Barclays Global Investors, N.A. ("BGI", formerly, Wells Fargo Institutional
Trust Company), serves as sub-adviser to the Asset Allocation and U.S.
Government Allocation Funds of the Trust and as adviser or sub-adviser to
certain other open-end management investment companies.
The directors and officers of BGFA consist primarily of persons who
during the past two years have been active in the investment management business
of the former sub-adviser to the Asset Allocation and U.S. Government
Allocation Funds, Wells Fargo Nikko Investment Advisors ("WFNIA") and, in some
cases, the service
C-7
<PAGE>
business of BGI. With the exception of Irving Cohen, each of the directors and
executive officers of BGFA will also have substantial responsibilities as
directors and/or officers of BGI. To the knowledge of the Registrant, except as
set forth below, none of the directors or executive officers of BGFA is or has
been at any time during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature.
<TABLE>
<CAPTION>
Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
- ----------------- --------------------------------
<S> <C>
Frederick L.A. Grauer Director of BGFA and Co-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105
Patricia Dunn Director of BGFA and C-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105
Lawrence G. Tint Chairman of the Board of Directors of BGFA
Chairman and Director and Chief Executive Officer of BGI
45 Fremont Street, San Francisco, CA 94105
Geoffrey Fletcher Chief Financial Officer of BGFA and BGI since May 1997
Chief Financial Officer 45 Fremont Street, San Francisco, CA 94105
Managing Director and Principal Accounting Officer at
Bankers Trust Company from 1988 - 1997
505 Market Street, San Francisco, CA 94105
</TABLE>
Item 27. Principal Underwriters.
----------------------
(a) Stephens Inc. ("Stephens"), distributor for the Registrant, does
not presently act as investment adviser for any other registered investment
companies, but does act as principal underwriter for MasterWorks Funds Inc.,
Stagecoach Funds, Inc. and Stagecoach Trust, Nations Fund, Inc., Nations Fund
Trust, Nations Fund Portfolios, Inc., Nations LifeGoal Funds, Inc. and Nations
Institutional Reserves, and Wells Fargo Variable Trust, Wells Fargo Core Trust
and Wells Fargo Funds Trust and is the exclusive placement agent for Master
Investment Portfolio, all of which are registered open-end management investment
companies.
(b) Information with respect to each director and officer of the
principal underwriter is incorporated by reference to Form ADV and Schedules A
and D thereto, filed by Stephens with the Securities and Exchange Commission
pursuant to the Investment Advisors Act of 1940 (file No. 501-15510).
(c) Not applicable.
Item 28. Location of Accounts and Records.
--------------------------------
(a) The Registrant maintains accounts, books and other documents
required by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder (collectively, "Records") at the offices of Stephens Inc., 111 Center
Street, Little Rock, Arkansas 72201.
(b) Wells Fargo Bank maintains all Records relating to its services
as investment adviser, administrator and custodian and transfer and dividend
disbursing agent at 525 Market Street, San Francisco, California 94105.
C-8
<PAGE>
(c) BGFA and BGI maintain all Records relating to their services as
sub-adviser and custodian, respectively, to the Asset Allocation and U.S.
Government Allocation Funds at 45 Fremont Street, San Francisco, California
94105.
(d) Stephens maintains all Records relating to its services as
sponsor, co- administrator and distributor at 111 Center Street, Little Rock,
Arkansas 72201.
Item 29. Management Services.
-------------------
Other than as set forth under the captions "Organization and
Management of the Funds"" in the Prospectus constituting Part A of this
Registration Statement and "Management" in the Statement of Additional
Information constituting Part B of this Registration Statement, the Registrant
is not a party to any management-related service contract.
Item 30. Undertakings. Not applicable.
-------------
C-9
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement on Form N-1A pursuant to Rule 485(b) under the Securities Act of 1933,
and has duly caused this Amendment to be signed on its behalf by the
undersigned, thereto duly authorized in the City of Little Rock, State of
Arkansas on the 3rd day of June, 1999.
WELLS FARGO VARIABLE TRUST
By /s/ Richard H. Blank, Jr.
--------------------------------
Richard H. Blank, Jr.
Secretary and Treasurer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement on Form N-1A has been signed below by
the following persons in the capacities and on the date indicated:
Signature Title Date
--------- ----- ----
* Trustee
-----------------------
Robert C. Brown
* Trustee
-----------------------
Donald H. Burkhardt
* Trustee
-----------------------
Jack S. Euphrat
* Trustee
-----------------------
Thomas S. Goho
* Trustee
-----------------------
Peter G. Gordon
* Trustee
-----------------------
W. Rodney Hughes
* Trustee
-----------------------
Richard M. Leach
* Trustee
-----------------------
J. Tucker Morse
* Trustee
-----------------------
Timothy J. Penny
/s/Richard H. Blank, Jr. Secretary and Treasurer 6/3/99
-----------------------
Richard H. Blank, Jr. (Principal Financial Officer)
*By /s/Richard H. Blank, Jr.
---------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
June 3, 1999
<PAGE>
WELLS FARGO VARIABLE TRUST
FILE NOS. 333-74283; 811-09255
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
99.B(a) - Form of Amended and Restated Declaration of Trust.
99.B(d)(1) - Form of Investment Advisory Contract with Wells Fargo Bank,
N.A.
99.B(d)(2)(i) - Form of Sub-Advisory Contract with Barclays Global Fund
Advisors.
99.B(d)(2)(ii) - Form of Sub-Advisory Contract with Peregrine Capital
Management, Inc.
99.B(d)(2)(iii) - Form of Sub-Advisory Contract with Wells Capital
Management, Inc.
99.B(e) - Form of Distribution Agreement along with Form of Selling
Agreement.
99.B(g)(1) - Form of Custody Agreement with Barclays Global Investors,
N.A.
99.B(g)(2) - Form of Custody Agreement with Norwest Bank Minnesota, N.A.
99.B(h)(1) - Form of Administration Agreement with Wells Fargo Bank, N.A.
99.B(h)(2) - Form of Fund Accounting Agreement.
99.B(h)(3) - Form of Transfer Agency and Service Agreement with Boston
Financial Data Services, Inc.
99.B(i) - Opinion of Morrison & Foerster LLP.
99.B(m) - Rule 12b-1 Plan.
<PAGE>
Exhibit 99.B(a)
DECLARATION OF TRUST
OF
WELLS FARGO VARIABLE TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. DEFINITIONS................................................................................ 1
ARTICLE II. THE TRUSTEES............................................................................... 2
Section 1. Management of the Trust................................................................ 2
Section 2. Initial Trustees; Election and Number of Trustees...................................... 2
Section 3. Term of Office of Trustees............................................................. 3
Section 4. Vacancies; Appointment of Trustees..................................................... 3
Section 5. Temporary Vacancy or Absence........................................................... 3
Section 6. Chairman............................................................................... 3
Section 7. Action by Trustees..................................................................... 4
Section 8. Meetings of the Trustees; Required Notice.............................................. 4
Section 9. Committees............................................................................. 4
Section 10. Audit Committee........................................................................ 5
Section 11. Nominating Committee................................................................... 5
Section 12. Ownership of Trust Property............................................................ 5
Section 13. Effect of Trustees Not Serving......................................................... 5
Section 14. Trustees as Shareholders............................................................... 5
Section 15. Compensation of Trustees............................................................... 6
ARTICLE III. POWERS OF THE TRUSTEES..................................................................... 6
Section 1. Powers.................................................................................. 6
Section 2. Certain Transactions.................................................................... 9
ARTICLE IV. SERIES; CLASSES; SHARES.................................................................... 9
Section 1. Establishment of Series or Class........................................................ 9
Section 2. Shares.................................................................................. 10
Section 3. Investment in the Trust................................................................. 10
Section 4. Assets and Liabilities of Series........................................................ 10
Section 5. Ownership and Transfer of Shares........................................................ 11
Section 6. Status of Shares; Limitation of Shareholder Liability................................... 12
ARTICLE V. DISTRIBUTIONS AND REDEMPTION............................................................... 12
Section 1. Distributions........................................................................... 12
Section 2. Redemptions............................................................................. 12
Section 3. Determination of Net Asset Value........................................................ 13
Section 4. Suspension of Right of Redemption....................................................... 13
Section 5. Redemption Necessary for Tax Purposes................................................... 13
ARTICLE VI. SHAREHOLDERS' VOTING POWERS AND MEETINGS................................................... 13
Section 1. Voting Powers........................................................................... 13
Section 2. Meetings of Shareholders................................................................ 14
Section 3. Quorum; Required Vote................................................................... 14
ARTICLE VII. CONTRACTS WITH SERVICE PROVIDERS........................................................... 15
Section 1. Investment Adviser...................................................................... 15
Section 2. Principal Underwriter................................................................... 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 3. Transfer Agency, Shareholder Services, and Administration Agreements................. 15
Section 4. Custodian............................................................................ 15
Section 5. Parties to Contracts with Service Providers.......................................... 16
ARTICLE VIII. EXPENSES OF THE TRUST AND SERIES....................................................... 16
ARTICLE IX. LIMITATION OF LIABILITY AND INDEMNIFICATION.............................................. 17
Section 1. Limitation of Liability.............................................................. 17
Section 2. Mandatory Indemnification ........................................................... 17
Section 3. Indemnification of Shareholders...................................................... 18
Section 4. Contractual Modification of Duties................................................... 18
ARTICLE X. OFFICERS................................................................................. 19
Section 1. General.............................................................................. 19
Section 2. Election, Tenure and Qualifications of Officers...................................... 19
Section 3. Vacancies and Newly Created Officers................................................. 19
Section 4. Removal and Resignation.............................................................. 19
Section 5. President............................................................................ 19
Section 6. Treasurer and Assistant Treasurer(s)................................................. 19
Section 7. Secretary and Assistant Secretaries.................................................. 20
Section 8. Authority to Execute and File Applications for Exemptive Relief...................... 20
Section 9. Compensation of Officers............................................................. 20
Section 10. Surety Bond.......................................................................... 20
ARTICLE XI. MISCELLANEOUS............................................................................ 20
Section 1. Trust Not a Partnership.............................................................. 20
Section 2. Trustee Action; Expert Advice; No Bond or Surety..................................... 20
Section 3. Record Dates......................................................................... 21
Section 4. Dissolution of the Trust............................................................. 21
Section 5. Reorganization....................................................................... 22
Section 6. Declaration.......................................................................... 22
Section 7. Derivative Actions................................................................... 22
Section 8. Applicable Law....................................................................... 22
Section 9. Amendments........................................................................... 23
Section 10. Fiscal Year.......................................................................... 23
Section 11. Severability......................................................................... 23
Section 12. Principal Office..................................................................... 23
Section 13. Inspection of the Books.............................................................. 24
</TABLE>
ii
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
WELLS FARGO VARIABLE TRUST
This Amended and Restated DECLARATION OF TRUST of Wells Fargo Variable
Trust is made on March 26, 1999, by the Trustees, to create a Delaware business
trust for the investment and reinvestment of funds contributed to the Trust by
the holders from time to time, of undivided beneficial interests in the assets
of the Trust or a Series of the Trust. The Trustees declare that all money and
property contributed to the Trust shall be held and managed in trust pursuant to
amended and restated Declaration. The name of the Trust created by this
Declaration is Wells Fargo Variable Trust.
ARTICLE I
DEFINITIONS
Unless otherwise provided or required by the context:
(a) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time, and all terms and requirements that are defined herein by
reference to the 1940 Act shall be interpreted as that term or requirement has
been modified or interpreted by applicable orders of the Commission or any rules
or regulations adopted by, or interpretive releases of the Commission or its
staff, and staff no-action letters issued under the 1940 Act.
(b) "Board" means the Board of Trustees of the Trust as described in
Article II of this Declaration;
(c) "By-Laws" means the By-Laws of the Trust if adopted by the Trustees, as
amended from time to time;
(d) "Class" means the class of Shares of a Series established pursuant to
Article IV;
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations thereunder, as adopted or amended from time
to time;
(f) "Commission," "Interested Person," and "Principal Underwriter" have the
meanings provided in the 1940 Act;
(g) "Covered Person" means a person so defined in Article IX, Section 2;
(h) "Declaration" shall mean this Amended and Restated Declaration of Trust
as amended, modified, supplemented or restated from time to time.
(i) "Delaware Act" means Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time,
and as interpreted by the Delaware courts;
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(j) "Majority Shareholder Vote" means "the vote of a majority of the
outstanding voting securities" as defined in the 1940 Act;
(k) "Net Asset Value" means the net asset value of each Series of the
Trust, determined as provided in Article V, Section 3;
(l) "Outstanding Shares" means Shares shown in the books and records of the
Trust or its transfer agent as then issued and outstanding, but does not include
Shares which have been repurchased or redeemed by the Trust and which are held
in the treasury of the Trust;
(m) "Series" means a series of Shares established pursuant to Article IV;
(n) "Shareholder" means a record owner of Outstanding Shares;
(o) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest of each Series or Class is divided from time
to time (including whole Shares and fractions of Shares);
(p) "Trust" means Wells Fargo Variable Trust, created hereby;
(q) "Trustees" means the persons who have signed this Declaration, so long
as they shall continue in office in accordance with the terms hereof, and all
other persons who may from time to time be duly qualified and serving as
Trustees in accordance with Article II, in all cases in their capacities as
Trustees hereunder;
(r) "Trust Property" means any and all property, real or personal, tangible
or intangible, which is owned or held by or for the Trust or any Series or by
the Trustees on behalf of the Trust or any Series.
ARTICLE II
THE TRUSTEES
Section 1. Management of the Trust. The business and affairs of the Trust
shall be managed by or under the direction of the Board of Trustees, and they
shall have all powers necessary or desirable, convenient or incidental, to carry
out that responsibility. The Trustees may execute all instruments and take all
action they deem necessary, desirable, convenient or incidental, to promote the
interests of the Trust. Any determination made by the Trustees in good faith as
to what is in the interests of the Trust shall be conclusive.
Section 2. Initial Trustees; Election and Number of Trustees. The initial
Trustees shall be the persons initially signing this Declaration. The number of
Trustees (other than the initial Trustees) shall be fixed from time to time by a
majority of the Trustees; provided, that there shall be at least two (2)
Trustees. The Shareholders shall elect the Trustees (other than the initial
Trustees), only if required by the 1940 Act, on such dates as the Trustees may
fix from time to time.
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Section 3. Term of Office of Trustees. Each Trustee shall hold office for
life or until his or her successor is elected or the Trust terminates; except
that (a) any Trustee may resign by delivering to the other Trustees or to any
Trust officer a written resignation effective upon delivery or a later date
specified therein; (b) any Trustee may be removed with or without cause at any
time by a written instrument signed by at least two-thirds of the other
Trustees, specifying the effective date of removal; (c) any Trustee who requests
to be retired or who meets the criteria of any retirement policy adopted by the
Board, or has become physically or mentally incapacitated or is otherwise unable
to serve, may be retired by a written instrument signed by a majority of the
other Trustees, specifying the effective date of retirement; and (d) any Trustee
may be removed at any meeting of the Shareholders by a vote of at least two-
thirds of the Outstanding Shares.
Section 4. Vacancies; Appointment of Trustees. Whenever a vacancy shall
exist in the Board of Trustees, regardless of the reason for such vacancy, the
remaining Trustees shall appoint any person as they determine in their sole
discretion to fill that vacancy, except that the Trustee appointed may not be an
"interested person" within the meaning of the 1940 Act if the appointment of an
interested person would cause a violation of the 1940 Act. Such appointment
shall be made by a written instrument signed by a majority of the Trustees or by
a resolution of the Trustees, duly adopted and recorded in the records of the
Trust, specifying the effective date of the appointment. The Trustees may
appoint a new Trustee as provided above in anticipation of a vacancy expected to
occur because of the retirement, resignation, or removal of a Trustee, or an
increase in number of Trustees, provided that such appointment shall become
effective only at or after the expected vacancy occurs. As soon as any such
Trustee has accepted his or her appointment in writing, the trust estate shall
vest in the new Trustee, together with the continuing Trustees, without any
further act or conveyance, and he or she shall be deemed a Trustee hereunder.
The power of appointment is subject to Section 16(a) of the 1940 Act, and
shareholders may vote on such appointments only if expressly required under the
1940 Act.
Notwithstanding the foregoing, all of the Initial Trustees may resign by
written instrument to be effective on the date specified in the instrument
("Resignation Instrument"). However, before resigning as permitted in this
paragraph, the Initial Trustees shall determine and set forth in the Resignation
Instrument the number of Trustees of the Trust (subject to the Trustees'power to
change the required number as detailed in Section 2 of this Article) and shall
appoint their successors.
Section 5. Temporary Vacancy or Absence. Whenever a vacancy in the Board of
Trustees shall occur, until such vacancy is filled, or while any Trustee is
absent from his or her domicile (unless that Trustee has made arrangements to be
informed about, and to participate in, the affairs of the Trust during such
absence), or is physically or mentally incapacitated, the remaining Trustees
shall have all the powers hereunder and their certification as to such vacancy,
absence, or incapacity shall be conclusive. To the extent permitted under the
1940 Act, any Trustee may, by power of attorney, delegate his or her powers as
Trustee for a period not exceeding six (6) months at any one time to any other
Trustee or Trustees.
Section 6. Chairman. The Board of Trustees may appoint one or more of its
members to be Chairman or Co-Chairmen of the Board of Trustees. The Chairman or
Co-Chairmen shall preside at all meetings of the Trustees, and shall have such
other duties and powers as the
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Trustees determine from time to time. The Chairman or Co-Chairmen may be, but
are not required to be, officers of the Trust. If the Trustees choose to appoint
a Chairman or Co-Chairman who will not be officers of the Trust, the Trustees
shall determine, and specify in Board resolutions, the powers and duties, and
any limitations thereon, of the Chairman or Co-Chairman so selected.
Section 7. Action by Trustees. The Trustees shall act by majority vote at a
meeting duly called at which a quorum is present or by written consent of a
majority of the Trustees (or such greater number as may be required by
applicable law) without a meeting. Unless a higher amount is required by this
Declaration, by Board resolution, or the 1940 Act, a quorum of the Trustees
shall be one-third of the total number of Trustees, but no less than two
Trustees. An action of a majority of the Trustees, as defined above, shall
constitute action by the Trustees except to the extent otherwise required by the
1940 Act, this Declaration of Trust or by Board resolution.
Section 8. Meetings of the Trustees; Required Notice. Unless required under
this Declaration or under the 1940 Act, the Trustees may act with or without a
meeting. All of the Trustees or any one of them may participate in a meeting by
means of a conference call or similar communication equipment, provided that all
participants may hear each other, and participation in a meeting pursuant to
such communication equipment shall constitute presence at the meeting, unless
the 1940 Act specifically requires the Trustees to act "in person," in which
case such term shall be construed in accordance with the 1940 Act. Unless
required otherwise by this Declaration, Board resolution or by the 1940 Act, any
action of the Trustees may be taken without a meeting by written consent of a
majority Trustees.
Meetings of the Trustees may be called orally or in writing by the
Chairman, if any, or by any two other trustees. Regular meetings of the Trustees
may be held without call or notice at a place and time fixed by resolution of
the Trustees. Notice of any other meeting shall be given to each Trustee by
telephone, facsimile or other electronic mechanism sent to his or her home or
business address at least twenty-four hours in advance of the meeting. Notice
need not be given to any Trustee who attends the meeting without objecting to
the lack of notice or who signs a waiver of notice either before or after the
meeting. Subject only to any express limitation in the 1940 Act, the Board, by
majority vote, may delegate to any Trustee or Trustees authority to approve
particular matters or take particular action on behalf of the Trust. Written
consents or waivers of the Trustees may be executed in one or more counterparts,
and may be provided and delivered to the Trust by facsimile or other similar
electronic mechanism.
Section 9. Committees. To facilitate certain requirements under the 1940
Act, the Trust shall have a permanent Audit Committee and a permanent Nominating
Committee (collectively, the "Standing Committees"). The Trustees may designate
other committees of the Trustees. The Trustees shall determine the number of
members of each committee, and may determine the quorum for each committee, and
shall appoint its members and its chair. Each committee member shall serve at
the pleasure of the Trustees. The Trustees may abolish any committee other than
the Standing Committees, at any time. Each committee shall maintain records of
its meetings and report its actions to the Trustees. The Trustees may rescind
any action of any committee, but such rescission shall not have retroactive
effect. The Trustees may delegate to any committee any of its powers, subject
only to the express limitations of the 1940 Act.
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Committees may act with or without a meeting. Each committee may adopt such
rules governing its proceedings, quorum and manner of acting as it shall deem
proper and desirable if the Board does not determine otherwise. In the absence
of the adoption of such rules, a majority of the committee shall constitute a
quorum, and a committee shall act at a meeting by the vote of a majority of the
members present, or without a meeting by written consent of a majority of the
committee members.
Section 10. Audit Committee. The Audit Committee is responsible for (a)
recommending independent accountants for selection by the Boards, (b) reviewing
the scope of audit, accounting and financial internal controls and the quality
and adequacy of each Trust's accounting staff with the independent accountants
and such other persons as may be deemed appropriate, (c) reviewing, as
necessary, with the accounting staff and the independent accountants the
compliance of transactions between each Trust and any affiliated persons of the
Trust, (d) reviewing reports of the independent accountants, and (e) making
themselves directly available to the independent accountants and responsible
Officers of the Trusts for consultation on audit, accounting and related
financial matters.
Section 11. Nominating Committee. The Nominating Committee shall recommend
to the Board a slate of persons to be nominated for election as Trustees by the
Shareholders at any required Shareholder Meeting and a person to be appointed to
fill any vacancy occurring on the Board. Notwithstanding this section, the
nomination and selection of those Trustees who are not "interested persons" (as
defined under the 1940 Act) shall be committed to the discretion of the
disinterested Trustees so long as the Trust has in effect one or more plans
pursuant to Rule 12b-1 under the 1940 Act.
Section 12. Ownership of Trust Property. The Trust Property of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity (other than as Trustee hereunder) by the Trustees
or any successor Trustees. All of the Trust Property and legal title thereto
shall at all times be considered as vested in the Trustees on behalf of the
Trust, except that the Trustees may cause legal title to any Trust Property to
be held by or in the name of the Trust, or in the name of any person as nominee.
No Shareholder shall have any interest in specific property of the Trust or of
any Series or any right of partition or possession thereof, but each Shareholder
shall have, as provided in Article IV, a proportionate undivided beneficial
interest in the assets of the Trust or Series represented by Shares.
Section 13. Effect of Trustees Not Serving. The death, resignation,
retirement, removal, incapacity, or inability or refusal to serve of the
Trustees, or any one of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration.
Section 14. Trustees as Shareholders. Subject to any restrictions that the
Trustees may establish, any Trustee, officer, agent or independent contractor of
the Trust may acquire, own and dispose of Shares to the same extent as any other
Shareholder; the Trustees may issue and sell Shares to and buy Shares from any
such person or any firm or company in which such person is interested, subject
only to any general limitations herein. The Trustees are not required to be
Shareholders of the Trust.
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Section 15. Compensation of Trustees. Each Trustee and each committee
member may receive such compensation for his or her services and reimbursement
for expenses as may be fixed from time to time by the Trustees.
ARTICLE III
POWERS OF THE TRUSTEES
Section 1. Powers. The Board shall have full, exclusive and complete power
and discretion to manage and control the business and affairs of the Trust, and
to make all decisions affecting the business and affairs of the Trust. No
Shareholder or assignee of Shares, as such, shall have any authority, right or
power to bind the Trust or to manage or control, or to participate in the
management or control of, the business and affairs of the Trust in any manner
whatsoever. The Trustees shall have exclusive and absolute control over the
Trust Property and over the business of the Trust to the same extent as if they
were the sole owners of the Trust Property and business in their own right. The
Trustees shall have full power and authority to take or refrain from taking any
action and to execute any contracts and instruments that they may consider
necessary, desirable, convenient or incidental in the management of the Trust.
To the fullest extent permitted by applicable law, the Trustees shall not in any
way be bound or limited by current or future laws or customs applicable to trust
investments, but shall have full power and authority to make any investments
which they, in their sole discretion, deem proper to accomplish the purposes of
the Trust, and to dispose of the same. The Trustees may exercise all of their
powers without recourse to any court or other authority. Subject only to any
express limitation in the 1940 Act, this Declaration or contained in any Board
resolution, the Trustees shall have power and authority, without limitation:
(a) To operate as and carry on the business of a registered investment
company, and exercise all the powers necessary, proper or convenient to conduct
such a business;
(b) To subscribe for, invest in, reinvest in, purchase, or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute, or
otherwise deal in or dispose of any form of property, including, without
limitation, cash (U.S. currency), foreign currencies and related instruments,
and securities (including, without limitation, common and preferred stocks,
equity interests and securities, warrants, bonds, debentures, time notes, and
all other evidences of indebtedness, negotiable or non-negotiable instruments,
obligations, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, reverse repurchase agreements, convertible securities,
forward contracts, options, and futures contracts) issued, guaranteed, or
sponsored by, without limitation, any state, territory, or possession of the
United States or the District of Columbia or their political subdivisions,
agencies, or instrumentalities, or by the U.S. government, any foreign
government, or any agency, instrumentality, or political subdivision thereof, or
by any international instrumentality, or by any bank, savings institution,
corporation, partnership, limited liability company, trust, or other business
entity organized under the laws of the United States (including a Registered
Investment Company or any series thereof, subject to the provisions of the 1940
Act) or under foreign laws without regard to whether any such securities mature
before or after the possible termination of the Trust; to exercise any and all
rights, powers, and privileges of ownership or interest in respect of any and
all such investments of every kind and description; and to hold cash or other
property uninvested, without in any
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event being bound or limited by any current or future law or custom concerning
investments by trustees;
(c) To adopt By-Laws not inconsistent with this Declaration providing for
the conduct of the business of the Trust and to amend and repeal them;
(d) To elect and remove such officers of the Trust and appoint and
terminate such agents of the Trust as they deem appropriate;
(e) To employ as custodian of any assets of the Trust, subject to any
provisions herein or by resolution of the Board, one or more banks, trust
companies or companies that are members of a national securities exchange, or
other entities permitted by the Commission to serve as such;
(f) To retain one or more transfer agents and Shareholder servicing agents,
or both;
(g) To provide for the distribution of Shares either through a Principal
Underwriter as provided herein or by the Trust itself, or both, and, subject to
applicable law, to adopt a distribution plan of any kind;
(h) To set record dates in the manner provided for herein or in the By-
Laws;
(i) To delegate such authority as they consider desirable to such of their
number or to officers, employees or agents of the Trust including, without
limitation, the ability to perform actions or execute instruments in the name of
the Trust, the name of the Trustees or otherwise as the Trustees may deem
necessary, desirable or convenient;
(j) To sell or exchange any or all of the assets of the Trust, subject to
Article XI, Section 4;
(k) To vote or give assent, or exercise any rights of ownership, with
respect to other securities or property; and, if necessary, to execute and
deliver powers of attorney delegating such power to other persons;
(l) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(m) To hold any security or other property (i) in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable form, or
(ii) either in the Trust's or Trustees'own name or in the name of a custodian or
a nominee or nominees, subject to safeguards according to the usual practice of
business trusts or investment companies;
(n) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article IV;
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(o) To incur and pay all expenses that in the Trustees'opinion are
necessary or incidental to carry out any of the purposes of this Declaration; to
pay reasonable compensation to themselves as Trustees from the Trust Property or
the assets belonging to any appropriate Series or Class; to pay themselves such
compensation for special services, including legal and brokerage services, and
such reimbursement for expenses reasonably incurred by themselves on behalf of
the Trust or any Series or Class, as they in good faith may deem reasonable; and
to fix the compensation of all officers and employees of the Trust;
(p) To the full extent permitted by Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series
and liabilities and expenses to a particular Class or to apportion the same
between or among two or more Series or Classes, provided that any liabilities or
expenses incurred by a particular Series or Class shall be payable solely out of
the assets belonging to that Series or Class as provided for in Article IV,
Section 4;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or other business entity or concern
whose securities are held by the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern; and to
pay calls or subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(s) To make distributions of income and of capital gains to Shareholders in
the manner hereinafter provided for;
(t) To borrow money, issue evidence of indebtedness or otherwise obtain
credit and to secure the same by mortgaging, pledging, or otherwise subjecting
as security any assets of the Trust, including the lending of portfolio
securities, and to endorse, guarantee, or undertake the performance of any
obligation, contract, or engagement of any other person, firm, association, or
corporation subject only to the requirements of the 1940 Act;
(u) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any Shareholders
whose investment is less than such minimum upon giving notice to such
Shareholder;
(v) To establish committees for such purposes, with such membership, and
with such responsibilities as the Trustees may consider proper, including a
committee consisting of fewer than all of the Trustees then in office, which may
act for and bind the Trustees and the Trust with respect to the institution,
prosecution, dismissal, settlement, review or investigation of any legal action,
suit or proceeding, pending or threatened;
(w) To purchase, and pay for, out of Trust Property or the assets belonging
to any appropriate Series, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, and/or independent contractors of the
Trust (including the investment adviser of any Series) against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such person in such capacity, whether or not the Trust would
have the power to indemnify such person against such claim;
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(x) To issue, sell, repurchase, redeem, cancel, retire, acquire, hold,
resell, reissue, dispose of and otherwise deal in Shares; to establish terms and
conditions regarding the issuance, sale, repurchase, redemption, cancellation,
retirement, acquisition, holding, resale, reissuance, disposition of or dealing
in Shares; and, subject to Articles IV and V, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or
property of the Trust or of the particular Series with respect to which such
Shares are issued;
(y) To definitively interpret the investment objectives, policies and
limitations of the Trust or any Series; and
(z) To carry on any other business in connection with or incidental to any
of the foregoing powers, to do everything necessary, desirable or convenient to
accomplish any purpose or to further any of the foregoing powers, and to take
every other action incidental to the foregoing business or purposes, objects or
powers.
The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general powers of
the Trustees. Any action by one or more of the Trustees in their capacity as
Trustee(s) shall be deemed an action on behalf of the Trust or the applicable
Series, and not an action in an individual capacity. No one dealing with the
Trustees shall be under any obligation to make any inquiry concerning the
authority of the Trustees, or to see to the application of any payments made or
property transferred to the Trustees or upon their order. In construing this
Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
Section 2. Certain Transactions. Except as expressly prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person. The Trust may employ any such person or entity
in which such person is an Interested Person, or broker, legal counsel,
registrar, investment adviser, administrator, distributor, transfer agent,
dividend disbursing agent, custodian or in any other capacity upon customary
terms.
ARTICLE IV
SERIES; CLASSES; SHARES
Section 1. Establishment of Series or Class. The Trust shall consist of one
or more Series. The Trustees may divide the Shares of any Series into Classes.
The Initial Trustees shall establish the initial Series and Classes of each
Series by written unanimous consent. Each additional Series or division of
Series into Classes may be established by any permissible action of the
Trustees, including by resolution at a meeting. The Trustees may designate the
relative rights and preferences of the Shares of each Series. If a Series is
divided into Classes, each Class of a Series shall represent an undivided
beneficial interest in the assets of that Series and have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that expenses allocated to a Class may be borne solely by such Class as
determined by the Trustees and a Class may have exclusive voting rights with
respect to matters affecting only that
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Class. The Trust shall maintain separate and distinct records for each Series
and hold and account for the assets thereof separately from the other assets of
the Trust or of any other Series. A Series may issue any number of Shares and
need not issue Shares. Each Share of a Series shall represent an equal undivided
beneficial interest in the net assets of such Series. Each holder of Shares of a
Series shall be entitled to receive his or her pro rata share of all
distributions made with respect to such Series. Upon redemption of his or her
Shares, such Shareholder shall be paid solely out of the funds and property of
such Series. The Trustees may change the name of any Series or Class.
Section 2. Shares. The beneficial interest in the Trust shall be divided
into Shares of one or more separate and distinct Series or Classes established
by the Trustees. The number of Shares of each Series and Class is unlimited and
each Share shall have a par value (if any) as the Trustees may determine from
time to time. All Shares issued hereunder shall be fully paid and nonassessable.
Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust. The Trustees shall
have full power and authority, in their sole discretion and without obtaining
Shareholder approval, to issue original or additional Shares at such times and
on such terms and conditions as they deem appropriate; to issue fractional
Shares and Shares held in the treasury; to establish and to change in any manner
Shares of any Series or Classes with such preferences, terms of conversion,
voting powers, rights and privileges as the Trustees may determine; to divide or
combine the Shares of any Series or Classes into a greater or lesser number; to
classify or reclassify any unissued Shares of any Series or Classes into one or
more Series or Classes of Shares; to abolish any one or more Series or Classes
of Shares; to issue Shares to acquire other assets (including assets subject to,
and in connection with, the assumption of liabilities) and businesses; and to
take such other action with respect to the Shares as the Trustees may deem
desirable. Shares held in the treasury shall not confer any voting rights on the
Trustees and shall not be entitled to any dividends or other distributions
declared with respect to the Shares.
Section 3. Investment in the Trust. The Trustees may accept investments in
any Series from such persons and on such terms as they may from time to time
authorize. At the Trustees'discretion, such investments, subject only to the
express requirements of the 1940 Act, may be in the form of cash or securities
in which that Series is authorized to invest, valued as provided in Article V,
Section 3. Investments in a Series shall be credited to each Shareholder's
account in the form of full Shares at the Net Asset Value per Share next
determined after the investment is received or accepted as may be determined by
the Trustees; provided, however, that the Trustees may, in their sole
discretion, (a) impose a sales charge upon investments in any Series or Class,
(b) issue fractional Shares, or (c) determine the Net Asset Value per Share of
the initial capital contribution. The Trustees shall have the right to refuse to
accept investments, or any investment, in any Series at any time without any
cause or reason whatsoever.
Section 4. Assets and Liabilities of Series. All consideration received by
the Trust for the issue or sale of Shares of a particular Series, together with
all assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof (including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be), shall
be held and accounted for separately from the other assets of the Trust and
every other Series and are referred to as "assets belonging to" that Series. The
assets belonging to a
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Series shall belong only to that Series for all purposes, and to no other
Series, subject only to the rights of creditors of that Series. Any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more Series as the Trustees
deem fair and equitable. Each such allocation shall be conclusive and binding
upon the Shareholders of all Series for all purposes, and such assets, earnings,
income, profits or funds, or payments and proceeds thereof shall be referred to
as assets belonging to that Series. The assets belonging to a Series shall be so
recorded upon the books of the Trust, and shall be held by the Trustees in trust
for the benefit of the Shareholders of that Series. The assets belonging to a
Series shall be charged with the liabilities of that Series and all expenses,
costs, charges and reserves attributable to that Series, except that liabilities
and expenses allocated solely to a particular Class shall be borne by that
Class. Any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any particular Series
or Class shall be allocated and charged by the Trustees between or among any one
or more of the Series or Classes in such manner as the Trustees deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the Trustees to
allocate general liabilities, expenses, costs, charges or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of the Trust generally or of any other Series and, unless otherwise provided in
this Declaration, none of the debts, liabilities, obligations, expenses
incurred, contracted for or otherwise existing with respect to the Trust
generally or any other Series shall be enforceable against the assets of such
Series. Notice of this contractual limitation on liabilities among Series may,
in the Trustees discretion, be set forth in the certificate of trust of the
Trust (whether originally or by amendment) as filed or to be filed in the Office
of the Secretary of State of the State of Delaware pursuant to the Delaware Act,
and upon the giving of such notice in the certificate of trust, the statutory
provisions of Section 3804 of the Delaware Act relating to limitations on
liabilities among Series (and the statutory effect under Section 3804 of the
Delaware Act of setting forth such notice in the certificate of trust) shall
become applicable to the Trust and each Series. Any person extending credit to,
contracting with or having any claim against any Series may look only to the
assets of that Series to satisfy or enforce any debt, with respect to that
Series. No Shareholder or former Shareholder of any Series shall have a claim on
or any right to any assets allocated or belonging to any other Series.
Section 5. Ownership and Transfer of Shares. The Trust or Transfer Agent
shall maintain a register containing the names and addresses of the Shareholders
of each Series and Class thereof, the number of Shares of each Series and Class
held by such Shareholders, and a record of all Share transfers. The register
shall be conclusive as to the identity of Shareholders of record and the number
of Shares held by them from time to time. Shares shall be uncertificated unless
expressly authorized by the Trustees. The Trustees may authorize the issuance of
certificates representing Shares and adopt rules governing their use. The
Trustees may make rules governing the transfer of Shares, whether or not
represented by certificates. No Shareholder shall be entitled to payments of
distributions nor to any notice given, until it has given its address to such
officer or agent as shall keep the register.
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Section 6. Status of Shares; Limitation of Shareholder Liability. Shares
shall be deemed to be personal property giving Shareholders only the rights
provided in this Declaration. Every Shareholder, by virtue of having acquired a
Share, shall be held expressly to have assented to and agreed to be bound by the
terms of this Declaration and to have become a party hereto. No Shareholder
shall be personally liable for the debts, liabilities, obligations and expenses
incurred by, contracted for, or otherwise existing with respect to, the Trust or
any Series. Shareholders shall have the same limitation of personal liability as
is extended to Stockholders of a private corporation for profit organized under
The General Corporation Law of the State of Delaware. Every written obligation
of the Trust or any Series shall contain a statement to the effect that such
obligation may only be enforced against the assets of the Trust or such Series;
however, the omission of such statement shall not operate to bind or create
personal liability for any Shareholder or Trustee.
ARTICLE V
DISTRIBUTIONS AND REDEMPTION
Section 1. Distributions. The Trustees may declare and pay dividends and
other distributions, including dividends on Shares of a particular Series and
other distributions from the assets belonging to that Series. The amount and
payment of dividends or distributions and their form, whether they are in cash,
Shares or other Trust Property, shall be determined by the Trustees in their
sole discretion. Dividends and other distributions may be paid pursuant to a
standing resolution adopted once or more often as the Trustees determine. All
dividends and other distributions on Shares of a particular Series shall be
distributed pro rata to the Shareholders of that Series in proportion to the
number of Shares of that Series they held on the record date established for
such payment, except that such dividends and distributions shall appropriately
reflect expenses allocated to a particular Class of such Series. The Trustees
may adopt and offer to Shareholders such dividend reinvestment plans, cash
dividend payout plans or similar plans as the Trustees deem appropriate.
Section 2. Redemptions. As required under the 1940 Act, each Shareholder of
a Series shall have the right at such times as may be determined by the Trustees
to require the Series to redeem all or any part of his or her Shares at a
redemption price per Share equal to the Net Asset Value per Share at such time
as the Trustees shall have prescribed by resolution, less any applicable charges
or sales loads. In the absence of such resolution, the redemption price per
Share shall be the Net Asset Value next determined after receipt by the Series
of a request for redemption in proper form less such charges as are determined
by the Trustees and described in the Trust's Registration Statement for that
Series under the Securities Act of 1933 or the 1940 Act. The Trustees may
specify conditions, prices, and places of redemption, and may specify binding
requirements for the proper form or forms of requests for redemption. Payment of
the redemption price may be wholly or partly in securities or other assets at
the value of such securities or assets used in such determination of Net Asset
Value, or may be in cash. Upon redemption, Shares shall not be cancelled and may
be reissued from time to time. The Trustees may require Shareholders to redeem
Shares for any reason under terms set by the Trustees, including the failure of
a Shareholder to supply a personal identification number if required to do so,
or to have the minimum investment required, or to pay when due for the purchase
of Shares issued to him. To the extent permitted by law, the Trustees may retain
the proceeds of any
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redemption of Shares required by them for payment of amounts due and owing by a
Shareholder to the Trust or any Series or Class. Notwithstanding the foregoing,
the Trustees may postpone payment of the redemption price and may suspend the
right of the Shareholders to require any Series or Class to redeem Shares during
any period of time when and to the extent permissible under the 1940 Act.
Section 3. Determination of Net Asset Value. The Trustees shall cause the
Net Asset Value of Shares of each Series or Class to be determined from time to
time in a manner consistent with the 1940 Act. The Trustees may delegate the
power and duty to determine Net Asset Value per Share to one or more Trustees or
officers of the Trust or to a custodian, depository or other agent appointed for
such purpose. The Net Asset Value of Shares shall be determined separately for
each Series or Class at such times as may be prescribed by the Trustees or, in
the absence of action by the Trustees, as of the close of regular trading on the
New York Stock Exchange on each day for all or part of which such Exchange is
open for unrestricted trading.
Section 4. Suspension of Right of Redemption. If, as referred to in Section
2 of this Article, the Trustees postpone payment of the redemption price and
suspend the right of Shareholders to redeem their Shares, such suspension shall
take effect at the time the Trustees shall specify, but not later than the close
of business on the business day next following the declaration of suspension.
Thereafter Shareholders shall have no right of redemption or payment until the
Trustees declare the end of the suspension. If the right of redemption is
suspended, a Shareholder may either withdraw his or her request for redemption
or receive payment based on the Net Asset Value per Share next determined after
the suspension-terminates.
Section 5. Redemption Necessary for Tax Purposes. If the Trustees shall
determine that direct or indirect ownership of Shares of any Series has become
concentrated in any person to an extent that would disqualify any Series as a
regulated investment company under the Internal Revenue Code, then the Trustees
shall have the power (but not the obligation) by lot or other means they deem
equitable to (a) call for redemption by any such person of a number, or a
principal amount, of Shares sufficient to maintain or bring the direct or
indirect ownership of Shares into conformity with the requirements for such
qualification, and (b) refuse to transfer or issue shares to any person whose
acquisition of Shares in question would, in the Trustee's judgment, result in
such disqualification. Any such redemption shall be effected at the redemption
price and in the manner provided in Section 2 of this Article V. Shareholders
shall upon demand disclose to the Trustees in writing such information
concerning direct and indirect ownership of Shares as the Trustees deem
necessary to comply with the requirements of any taxing authority.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have the right to vote
only on matters as expressly required under the 1940 Act or under the law of
Delaware applicable to business trusts. This Declaration shall not confer any
independent right to Shareholders to vote for any matter concerning the
creation, operation, dissolution, or termination of the Trust. The
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Shareholders shall have the right to vote on other matters only as the Trustees
may consider desirable, and so authorize. To the extent that the 1940 Act or
Delaware law is amended by rule, regulation, order, or no-action letter to
eliminate or limit Shareholders' right to vote on any specific matter, the
Shareholders' right to vote shall be deemed to be amended in accordance with the
amendment of law without further approval by the Trustees or the Shareholders.
Currently, the 1940 Act requires that shareholders have the right to
vote, under certain circumstances, to: (a) elect Trustees; (b) approve
investment advisory agreements and principal underwriting agreements; (c)
approve a change in subclassification; (d) approve any change in fundamental
investment policies; (e) approve a distribution plan under Rule 12b-1 of the
1940 Act; and (f) terminate the Trust's independent public accountant. The
Shareholders may vote on any additional matter only as the Trustees may consider
desirable, and so authorize.
On any matter that requires Shareholder approval under the 1940 Act,
whether Shareholders are required to vote by Series or Class shall be determined
by reference to the express requirements of the 1940 Act. On other matters
submitted to a vote of the Shareholders in the discretion of the Trustees, or
for which the 1940 Act does not expressly specify the voting procedure, all
Shares shall be voted in the aggregate and not by individual Series or Class
unless the Trustees determine otherwise. Each whole Share shall be entitled to
one vote as to any matter on which it is entitled to vote, and each fractional
Share shall be entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy or in any manner authorized by the Trustees. Unless the Trustees
declare otherwise, proxies may be given by any electronic or telecommunications
device, including telefax, telephone or through the Internet, but if a proposal
by anyone other than the officers or Trustees is submitted to a vote of the
Shareholders of any Series or Class, or if there is a proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees, Shares may be voted only in person or by written proxy unless the
Trustees specifically authorize other permissible methods of transmission. Until
Shares of a Series are issued, as to that Series the Trustees may exercise all
rights of Shareholders and may take any action required or permitted to be taken
by Shareholders by Law, or this Declaration.
Section 2. Meetings of Shareholders. There shall be no annual
Shareholders' meeting unless required by law. The first Shareholders' meeting
shall be held to elect Trustees at such time and place as the Trustees
designate, unless such action is taken by consent of Shareholders. Special
meetings of the Shareholders of any Series or Class may be called by the
Trustees. Only if required under Section 16(c) of the 1940 Act, special meetings
shall be called by the Trustees upon the written request of Shareholders owning
at least ten percent of the Outstanding Shares of such Series or Class entitled
to vote for purposes of removing a Trustee. Shareholders shall be entitled to at
least fifteen calendar days notice of any meeting, given as determined by the
Trustees.
Section 3. Quorum; Required Vote. One-third of the Outstanding Shares
of each Series or Class, or one-third of the Outstanding Shares of the Trust,
entitled to vote in person or by proxy shall be a quorum for the transaction of
business at a Shareholders' meeting with respect to such Series or Class, or
with respect to the entire Trust, respectively. Any lesser number shall be
sufficient for adjournments. Any adjourned session of a Shareholders' meeting
may be held within a reasonable time without further notice. Except when a
larger vote is
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expressly required by the 1940 Act, if a quorum is present at a meeting, an
affirmative vote of a majority of the Outstanding Shares voted in person or by
proxy shall decide any matters to be voted upon with respect to the entire
Trust. However, if the 1940 Act requires, or this Declaration permit, or the
Trustees determine, that Shares be voted on any matter by individual Series or
Classes, then a majority of the Outstanding Shares of that Series or Class (or,
if required by law, a Majority Shareholder Vote of that Series or Class) voted
in person or by proxy shall decide that matter insofar as that Series or Class
is concerned. Shareholders may act as to the Trust or any Series or Class by the
written consent of a majority (or such greater amount as may be required by
applicable law or this Declaration) of the Outstanding Shares of the Trust or of
such Series or Class, as the case may be.
ARTICLE VII
CONTRACTS WITH SERVICE PROVIDERS
Section 1. Investment Adviser. The Trustees may enter into one or more
investment advisory contracts on behalf of the Trust or any Series, providing
for investment advisory services, statistical and research facilities and
services, and other facilities and services to be furnished to the Trust or
Series on terms and conditions acceptable to the Trustees. Any such contract may
provide for the investment adviser to effect purchases, sales or exchanges of
portfolio securities or other Trust Property on behalf of the Trustees or may
authorize any officer or agent of the Trust to effect such purchases, sales or
exchanges pursuant to recommendations of the investment adviser. The Trustees
may authorize the investment adviser to employ one or more sub-advisers. The
Shareholders of the Trust shall have the power to vote to approve investment
advisory contracts to the extent such approval is required under the 1940 Act.
Section 2. Principal Underwriter. The Trustees may enter into contracts
on behalf of the Trust or any Series or Class, providing for the distribution
and sale of Shares by the other party, either directly or as sales agent, on
terms and conditions acceptable to the Trustees. The Trustees may adopt a plan
or plans of distribution with respect to Shares of any Series or Class and enter
into any related agreements, whereby the Series or Class finances directly or
indirectly any activity that is primarily intended to result in sales of its
Shares, subject to the requirements of Section 12 of the 1940 Act, Rule 12b-1
thereunder, and other applicable rules and regulations.
Section 3. Transfer Agency, Shareholder Services, Accounting and
Administration Agreements. The Trustees, on behalf of the Trust or any Series or
Class, may enter into transfer agency agreements, Shareholder service
agreements, accounting agreements and administration and management agreements
with any party or parties on terms and conditions acceptable to the Trustees.
Section 4. Custodian. The Trustees shall at all times place and
maintain the securities and similar investments of the Trust and of each Series
in custody meeting the requirements of Section 17(f) of the 1940 Act and the
rules thereunder. The Trustees, on behalf of the Trust or any Series, may enter
into an agreement with a custodian on terms and conditions acceptable to the
Trustees, providing for the custodian, among other things, to (a) hold the
securities owned by the Trust or any Series and deliver the same upon written
order or oral order confirmed in writing, (b) receive and receipt for any moneys
due to the Trust or any Series and deposit the
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same in its own banking department or elsewhere, (c) disburse such funds upon
orders or vouchers, and (d) employ one or more sub-custodians.
Section 5. Parties to Contracts with Service Providers. The Trustees
may enter into any contract with any entity, although one more of the Trustees
or officers of the Trust may be an officer, director, trustee, partner,
Shareholder, or member of such entity, and no such contract shall be invalidated
or rendered void or voidable because of such relationship. No person having such
a relationship shall be disqualified from voting on or executing a contract in
his or her capacity as Trustee and/or Shareholder, or be liable merely by reason
of such relationship for any loss or expense to the Trust with respect to such a
contract or accountable for any profit realized directly or indirectly
therefrom; provided, that the contract was reasonable and fair and not
inconsistent with this Declaration.
Any contract referred to in Sections 1 and 2 of this Article shall be
consistent with and subject to the applicable requirements of Section 15 of the
1940 Act and the rules and orders thereunder with respect to its continuance in
effect, its termination, and the method of authorization and approval of such
contract or renewal.
ARTICLE VIII
EXPENSES OF THE TRUST AND SERIES
Subject to Article IV, Section 4, the Trust or a particular Series
shall pay, or shall reimburse the Trustees from the Trust estate or the assets
belonging to the particular Series, for their expenses and disbursements,
including, but not limited to, interest charges, taxes, brokerage fees and
commissions; expenses of issue, repurchase and redemption of Shares; certain
insurance premiums; applicable fees, interest charges and expenses of third
parties, including the Trust's investment advisers, managers, administrators,
distributors, custodians, transfer agents and fund accountants; fees of pricing,
interest, dividend, credit and other reporting services; costs of membership in
trade associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and its
Series and maintaining its existence; costs of preparing and printing the
prospectuses of the Trust and each Series, statements of additional information
and Shareholder reports and delivering them to Shareholders; expenses of
meetings of Shareholders and proxy solicitations therefor; costs of maintaining
books and accounts; costs of reproduction, stationery and supplies; fees and
expenses of the Trustees; compensation of the Trust's officers and employees and
costs of other personnel performing services for the Trust or any Series; costs
of Trustee meetings; Commission registration fees and related expenses; state or
foreign securities laws registration fees and related expenses; and for such
non-recurring items as may arise, including litigation to which the Trust or a
Series (or a Trustee or officer of the Trust acting as such) is a party, and for
all losses and liabilities by them incurred in administering the Trust. The
Trustees shall have a lien on the assets belonging to the appropriate Series, or
in the case of an expense allocable to more than one Series, on the assets of
each such Series, prior to any rights or interests of the Shareholders thereto,
for the reimbursement to them of such expenses, disbursements, losses and
liabilities.
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ARTICLE IX
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Liability. All persons contracting with or
having any claim against the Trust or a particular Series shall look only to the
assets of the Trust or such Series, respectively, for payment under such
contract or claim; and neither the Trustees nor any of the Trust's officers,
employees or agents, whether past, present or future (each a "Covered Person,"
and collectively the "Covered Persons"), shall be personally liable therefor. No
Covered Person shall be liable to the Trust or to any Shareholder for any loss,
damage or claim incurred by reason of any act omission performed or omitted by
such Covered Person in good faith on behalf of the Trust, a Series or a Class,
and in a manner reasonably believed to be within the scope of authority
conferred on such Covered Person by this Declaration, except that a Covered
Person shall be liable for any loss, damage or claim incurred by reason of such
Covered Person's bad faith, gross negligence, willful misconduct or reckless
disregard of the duties involved in the conduct of his or her office.
Section 2. Mandatory Indemnification. (a) Subject only to the express
limitations in the 1940 Act or other applicable laws, the Trust or the
appropriate Series shall indemnify each of its Covered Persons to the fullest
extent permitted under the 1940 Act and other applicable laws, including:
(i) against all liabilities and expenses reasonably incurred or
paid by him or her in connection with any claim, action, suit or proceeding in
which he or she becomes involved as a party or otherwise by virtue of his or her
being or having been a Covered Person and against amounts paid or incurred in
the settlement thereof
(ii) As used herein, the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened, and the words
"liability" and "expenses" shall include, without limitation, reasonable
attorneys'fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.
(b) As currently required under the 1940 Act, no indemnification shall
be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office,
or (B) not to have acted in good faith in the reasonable belief that his or her
action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office (A) by the court or other body approving the
settlement; (B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent
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legal counsel based upon a review of readily available facts (as opposed to a
full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured against
by policies of insurance maintained by the Trust, shall be severable, shall not
be exclusive of or affect any other rights to which any Covered Person may now
or hereafter be entitled, and shall inure to the benefit of the heirs, executors
and administrators of a Covered Person.
(d) To the maximum extent permitted by the 1940 Act and other applicable
laws, expenses in connection with the preparation and presentation of a defense
to any claim, action, suit or proceeding of the character described in
subsection (a) of this Section shall be paid by the Trust or applicable Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him or her to the Trust or applicable Series if it is ultimately
determined that he or she is not entitled to indemnification under this Section;
provided, however, that either (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured against
losses arising out of any such advance payments or (iii) either a majority of
the Trustees who are neither Interested Persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed to a full
trial-type inquiry) that there is reason to believe that such Covered Person
will not be disqualified from indemnification under this Section; provided,
however, that the Trust shall not be obligated to pay the expenses of any agent
acting pursuant to a written contract with the Trust, except to the extent
required by such contract;
(e) Any repeal or modification of this Article IX shall be prospective
only, to the extent that such repeal or modification would, if applied
retrospectively, adversely affect any limitation on the liability of any Covered
Person or adversely affect any indemnification available to any Covered Person
with respect to any act or omission which occurred prior to such repeal,
modification or adoption.
Section 3. Indemnification of Shareholders. If any Shareholder or
former Shareholder of any Series shall be held personally liable solely by
reason of his or her being or having been a Shareholder and not because of his
or her acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his or her heirs, executors, administrators or other legal
representatives or in the case of any entity, its general successor) shall be
entitled out of the assets belonging to the applicable Series to be held
harmless from and indemnified against all loss and expense arising from such
liability. The Trust, on behalf of the affected Series, shall, upon request by
such Shareholder, assume the defense of any claim made against such Shareholder
for any act or obligation of the Series and satisfy any judgment thereon from
the assets of the Series.
Section 4. Contractual Modification of Duties. To the extent that, at
law or equity, a Covered Person has duties (including fiduciary duties) and
liabilities relating to the Trust or any Series thereof or to any Shareholder,
any such Covered Person acting under this Declaration shall not be liable to the
Trust or any Series thereof or to any Shareholder for the Covered Person's good
faith reliance on the provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the duties and liabilities of a
Covered Person
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otherwise existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Covered Person.
ARTICLE X
OFFICERS
Section 1. General. The officers of the Trust shall be a President, a
Treasurer, and a Secretary, and may include one or more Assistant Treasurers or
Assistant Secretaries and such other officers ("Other Officers") as the Trustees
may determine. As specified in Section 6 of Article II, the Trustees may select
one or more of their members to be Chairman or Co-Chairmen of the Board. The
Chairman or Co-Chairmen of the Board may be, but are not required to be,
officers of the Trust. If the Trustees select a Chairman or Co-Chairmen, the
Trustees also will determine the powers and duties, and any limitations thereof,
of any Chairman or Co-Chairman selected by them.
Section 2. Election, Tenure and Qualifications of Officers. The Trustees
shall appoint the officers of the Trust. Each officer appointed by the Trustees
shall hold office until his or her successor shall have been appointed and
qualified or until his or her earlier death, inability to serve, or resignation.
Any person may hold one or more offices, except that the President and the
Secretary may not be the same individual. A person who holds more than one
office in the Trust may not act in more than one capacity to execute,
acknowledge, or verify an instrument required by law to be executed,
acknowledged, or verified by more than one officer. No officer need be a Trustee
or a Shareholder, unless specified otherwise by the Trustees.
Section 3. Vacancies and Newly Created Officers. Whenever a vacancy shall
occur in any office or if any new office is created, the Trustees may fill such
vacancy or new office.
Section 4. Removal and Resignation. Officers serve at the pleasure of
the Trustees and may be removed at any time with or without cause. The Trustees
may delegate this power to the Chairman or President with respect to any Other
Officer. Such removal shall be without prejudice to the contract rights, if any,
of the person so removed. Any officer may resign from office at any time by
delivering a written resignation to the Trustees, Chairman, or the President.
Unless otherwise specified therein, such resignation shall take effect upon
delivery.
Section 5. President. The President shall have such powers and perform
such duties as the Board or the Chairman may determine. In the absence of a
Chairman, the President shall preside over meetings of the Board, unless the
Trustees determine otherwise.
Section 6. Treasurer and Assistant Treasurer(s). The Treasurer is the
principal financial officer and principal accounting officer of the Trust. As
such, the Treasurer shall have general charge of the finances and books of the
Trust, and shall report to the Trustees annually regarding the financial
condition of each Series as soon as possible after the close of such
Series' fiscal year. The Treasurer shall be responsible for the delivery of all
funds and securities of the Trust to such company as the Trustees shall retain
as Custodian. The Treasurer shall furnish such reports concerning the financial
condition of the Trust as the Trustees may request. The Treasurer shall perform
all acts incidental to the office of Treasurer, subject to the Trustees'
supervision, and shall perform such additional duties as the Trustees may
designate.
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Any Assistant Treasurer may perform such duties of the Treasurer as the
Trustees or the Treasurer may assign, and, in the absence of the Treasurer, may
perform all the duties of the Treasurer.
Section 7. Secretary and Assistant Secretaries. The Secretary shall
record all votes and proceedings of the meetings of Trustees and Shareholders in
books to be kept for that purpose. The Secretary shall be responsible for giving
and serving notices of the Trust, unless the Trustees determine otherwise. The
Secretary shall have custody of any seal of the Trust and shall be responsible
for the records of the Trust, including the Share register and such other books
and documents as may be required by the Trustees or by law. The Secretary shall
perform all acts incidental to the office of Secretary, subject to the
supervision of the Trustees, and shall perform such additional duties as the
Trustees may designate.
Any Assistant Secretary may perform such duties of the Secretary as the
Trustees or the Secretary may assign, and, in the absence of the Secretary, may
perform all the duties of the Secretary.
Section 8. Authority to Execute and File Applications for Exemptive
Relief. The Officers of the Trust, including, without limitation, the President,
Treasurer, Assistant Treasurer, Secretary, Assistant Secretary, are delegated
the authority to prepare, execute and file with the Commission, any and all
applications for exemptive orders, and any amendments or supplements thereto,
that the Officers believe are necessary, desirable or convenient.
Section 9. Compensation of Officers. Each officer may receive such
compensation from the Trust for services and reimbursement for expenses as the
Trustees may determine.
Section 10. Surety Bond. The Trustees may require any officer or agent of
the Trust to execute a bond (including, without limitation, any bond required by
the 1940 Act and the rules and regulations of the Commission) to the Trust in
such sum and with such surety or sureties as the Trustees may determine,
conditioned upon the faithful performance of his or her duties to the Trust,
including responsibility for negligence and for the accounting of any of the
Trust's property, funds or securities that may come into his or her hands.
ARTICLE XI
MISCELLANEOUS
Section 1. Trust Not a Partnership. This Declaration creates a trust and
not a partnership. No Trustee shall have any power to bind personally either the
Trust's officers or any Shareholder to any obligation to which such person has
not consented.
Section 2. Trustee Action; Expert Advice; No Bond or Surety. The
exercise by the Trustees of their powers and discretion in accordance with the
terms of this Declaration in good faith under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
IX, the Trustees shall not be liable for errors of judgment or mistakes of fact
or law. The Trustees may take advice of counsel or other experts with respect to
the meaning and operation of this Declaration, and subject to the provisions of
Article IX, shall not be liable for any act or omission in accordance with such
advice or for failing to follow such
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advice. The Trustees shall not be required to give any bond as such, nor any
surety if a bond is obtained.
Section 3. Record Dates. The Trustees may fix in advance a date up to
ninety (90) days before the date of any Shareholders' meeting, or the date for
the payment of any dividends or other distributions, or the date for the
allotment of any other rights, or the date when any change or conversion or
exchange of Shares shall go into effect as a record date for the determination
of the Shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of such dividend or other distribution, or to
receive any such allotment of rights, or to exercise such rights in respect of
any such change, conversion or exchange of Shares.
Section 4. Dissolution or Termination of the Trust or a Series. (a)
This Trust shall have perpetual existence. Notwithstanding the foregoing, the
Trustees may, without Shareholder approval (unless the 1940 Act or other
applicable law expressly provides otherwise):
(i) sell and convey all or substantially all of the assets of the
Trust or any affected Series to another Series or to another entity which is an
open-end investment company as defined in the 1940 Act, or is a series thereof,
for adequate consideration, which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of the Trust or
any affected Series, and which may include Shares of or interests in such
Series, entity, or series thereof; or
(ii) at any time sell and convert into money all or substantially
all of the assets of the Trust or any affected Series.
Upon payment or the making of reasonable provision for the payment of
all known liabilities of the Trust or any affected Series in either (i) or (ii),
by such assumption or otherwise, the Trustees shall distribute the remaining
proceeds or assets (as the case may be) ratably among the Shareholders of the
Trust or any affected Series; however, the payment to any particular Series or
Class of such Series may be reduced by any fees, expenses or charges allocated
to that Series or Class.
(b) In determining whether to dissolve the Trust or a Series, the Trustees
may take into account whether continuation of the Trust or Series is in the best
interests of the Trust, such Series, or their respective Shareholders as a
result of factors or events adversely affecting the ability of the Trust or such
Series to conduct its business and operations in an economically viable manner.
Such factors and events may include the inability of the Trust or a Series to
maintain its assets at an appropriate size, changes in laws or regulations
governing the Trust or the Series or affecting assets of the type in which the
Trust or Series invests, or economic developments or trends having a significant
adverse impact on the business or operations of the Trust or such Series. If a
majority of the Trustees determine that the continuation of the Trust or Series
is not in the best interests of the Trust, such Series or Shareholders, such
determination is conclusive and binding upon the Trust, Series or Shareholders.
(c) Upon completion of the winding up of the affairs of the Trust and the
distribution of the remaining proceeds or assets pursuant to subsection (a), the
Trust shall terminate and the Trustees and the Trust shall be discharged of any
and all further liabilities and duties hereunder
21
<PAGE>
with respect thereto and the right, title and interest of all parties therein
shall be canceled and discharged. Upon dissolution (as defined in The Delaware
Act) of the Trust, following completion of winding up of its business, the
Trustees shall cause a certificate of cancellation of the Trust's certificate of
Trust, which may be signed by any one Trustee, to be filed in accordance with
the Delaware Act.
(d) The dissolution or termination of a Series or a Class shall not affect
the existence of the Trust or any other Series or Class. Upon completion of the
winding up of the affairs of a terminated Series and the distribution of the
assets pursuant to subparagraph (a), the Trustees shall, by Board resolution or
other written instrument, record in the Trust's books and records that the
Series or Class is terminated.
Section 5. Reorganization. Unless Shareholder approval is expressly
required under the 1940 Act, the Trustees may, without the need of any action or
vote of the Shareholders or any other person or entity, (a) cause the Trust to
merge or consolidate with or into one or more business trust or other business
entities (as defined under The Delaware Act), if the surviving or resulting
entity is the Trust or another open-end management investment company under the
1940 Act, or a series thereof, that will succeed to or assume the Trust's
registration under the 1940 Act, or (b) cause the Trust to incorporate under the
laws of Delaware. Any agreement of merger or consolidation or certificate of
merger may be signed by any Trustee authorized by resolution of a majority of
the Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.
Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 5 may effect any amendment to the
Declaration or effect the adoption of a new governing Declaration of the Trust
if it is the surviving or resulting trust in the merger or consolidation.
Section 6. Declaration. The original or a copy of this Declaration and
of each amendment hereto or Declaration supplemental shall be kept at the office
of the Trust. Anyone dealing with the Trust may rely on a certificate by a
Trustee or an officer of the Trust as to the authenticity of the Declaration of
Trust or any such amendments or supplements and as to any matters in connection
with the Trust. This Declaration may be executed in any number of counterparts,
each of which shall be deemed an original.
Section 7. Derivative Actions. As expressly provided in The Delaware
Act, Shareholders have the right to bring a derivative action if they meet the
express requirements of Delaware law. In addition to the requirements under
Delaware law, however, no derivative action may be brought by Shareholders
unless Shareholders owning not less than one-third of the Outstanding Shares of
all Series of the Trust, or of the affected Series or Classes of the Trust, as
the case may be, join in the bringing of the derivative action.
Section 8. Applicable Law. This Declaration and the Trust created
hereunder are governed by and construed and administered according to The
Delaware Act and the applicable laws of the State of Delaware; provided,
however, that there shall not be applicable to the Trust, the Trustees or this
Declaration (a) the provisions of Section 3540 of Title 12 of the Delaware
22
<PAGE>
Code, or (b) any provisions of the laws (statutory or common) of the State of
Delaware (other than the Delaware Act) pertaining to trusts which relate to or
regulate (i) the filing with any court or governmental body or agency of trustee
accounts or schedules of trustee fees and charges, (ii) affirmative requirements
to post bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding of trust assets, or (vii) the establishment of fiduciary or
other standards of responsibilities or limitations on the acts or powers of
trustees, which are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this
Declaration. The Trust shall be of the type commonly called a Delaware business
trust, and, without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions.
Section 9. Amendments. Because this Declaration does not confer any
independent rights to Shareholders not expressly granted under Delaware law or
the 1940 Act, this Declaration may be amended without Shareholder approval, and
all Shareholders purchase Shares with notice that this Declaration may be so
amended unless expressly required under the 1940 Act. The Trustees may, without
any Shareholder vote, amend or otherwise supplement this Declaration by making
an amendment, a trust instrument supplemental hereto or an amended and restated
declaration of trust; provided, that Shareholders shall have the right to vote
on any amendment if expressly required under the 1940 Act or other applicable
law, or submitted to them by the Trustees in their discretion.
Section 10. Fiscal Year. The fiscal year of the Trust or specific Series
within the Trust shall end on a specific date as determined by the Trustees in
this Declaration or by resolution or other written instrument. The Trustees may
change the fiscal year of the Trust, or any Series of the Trust without
Shareholder approval.
Section 11. Severability. The provisions of this Declaration are
severable. If the Trustees determine, with the advice of counsel, that any
provision hereof conflicts with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration; provided, however, that such determination shall not
affect any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination. If any
provision hereof shall be held invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall attach only to such provision only in
such jurisdiction and shall not affect any other provision of this Declaration.
Section 12. Principal Office. The principal office of the Trust shall be
located in Little Rock, Arkansas, or such other location as the Trustees may
from time to time determine.
23
<PAGE>
Section 13. Inspection of the Books. Except as expressly required under the
1940 Act or conferred under other applicable law, Shareholders shall have no
right to inspect the books of the Trust except as the Trustees may expressly
authorize. The Trustees may authorize that the books of the Trust be open to
inspection by Shareholders under the conditions and regulations that they deem
desirable.
24
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the Trustees, have executed
this Declaration as of the date first above written.
___________________________________
Robert C. Brown,
as Trustee and not individually
___________________________________
Donald H. Burkhardt,
as Trustee and not individually
___________________________________
Jack S. Euphrat,
as Trustee and not individually
___________________________________
Thomas S. Goho,
as Trustee and not individually
___________________________________
Peter G. Gordon,
as Trustee and not individually
___________________________________
W. Rodney Hughes,
as Trustee and not individually
___________________________________
Richard M. Leach,
as Trustee and not individually
__________________________________
J. Tucker Morse,
as Trustee and not individually
25
<PAGE>
___________________________________
Timothy J. Penny,
as Trustee and not individually
___________________________________
Donald C. Willeke,
as Trustee and not individually
26
<PAGE>
EXHIBIT 99.B(d)(1)
WELLS FARGO VARIABLE TRUST
INVESTMENT ADVISORY AGREEMENT
This AGREEMENT is made as of this ___ day of September___, 1999, between
Wells Fargo Variable Trust (the "Trust"), a business trust organized under the
laws of the State of Delaware with its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201 and Wells Fargo Bank, N.A. (the "Adviser"),
a banking association organized under the laws of the United States of America
with its principal place of business at 420 Montgomery Street, 12th Floor, San
Francisco, California, 94104.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "1940 Act") as an open-end management investment company and is
authorized to issue interests (as defined in the Trust's Trust Instrument), in
separate series;
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust listed on Schedule A hereto as such
Schedule may be amended or supplemented from time to time by mutual agreement
(each a "Fund" and collectively the "Funds"), and the Adviser is willing to
provide those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust and the Adviser agree as follows:
Section 1. The Trust; Delivery Of Documents. The Trust is engaged in the
business of investing and reinvesting its assets in securities of the type and
in accordance with the limitations specified in its Trust Instrument, By-Laws
(if any) and Registration Statement filed with the Securities and Exchange
Commission (the "Commission") under the 1940 Act and the Securities Act of 1933
(the "Securities Act"), including any representations made in the prospectus and
statement of additional information relating to the Funds contained therein and
as may be supplemented from time to time, all in such manner and to such extent
as may from time to time be authorized by the Trust's Board of Trustees (the
"Board"). The Board is authorized to issue any unissued shares in any number of
additional classes or series. The Trust has delivered copies of the documents
listed in this Section to the Adviser and will from time to time furnish the
Adviser with any amendments thereof.
Section 2. Investment Adviser; Appointment. The Trust hereby employs
Adviser, subject to the direction and control of the Board, to manage the
investment and reinvestment of the assets in the Funds and, without limiting the
generality of the foregoing, to provide the other services specified in Section
3 hereof.
Section 3. Duties Of The Adviser.
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets for the Funds. Among other
things, the Adviser
<PAGE>
shall make all decisions with respect to the allocation of the Funds'
investments in various securities or other assets, in investment styles and, if
applicable, in other investment companies or pooled vehicles in which a Fund may
invest. To carry out such decisions, the Adviser is hereby authorized, as agent
and attorney-in-fact for the Trust, for the account of, at the risk of and in
the name of the Trust, to place orders and issue instructions with respect to
those transactions of the Funds. In all purchases, sales and other transactions
in securities for the Funds, the Adviser is authorized to exercise full
discretion and act for the Trust in the same manner and with the same force and
effect as the Trust might or could do with respect to such purchases, sales or
other transactions, as well as with respect to all other things necessary or
incidental to the furtherance or conduct of such purchases, sales or other
transactions.
(b) The Adviser will report to the Board at each regular meeting thereof
all material changes in the Funds since the prior report, and will also keep the
Board informed of important developments affecting the Trust, each Fund and the
Adviser, and on its own initiative will furnish the Board from time to time with
such information as the Adviser may believe appropriate, whether concerning the
individual companies whose securities are held by a Fund, the industries in
which they engage, or the economic, social or political conditions prevailing in
each country in which a Fund maintains investments. The Adviser will also
furnish the Board with such statistical and analytical information with respect
to securities in the Funds as the Adviser may believe appropriate or as the
Board reasonably may request. In making purchases and sales of securities for
the Funds, the Adviser will comply with the policies set from time to time by
the Board as well as the limitations imposed by the Trust's Trust Instrument, By
- -Laws (if any) and Registration Statement under the 1940 Act and the Securities
Act, the limitations in the 1940 Act and in the Internal Revenue Code of 1986,
as amended, applicable to the Trust and the investment objectives, policies and
restrictions of each Fund.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be appropriate or necessary to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be imposed on the
Trust in any such respect.
(d) The Adviser shall maintain records relating to portfolio transactions
and the placing and allocation of brokerage orders as are required to be
maintained by the Trust under the 1940 Act. The Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Commission and the Internal Revenue
Service. The books and records pertaining to the Trust which are in possession
of the Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Adviser's normal business hours. Upon the reasonable request of
the Trust, copies of any
<PAGE>
such books and records shall be provided promptly by the Adviser to the Trust or
the Trust's authorized representatives.
(e) With respect to a Fund, the Adviser shall have no duties or
obligations pursuant to this Agreement, during any period during which the Fund
invests all (or substantially all) of its investment assets in a registered,
open-end management investment company, or separate series thereof, in
accordance with Section 12(d)(1)(E) under the 1940 Act.
Section 4. Delegation Of Responsibilities. The Adviser may carry out any
of its obligations under this Agreement by employing, subject to supervision by
the Adviser, one or more Sub-Adviser(s) who are registered as investment
advisers pursuant to the Investment Advisers Act of 1940 or who are exempt from
registration thereunder ("Sub-Advisers"). Each Sub-Adviser's employment will be
evidenced by a separate written agreement approved by the Board and, if required
under the 1940, Act by the shareholders of the Fund (unless the Commission or
its staff has given authorization or issued an interpretation dispensing with
the requirement of shareholder approval). The Adviser shall not be liable
hereunder for any act or omission of any Sub-Adviser, except for failure to
exercise good faith in the employment of the Sub-Adviser and for failure to
exercise appropriate supervision of such Sub-Adviser, and as may otherwise be
agreed in writing. The Adviser shall be solely responsible for compensating any
Sub-Adviser for services rendered under any Sub-Advisory Agreement. The Adviser
may, from time to time and at any time, terminate any Sub-Adviser and reassume
the responsibilities assigned to such Sub-Adviser with respect to any Fund
without obtaining the approval of the shareholders of the Fund.
Section 5. Control By Board. Any investment activities undertaken by the
Adviser pursuant to this Agreement, as well as any other activities undertaken
by the Adviser on behalf of the Funds, shall at all times be subject to the
direction and control of the Board.
Section 6. Compliance With Applicable Requirements. In carrying out its
obligations under this Agreement, the Adviser shall at all times comply with:
(a) all applicable provisions of the 1940 Act, and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as it may
be amended from time to time, under the Securities Act and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as it may be
amended from time to time;
(d) the provisions of any By-laws of the Trust, if adopted and as they may
be amended from time to time, or resolutions of the Board that may be adopted
from time to time;
<PAGE>
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Trust or the Funds; and
(f) any other applicable provisions of state or federal law.
Section 7. Broker-dealer Relationships. In connection with the purchase
and sale of securities for the Funds, the Adviser is responsible for broker-
dealer selection and negotiation of brokerage commission rates. The Adviser's
primary consideration in effecting a security transaction will be to obtain the
best price and execution. In selecting a broker-dealer to execute each
particular transaction for a Fund, the Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker-
dealer to the Fund on a continuing basis. Accordingly, the price to the Fund in
any transaction may be less favorable than that available from another broker-
dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Board may
from time to time determine, the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of having caused a Fund to pay a broker or dealer that provides
brokerage and research services to the Adviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Adviser with
respect to the Fund and to other clients of the Adviser. The Adviser is further
authorized to allocate the orders placed by it on behalf of the Funds to brokers
and dealers who also provide research or statistical material, or other services
to the Funds or to the Adviser. Such allocation shall be in such amounts and
proportions as the Adviser shall determine and the Adviser will report on said
allocations regularly to the Board, indicating the brokers to whom such
allocations have been made and the basis therefor.
Section 8. Expenses of The Fund. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Trust include, but are not limited to, brokerage
commissions, taxes, legal, auditing or governmental fees, the cost of preparing
share certificates, custodian, transfer agent and shareholder service agent
costs, expense of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to trustees and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
<PAGE>
Section 9. Compensation.
(a) As compensation for the advisory services provided under this
Agreement, the Trust shall pay the Adviser fees, payable monthly, at the annual
rates indicated on Schedule A hereto, as such Schedule may be amended or
supplemented from time to time;
(b) Except as provided in the following paragraph, no fee shall be
payable hereunder with respect to a Fund during any period in which the Fund
invests all (or substantially all) of its investment assets in a single
registered, open-end management investment company, or separate series thereof,
in accordance with Section 12(d)(1)(E) under the 1940 Act;
(c) The adviser shall receive a fee of as set forth in Schedule A for
asset allocation services if a Fund invests some or all of its investment assets
in one or more registered, open-end management investment companies, or separate
series thereof, in each case, in accordance with Section 12(d)(1)(h) under the
Act, the rules thereunder or an exemptive order issued by the Commission
exempting the Fund from the provisions of Section 12(d)(1)(A) under the Act (a
"Fund of Funds structure")
(d) To the extent the Board determines that a Fund should invest a
portion of its assets directly in portfolio securities, rather than in a
portfolio of Wells Fargo Core Trust (Delaware) or other portfolio, with respect
to those assets the Fund will pay the Adviser the same fee that the portfolio
was paying its adviser (the fees of each portfolio will be disclosed in the
proxy statement and prospectus).
Section 10. Standard Of Care. The Trust shall expect of the Adviser, and
the Adviser will give the Trust the benefit of, the Adviser's best judgment and
efforts in rendering its services to the Trust, and as an inducement to the
Adviser's undertaking these services at the compensation level specified, the
Adviser shall not be liable hereunder for any mistake in judgment. In the
absence of willful misfeasance, bad faith, negligence or reckless disregard of
obligations or duties hereunder on the part of the Adviser or any of its
officers, directors, employees or agents, the Adviser shall not be subject to
liability to the Trust or to any shareholders of the Trust for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
Section 11. Non-exclusivity. The services of the Adviser to the Funds are
not to be deemed to be exclusive, and the Adviser shall be free to render
investment advisory or other services to others (including other investment
companies) and to engage in other activities. It is understood and agreed that
officers or directors of the Adviser may serve as officers and directors of the
Trust, and that officers or directors of the Trust may serve as officers or
directors of the Adviser, to the extent that such services may be permitted by
law, and that the officers and directors of the Adviser are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or
<PAGE>
from serving as partners, officers, directors or trustees of any other firm or
trust, including other investment advisory companies.
Section 12. Records. The Adviser shall, with respect to orders the Adviser
places for the purchase and sale of portfolio securities of the Funds, maintain
or arrange for the maintenance of the documents and records required pursuant to
Rule 31a-1 under the 1940 Act as well as such records as the Funds'
administrator reasonably requests to be maintained, including, but not limited
to, trade tickets and confirmations for portfolio trades. All such records shall
be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1 or any successor rule. All such records will be the
property of the Funds and will be available for inspection and use by the Funds.
The Adviser will promptly notify the Funds' Administrator if it experiences any
difficulty in maintaining the records in an accurate and complete manner.
Section 13. Term And Approval. This Agreement shall become effective with
respect to a Fund after approved in accordance with the requirements of the 1940
Act, and executed by the Adviser and the Trust, and shall thereafter continue
from year to year, provided that the continuation of the Agreement is
specifically approved in accordance with the requirements of the 1940 Act, which
currently requires that the continuation be approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of "a
majority of the outstanding voting securities" of the Fund (as defined in
Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's Directors who
are not parties to this Agreement or "interested persons" (as defined in the
1940 Act) of a party to this Agreement (other than as Directors of the Trust),
by votes cast in person at a meeting specifically called for such purpose.
Section 14. Termination. As required under the 1940 Act, this Agreement may
be terminated with respect to a Fund at any time, without the payment of any
penalty, by vote of the Trust's Board of Trustees or by vote of a majority of a
Fund's outstanding voting securities, or by the Adviser, on sixty (60) days'
written notice to the other party. The notice provided for herein may be waived
by the party entitled to receipt thereof. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" for purposes of
this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act, as
it may be interpreted by the Commission or its staff in interpretive releases,
or applied by the Commission staff in no-action letters issued under the 1940
Act.
Section 15. Indemnification By The Adviser. The Trust shall not be
responsible for, and the Adviser shall indemnify and hold the Trust or any Fund
of the Trust harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to the willful misfeasance, bad faith,
<PAGE>
negligent acts or reckless disregard of obligations or duties on the part of the
Adviser or any of its officers, directors, employees or agents.
Section 16. Indemnification By The Trust. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of duties hereunder on
the part of the Adviser or any of its officers, directors, employees or agents,
the Trust hereby agrees to indemnify and hold harmless the Adviser against all
claims, actions, suits or proceedings at law or in equity whether brought by a
private party or a governmental department, commission, board, bureau, agency or
instrumentality of any kind, arising from the advertising, solicitation, sale,
purchase or pledge of securities, whether of the Funds or other securities,
undertaken by the Funds, their officers, directors, employees or affiliates,
resulting from any violations of the securities laws, rules, regulations,
statutes and codes, whether federal or of any state, by the Funds, their
officers, directors, employees or affiliates. Federal and state securities laws
impose liabilities under certain circumstances on persons who act in good faith,
and nothing herein shall constitute a waiver or limitation of any rights which a
Fund may have and which may not be waived under any applicable federal and state
securities laws.
Section 17. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
shall be c/o Stephens Inc., 111 Center Street, Suite 300, Little Rock, Arkansas
72201, Attention R. Greg Feltus, and that of the Adviser shall be 525 Market
Street, 12th Floor, San Francisco, California 94163, Attention Michael J.
Hogan..
Section 18. Questions Of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission,
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the Commission, such provision shall be
deemed to incorporate the effect of such rule, regulation or order. The duties
and obligations of the parties under this Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 19. Amendment Of This Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. If shareholder approval of
an amendment is required under the 1940 Act, no such amendment shall become
effective until approved by a vote of the majority of the outstanding shares of
the affected Funds. Otherwise, a written
<PAGE>
amendment of this Agreement is effective upon the approval of the Board of
Trustees and the Adviser.
Section 20. Wells Fargo Name. The Adviser and the Trust each agree that the
name "Wells Fargo," which comprises a component of the Trust's name, is a
property right of the parent of the Adviser. The Trust agrees and consents
that: (I) it will use the words "Wells Fargo" as a component of its corporate
name, the name of any series or class, or all of the above, and for no other
purpose; (ii) it will not grant to any third party the right to use the name
"Wells Fargo" for any purpose; (iii) the Adviser or any corporate affiliate of
the Adviser may use or grant to others the right to use the words "Wells Fargo,"
or any combination or abbreviation thereof, as all or a portion of a corporate
or business name or for any commercial purpose, other than a grant of such right
to another registered investment company not advised by the Adviser or one of
its affiliates; and (iv) in the event that the Adviser or an affiliate thereof
is no longer acting as investment adviser to any Fund or class of a Fund, the
Trust shall, upon request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing the words "Wells
Fargo" and following such change, shall not use the words "Wells Fargo," or any
combination thereof, as a part of its corporate name or for any other commercial
purpose, and shall use its best efforts to cause its trustees, officers and
shareholders to take any and all actions that the Adviser may request to effect
the foregoing and to reconvey to the Adviser any and all rights to such words.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO VARIABLE TRUST
on behalf of the Funds
By: /s/
-------------------------------
R. Greg Feltus, President
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/
---------------------------------
Michael J. Hogan, Senior Vice President
By:___________________________________
C. David Messman, Vice President
<PAGE>
Schedule A
----------
---------------------------------------------------------------
Well Fargo
Variable Trust Funds Advisory
---------------------------------------------------------------
Asset Allocation Fund 0.55
---------------------------------------------------------------
Corporate Bond Fund 0.45
---------------------------------------------------------------
Equity Value Fund 0.55
---------------------------------------------------------------
Growth Fund 0.55
---------------------------------------------------------------
Income Equity Fund 0.55
---------------------------------------------------------------
International Equity Fund 0.75
---------------------------------------------------------------
Large Company Growth Fund 0.55
---------------------------------------------------------------
Money Market Fund 0.40
---------------------------------------------------------------
Small Cap Fund 0.75
---------------------------------------------------------------
Approved by Board of Trustees: March 26, 1999
<PAGE>
EXHIBIT 99.B(d)(2)(i)
SUB-ADVISORY CONTRACT
WELLS FARGO BANK, N.A.
525 Market Street
San Francisco, CA 94163
September __, 1999
Barclays Global Fund Advisors
45 Fremont, 17th Floor
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement by and among Wells Fargo Bank, N.A. (the
"Adviser"), Wells Fargo Variable Trust (the "Trust"), on behalf of each Fund
listed on attached Appendix I as it may be amended from time to time (each, a
"Fund" and collectively, the "Funds"), and Barclays Global Fund Advisors (the
"Sub-Adviser") as follows:
1. The Trust is a registered open-end management investment company
currently consisting of a number of investment portfolios, but which may from
time to time consist of a greater or lesser number of investment portfolios. The
Trust proposes to engage in the business of investing and reinvesting the assets
of the Funds in the manner and in accordance with the investment objective and
restrictions specified in the Trust's Registration Statement, as amended from
time to time (the "Registration Statement"), filed by the Trust under the
Investment Company Act of 1940 (the "Act") and the Securities Act of 1933.
Copies of the Registration Statement have been furnished to the Adviser. Any
amendments to the Registration Statement shall be furnished to the Adviser
promptly.
2. The Trust has engaged the Adviser to manage the investing and
reinvesting of the Funds' assets and to provide the advisory services specified
elsewhere in the Investment Advisory Agreement between the Trust and the
Adviser, dated as of the date hereof, subject to the overall supervision of the
Board of Trustees of the Trust. Pursuant to Administration between the Trust, on
behalf of the Funds, and the Administrator (the "Administrator"), the Trust has
engaged the Administrator to provide the administration services specified
therein.
3. (a) The Adviser hereby employs the Sub-Adviser to perform for the
Funds certain sub-advisory services and the Sub-Adviser hereby accepts such
employment. The Adviser shall retain the authority to establish and modify, from
time to time, the investment strategies and approaches to be followed by the
Sub-Adviser, subject, in all respects, to the supervision and direction of the
Trust's Board of Trustees and subject to compliance with the investment
objective, policies and restrictions set forth in the Registration Statement.
(b) Subject to the overall supervision and control of the Adviser and
the Trust, the Sub-Adviser shall be responsible for investing and reinvesting
the Funds' assets in a manner consistent with the investment strategies and
approaches referenced in subparagraph (a), above.
<PAGE>
In this regard, the Sub-Adviser shall be responsible for implementing and
monitoring the performance of the investment model employed with respect to a
Fund, in accordance with the investment objective, policies and restrictions set
forth in the Registration Statement, the Act, and the provisions of the Internal
Revenue Code of 1986 relating to investment companies, and shall furnish to the
Adviser periodic reports on the investment activity and performance of the
Funds. The Sub-Adviser shall also furnish such additional reports and
information as the Adviser and the Trust's Board of Trustees and officers shall
reasonably request.
(c) The Sub-Adviser shall, at its expense, employ or associate with
itself such persons as the Sub-Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Adviser shall be responsible for fees paid to the Sub-Adviser for
its services thereunder. The Sub-Adviser agrees that it shall have no claim
against the Trust or the Funds respecting compensation under this contract. In
consideration of the services to be rendered by the Sub-Adviser under this
contract, the Adviser shall pay the Sub-Adviser monthly fees at the rates
specified on Appendix I hereto. If the fee payable to the Sub-Adviser pursuant
to this Paragraph 4 begins to accrue on a day after the first day of any month
or if this contract terminates before the end of any month, the fee for the
period from the effective date to the end of the month, or from the beginning of
that month to the termination date, shall be prorated according to the
proportion that such period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating the monthly fee, the value of
a Fund's net assets shall be computed in the manner specified in the
Registration Statement and the Trust's Declaration of Trust for the computation
of the value of such Fund's net assets in connection with the determination of
the net asset value of Fund shares.
5. The Sub-Adviser shall give the Trust the benefit of the Sub-Adviser's
best judgment and efforts in rendering services under this contract. As
consideration and as an inducement to the Sub-Adviser's undertaking to render
these services, the Trust and the Adviser agree that the Sub-Adviser shall not
be liable under this contract for any mistake in judgment or in any other event
whatsoever except for lack of good faith, provided that nothing in this contract
shall be deemed to protect or purport to protect the Sub-Adviser against any
liability to the Adviser, the Trust or its shareholders to which the Sub-Adviser
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Sub-Adviser's duties under this contract or
by reason of reckless disregard of its obligations and duties thereunder.
6. This contract shall become effective as of its execution date and
shall thereafter continue in effect, provided that this contract shall continue
in effect for a period of more than two years from the date hereof only so long
as the continuance is specifically approved at least annually (a) by the vote of
a majority of a Fund's outstanding voting securities (as defined in the Act) or
by the Trust's Board of Trustees and (b) by the vote, cast in person at a
meeting called specifically for the purpose of continuing this Sub-Advisory
Contract, of a majority of the Trust's Trustees who are not parties to this
contract or "interested persons" (as defined in the Act) of any such party. This
contract may be terminated, upon 60 days' written notice to the Sub-Adviser, by
the Company, without the payment of any penalty, by a vote of a majority of such
Fund's outstanding voting securities (as defined in the Act) or by a vote of a
majority of the
2
<PAGE>
Trust's entire Board of Trustees. The Sub-Adviser may terminate this contract on
60 days' written notice to the Trust. This contract shall terminate
automatically in the event of its assignment (as defined in the Act).
7. Except to the extent necessary to perform the Sub-Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Sub-Adviser, or any affiliate of the Sub-Adviser, or
any employee of the Sub-Adviser, to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, firm, individual or association.
8. The Trust shall own and control all records generated on behalf of the
Trust as a result of services provided under this contract. In addition, the
Trust shall have the right to inspect, audit, and/or copy all records pertaining
to the performance of services under this contract.
9. This contract shall be governed by and construed in accordance with
the laws of the State of California.
3
<PAGE>
If the foregoing correctly sets forth the agreement by and among the Trust, the
Adviser and the Sub-Adviser, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
WELLS FARGO BANK, N.A.
By: ______________________________________
Name: Michael J. Hogan
Title: Executive Vice President
By: ______________________________________
Name: C. David Messman
Title: Vice President
AGREED to as of the date set forth above.
BARCLAYS GLOBAL FUND ADVISORS
By: _________________________________
Stephen E. Rogers
Principal
ACCEPTED as of the date set forth above
WELLS FARGO VARIABLE TRUST,
on behalf of each Fund listed on
attached Appendix I
By: _________________________________
Richard H. Blank, Jr.
Secretary
4
<PAGE>
APPENDIX I
Sub-advisory fees shall be paid monthly on the first business day of each
month, at the annual rates specified below of each Fund's average daily value
(as determined on each day that such value is determined for the Fund at the
time set forth in the Prospectus for determining net asset value per share)
during the preceding month.
Fund Investment Advisory Fee
---- -----------------------
Asset Allocation Fund 0.15%
Approved by Board of Trustees: March 26, 1999.
5
<PAGE>
EXHIBIT 99.B(d)(2)(ii)
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO VARIABLE TRUST, WELLS FARGO
BANK, N.A. AND PEREGRINE CAPITAL MANAGEMENT, INC.
This AGREEMENT is made as of this ___ day of September, 1999, between Wells
Fargo Variable Trust (the "Trust"), a business trust organized under the laws of
the State of Delaware with its principal place of business at 111 Center Street,
Little Rock, Arkansas 72201, Wells Fargo Bank, N.A. (the "Adviser"), a banking
association organized under the laws of the United States of America with its
principal place of business at 420 Montgomery Street, San Francisco, California
94104, and Peregrine Capital Management, Inc., a corporation organized under the
laws of the State of Minnesota with its principal place of business at 800
LaSalle Avenue, Minneapolis, Minnesota 55402 (the "Sub-Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "1940 Act") as an open-end, series management investment
company; and
WHEREAS, the Trust and the Adviser desire that the Sub-Adviser perform
investment advisory services for each of the series of the Trust listed in
Appendix A hereto as it may be amended from time to time (each a "Fund" and
collectively the "Funds"), and the Sub-Adviser is willing to perform those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust, the Adviser and Sub-Adviser agrees as follows:
Section 1. The Trust; Delivery of Documents. The Trust is engaged in the
business of investing and reinvesting its assets in securities of the type and
in accordance with the limitations specified in its Trust Instrument, By-Laws
(if any) and Registration Statement filed with the Securities and Exchange
Commission (the "Commission") under the 1940 Act and the Securities Act of 1933
(the "Securities Act"), including any representations made in the prospectus and
statement of additional information relating to the Funds contained therein and
as may be supplemented from time to time, all in such manner and to such extent
as may from time to time be authorized by the Trust's Board of Trustees (the
"Board"). The Board is authorized to issue any unissued shares in any number of
additional classes or series. The Trust has delivered copies of the documents
listed in this Section to the Sub-Adviser and will from time to time furnish the
Sub-Adviser with any amendments thereof.
1
<PAGE>
Section 2. Appointment of Sub-Adviser. Subject to the direction and
control of the Board, the Adviser manages the investment and reinvestment of the
assets of the Funds and provides for certain management and services as
specified in the Investment Advisory Agreement between the Trust and the Adviser
with respect to the Funds.
Subject to the direction and control of the Board, the Sub-Adviser shall
manage the investment and reinvestment of the assets of the Funds, and without
limiting the generality of the foregoing, shall provide the management and other
services specified below, all in such manner and to such extent as may be
directed from time to time by the Adviser.
Section 3. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets for the Funds. To carry out
such decisions, the Sub-Adviser is hereby authorized, as agent and attorney-in-
fact for the Trust, for the account of, at the risk of and in the name of the
Trust, to place orders and issue instructions with respect to those transactions
of the Funds. In all purchases, sales and other transactions in securities for
the Funds, the Sub-Adviser is authorized to exercise full discretion and act for
the Trust in the same manner and with the same force and effect as the Trust
might or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Sub-Adviser will report to the Board at each regular meeting
thereof all material changes in the Funds since the prior report, and will also
keep the Board informed of important developments affecting the Trust, the Funds
and the Sub-Adviser, and on its own initiative will furnish the Board from time
to time with such information as the Sub-Adviser may believe appropriate,
whether concerning the individual companies whose securities are held by a Fund,
the industries in which they engage, or the economic, social or political
conditions prevailing in each country in which the Fund maintains investments.
The Sub-Adviser will also furnish the Board with such statistical and analytical
information with respect to securities in the Funds as the Sub-Adviser may
believe appropriate or as the Board reasonably may request. In making purchases
and sales of securities for the Funds, the Sub-Adviser will comply with the
policies set from time to time by the Board as well as the limitations imposed
by the Trust's Trust Instrument, By-Laws (if any), Registration Statement under
the Act and the Securities Act, the limitations in the Act and in the Internal
Revenue Code of 1986, as amended applicable to the Trust and the investment
objectives, policies and restrictions of the Funds.
(c) The Sub-Adviser may from time to time employ or associate with such
persons as the Sub-Adviser believes to be appropriate or necessary to assist in
the execution of the Sub-Adviser's duties hereunder, the cost of performance of
such duties to be borne and paid by the Sub-Adviser. No obligation may be
imposed on the Trust in any such respect.
2
<PAGE>
(d) The Sub-Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Sub-Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Sub-Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Securities and Exchange Commission
and the Internal Revenue Service. The books and records pertaining to the Trust
which are in possession of the Sub-Adviser shall be the property of the Trust.
The Trust, or the Trust's authorized representatives (including the Adviser),
shall have access to such books and records at all times during the Sub-
Adviser's normal business hours. Upon the reasonable request of the Trust,
copies of any such books and records shall be provided promptly by the Sub-
Adviser to the Trust or the Trust's authorized representatives.
Section 4. Control by Board. As is the case with respect to the Adviser
under the Investment Advisory Agreement, any investment activities undertaken by
the Sub-Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Adviser on behalf of the Funds, shall at all times be
subject to the direction and control the Trust's Board.
Section 5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times comply
with:
(a) all applicable provisions of the 1940 Act, and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as it may
be amended from time to time, under the Securities Act and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as it may be
amended from time to time;
(d) the provisions of any By-laws of the Trust, if adopted and as it may
be amended from time to time, or resolutions of the Board as may be adopted from
time to time;
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Trust or the Funds;
(f) any other applicable provisions of state or federal law; and
In addition, any code of ethics adopted by the Sub-Advisers in compliance
with Rule 17j-1 under the 1940 Act shall include policies, prohibitions and
procedures which substantially conform to the recommendations regarding personal
investing approved by
3
<PAGE>
the Board of Governors of the Investment Company Institute on June 30, 1994, as
such recommendations may be amended from time to time, and that comply with any
amendments to Rule 17j-1 under the 1940 Act.
Section 6. Broker-Dealer Relationships. The Sub-Adviser is responsible for
the purchase and sale of securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Sub-Adviser's primary
consideration in effecting a security transaction will be to obtain the best
price and execution. In selecting a broker-dealer to execute each particular
transaction for a Fund, the Sub-Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker-
dealer to the Fund on a continuing basis. Accordingly, the price to the Fund in
any transaction may be less favorable than that available from another broker-
dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Trust's
Board of Trustees may from time to time determine, the Sub-Adviser shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of having caused a Fund to pay a broker
or dealer that provides brokerage and research services to the Sub-Adviser an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Sub-Adviser with respect to the Fund and to other clients of the Sub-
Adviser. The Sub-Adviser is further authorized to allocate the orders placed by
it on behalf of the Funds to brokers and dealers who also provide research or
statistical material, or other services to the Funds or to the Sub-Adviser. Such
allocation shall be in such amounts and proportions as the Sub-Adviser shall
determine and the Sub-Adviser will report on said allocations regularly to the
Board of Trustees of the Trust indicating the brokers to whom such allocations
have been made and the basis therefor.
Section 7. Expenses of the Fund. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Trust include, but are not limited to, brokerage
commissions, taxes, legal, auditing or governmental fees, the cost of preparing
share certificates, custodian, transfer agent and shareholder service agent
costs, expense of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to trustees and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
4
<PAGE>
Section 8. Compensation. As compensation for the sub-advisory services
provided under this Agreement, the Adviser shall pay the Sub-Adviser fees,
payable monthly, the annual rates indicated on Schedule A hereto, as such
Schedule may be amended or supplemented from time to time. It is understood
that the Adviser shall be responsible for the Sub-Adviser's fee for its services
hereunder, and the Sub-Adviser agrees that it shall have no claim against the
Trust or the Funds with respect to compensation under this Agreement.
Section 9. Standard of Care. The Trust and Adviser shall expect of the
Sub-Adviser, and the Sub-Adviser will give the Trust and the Adviser the benefit
of, the Sub-Adviser's best judgment and efforts in rendering its services to the
Trust, and as an inducement to the Sub-Adviser's undertaking these services at
the compensation level specified, the Sub-Adviser shall not be liable hereunder
for any mistake in judgment. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of obligations or duties hereunder on the part
of the Sub-Adviser or any of its officers, directors, employees or agents, the
Sub-Adviser shall not be subject to liability to the Trust or to any
shareholders in the Trust for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security.
Section 10. Non-Exclusivity. The services of the Sub-Adviser to the Adviser
and the Trust are not to be deemed to be exclusive, and the Sub-Adviser shall be
free to render investment advisory and administrative or other services to
others (including other investment companies) and to engage in other activities.
It is understood and agreed that officers or directors of the Sub-Adviser are
not prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
Section 11. Records. The Sub-Adviser shall, with respect to orders the Sub-
Adviser places for the purchase and sale of portfolio securities of the Funds,
maintain or arrange for the maintenance of the documents and records required
pursuant to Rule 31a-1 under the 1940 Act as well as trade tickets and
confirmations of portfolio trades and such other records as the Adviser or the
Funds' Administrator reasonably requests to be maintained. All such records
shall be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1 or any successor rule. All such records will be the
property of the Funds, and will be available for inspection and use by the Funds
and their authorized representatives (including the Adviser). The Sub-Adviser
shall promptly, upon the Trust's request, surrender to the Funds those records
which are the property of the Trust or any Fund. The Sub-Adviser will promptly
notify the Funds' Administrator if it experiences any difficulty in maintaining
the records in an accurate and complete manner.
Section 12. Term and Approval. This Agreement shall become effective with
respect to a Fund after it is approved in accordance with the express
requirements of the 1940 Act, and executed by the Trust, Adviser and Sub-Adviser
and shall thereafter
5
<PAGE>
continue from year to year, provided that the continuation of the Agreement is
approved in accordance with the requirements of the 1940 Act, which currently
requires that the continuation be approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of "a
majority of the outstanding voting securities" of the Fund (as defined in
Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's Trustees who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Trustees of the Trust), by
votes cast in person at a meeting specifically called for such purpose.
Section 13. Termination. As required under the 1940 Act, this Agreement may
be terminated with respect to a Fund at any time, without the payment of any
penalty, by vote of the Trust's Board of Trustees or by vote of a majority of a
Fund's outstanding voting securities, or by the Adviser or Sub-Adviser, on sixty
(60) days' written notice to the other party. The notice provided for herein may
be waived by the party entitled to receipt thereof. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for purposes of this paragraph having the meaning defined in Section 2(a)(4) of
the 1940 Act, as it may be interpreted by the Commission or its staff in
interpretive releases, or applied by the Commission staff in no-action letters,
issued under the 1940 Act.
Section 14. Indemnification by the Sub-Adviser. The Trust shall not be
responsible for, and the Sub-Adviser shall indemnify and hold the Trust or any
Fund of the Trust harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to the willful misfeasance, bad faith, negligent acts or reckless
disregard of obligations or duties of the Sub-Adviser or any of its officers,
directors, employees or agents.
Section 15. Indemnification by the Trust. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of duties hereunder on
the part of the Sub-Adviser or any of its officers, directors, employees or
agents, the Trust hereby agrees to indemnify and hold harmless the Sub-Adviser
against all claims, actions, suits or proceedings at law or in equity whether
brought by a private party or a governmental department, commission, board,
bureau, agency or instrumentality of any kind, arising from the advertising,
solicitation, sale, purchase or pledge of securities, whether of the Funds or
other securities, undertaken by the Funds, their officers, directors, employees
or affiliates, resulting from any violations of the securities laws, rules,
regulations, statutes and codes, whether federal or of any state, by the Funds,
their officers, directors, employees or affiliates. Federal and state securities
laws impose liabilities under certain circumstances on persons who act in good
faith, and nothing herein shall constitute a waiver or limitation of any rights
which a Fund may have and which may not be waived under any applicable federal
and state securities laws.
6
<PAGE>
Section 16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
shall be c/o Stephens Inc., 111 Center Street, Suite 300, Little Rock, Arkansas
72201, Attention R. Greg Feltus, and that of the Adviser shall be 420 Market
Street, San Francisco, California 94104, Attention: Michael J. Hogan, and that
of the Sub-Adviser shall be [blank].
Section 17. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission, or
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
this Agreement is revised by rule, regulation or order of the Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. The duties and obligations of the parties under this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
Section 18. Amendment. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. If shareholder approval of an amendment is required
under the 1940 Act, no such amendment shall become effective until approved by a
vote of the majority of the outstanding shares of the affected Funds. Otherwise,
a written amendment of this Agreement is effective upon the approval of the
Board of Trustees, the Adviser and the Sub-Adviser.
Section 19. Wells Fargo Name. The Sub-Adviser and the Trust each agree that
the name "Wells Fargo," which comprises a component of the Trust's name, is a
property right of the parent of the Adviser. The Trust agrees and consents that:
(i) it will use the words "Wells Fargo" as a component of its corporate name,
the name of any series or class, or all of the above, and for no other purpose;
(ii) it will not grant to any third party the right to use the name "Wells
Fargo" for any purpose; (iii) the Adviser or any corporate affiliate of the
Adviser may use or grant to others the right to use the words "Wells Fargo," or
any combination or abbreviation thereof, as all or a portion of a corporate or
business name or for any commercial purpose, other than a grant of such right to
another registered investment company not advised by the Adviser or one of its
affiliates; and (iv) in the event that the Adviser or an affiliate thereof is no
longer acting as investment adviser to any Fund or class of a Fund, the Trust
shall, upon request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing the words "Wells
Fargo" and following such change, shall not use the words "Wells Fargo," or any
combination thereof, as a part of its corporate name or for any other commercial
purpose, and shall use its best efforts to cause its trustees, officers
7
<PAGE>
and shareholders to take any and all actions that the Adviser may request to
effect the foregoing and to reconvey to the Adviser any and all rights to such
words.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO VARIABLE TRUST
on behalf of the Funds
By: /s/
-------------------------------------
R. Greg Feltus, President
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/
-------------------------------------
Michael J. Hogan
Executive Vice President
By:_____________________________________
C. David Messman
Vice President
PEREGRINE CAPITAL MANAGEMENT, INC.
on behalf of the Sub-Adviser
By: /s/
-------------------------------------
8
<PAGE>
Appendix A
Large Company Growth Fund
Approved by Board of Trustees: March 26, 1999
9
<PAGE>
SCHEDULE A
WELLS FARGO CORE TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the ____ day of September, 1999, as
amended ____________, by and between Wells Fargo Bank, N.A. (the "Adviser") and
Peregrine Capital Management, Inc. (the "Sub-Adviser") and
WHEREAS, the parties and Wells Fargo Variable Trust (the "Trust") have
entered into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement")
whereby the Sub-Adviser provides investment management advice to each series of
the Trust as listed in Appendix A to the Sub-Advisory Agreement (each a "Fund"
and collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid
to the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be paid to the Sub-
Adviser under the Sub-Advisory Agreement shall be calculated as follows on a
monthly basis by applying annual rate of percentage of the assets of the Large
Company Growth Fund:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Breakpoints Sub-Advisory Fee
- --------------------------------------------------------------------------------
<S> <C>
0-25M 0.36
25-50M 0.29
50-275M 0.24
more than 275M 0.15
- --------------------------------------------------------------------------------
</TABLE>
WELLS FARGO BANK, N.A.
______________________________
By: Michael J. Hogan
Executive Vice President
______________________________
By: C. David Messman
Vice President
10
<PAGE>
PEREGRINE CAPITAL MANAGEMENT,
INC.
______________________________
By: [Officer]
[Title of Officer]
11
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EXHIBIT 99.B(d)(2)(iii)
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO VARIABLE TRUST, WELLS FARGO
BANK, N.A. AND WELLS CAPITAL MANAGEMENT
This AGREEMENT is made as of this ___ day of September, 1999, between Wells
Fargo Variable Trust (the "Trust"), a business trust organized under the laws of
the State of Delaware with its principal place of business at 111 Center Street,
Little Rock, Arkansas 72201, Wells Fargo Bank, N.A. (the "Adviser"), a banking
association organized under the laws of the United States of America with its
principal place of business at 420 Montgomery Street, San Francisco, California
94104, and Wells Capital Management, a corporation organized under the laws of
the State of _____, with its principal place of business at _______________ (the
"Sub-Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "1940 Act") as an open-end, series management investment
company; and
WHEREAS, the Trust and the Adviser desire that the Sub-Adviser perform
investment advisory services for each of the series of the Trust listed in
Appendix A hereto as it may be amended from time to time (each a "Fund" and
collectively the "Funds"), and the Sub-Adviser is willing to perform those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust, the Adviser and Sub-Adviser agrees as follows:
Section 1. The Trust; Delivery of Documents. The Trust is engaged in the
business of investing and reinvesting its assets in securities of the type and
in accordance with the limitations specified in its Trust Instrument, By-Laws
(if any) and Registration Statement filed with the Securities and Exchange
Commission (the "Commission") under the 1940 Act and the Securities Act of 1933
(the "Securities Act"), including any representations made in the prospectus and
statement of additional information relating to the Funds contained therein and
as may be supplemented from time to time, all in such manner and to such extent
as may from time to time be authorized by the Trust's Board of Trustees (the
"Board"). The Board is authorized to issue any unissued shares in any number of
additional classes or series. The Trust has delivered copies of the documents
listed in this Section to the Sub-Adviser and will from time to time furnish the
Sub-Adviser with any amendments thereof.
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<PAGE>
Section 2. Appointment of Sub-Adviser. Subject to the direction and
control of the Board, the Adviser manages the investment and reinvestment of
the assets of the Funds and provides for certain management and services as
specified in the Investment Advisory Agreement between the Trust and the Adviser
with respect to the Funds.
Subject to the direction and control of the Board, the Sub-Adviser shall
manage the investment and reinvestment of the assets of the Funds, and without
limiting the generality of the foregoing, shall provide the management and other
services specified below, all in such manner and to such extent as may be
directed from time to time by the Adviser.
Section 3. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets for the Funds. To carry out
such decisions, the Sub-Adviser is hereby authorized, as agent and attorney-in-
fact for the Trust, for the account of, at the risk of and in the name of the
Trust, to place orders and issue instructions with respect to those transactions
of the Funds. In all purchases, sales and other transactions in securities for
the Funds, the Sub-Adviser is authorized to exercise full discretion and act for
the Trust in the same manner and with the same force and effect as the Trust
might or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Sub-Adviser will report to the Board at each regular meeting
thereof all material changes in the Funds since the prior report, and will also
keep the Board informed of important developments affecting the Trust, the Funds
and the Sub-Adviser, and on its own initiative will furnish the Board from time
to time with such information as the Sub-Adviser may believe appropriate,
whether concerning the individual companies whose securities are held by a Fund,
the industries in which they engage, or the economic, social or political
conditions prevailing in each country in which the Fund maintains investments.
The Sub-Adviser will also furnish the Board with such statistical and analytical
information with respect to securities in the Funds as the Sub-Adviser may
believe appropriate or as the Board reasonably may request. In making purchases
and sales of securities for the Funds, the Sub-Adviser will comply with the
policies set from time to time by the Board as well as the limitations imposed
by the Trust's Trust Instrument, By-Laws (if any), Registration Statement under
the Act and the Securities Act, the limitations in the Act and in the Internal
Revenue Code of 1986, as amended applicable to the Trust and the investment
objectives, policies and restrictions of the Funds.
(c) The Sub-Adviser may from time to time employ or associate with such
persons as the Sub-Adviser believes to be appropriate or necessary to assist in
the execution of the Sub-Adviser's duties hereunder, the cost of performance of
such duties to be borne and paid by the Sub-Adviser. No obligation may be
imposed on the Trust in any such respect.
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<PAGE>
(d) The Sub-Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Sub-Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Sub-Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Securities and Exchange Commission
and the Internal Revenue Service. The books and records pertaining to the Trust
which are in possession of the Sub-Adviser shall be the property of the Trust.
The Trust, or the Trust's authorized representatives (including the Adviser),
shall have access to such books and records at all times during the Sub-
Adviser's normal business hours. Upon the reasonable request of the Trust,
copies of any such books and records shall be provided promptly by the Sub-
Adviser to the Trust or the Trust's authorized representatives.
Section 4. Control by Board. As is the case with respect to the Adviser
under the Investment Advisory Agreement, any investment activities undertaken by
the Sub-Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Adviser on behalf of the Funds, shall at all times be
subject to the direction and control the Trust's Board.
Section 5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times comply
with:
(a) all applicable provisions of the 1940 Act, and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as it may
be amended from time to time, under the Securities Act and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as it may be
amended from time to time;
(d) the provisions of any By-laws of the Trust, if adopted and as it may
be amended from time to time, or resolutions of the Board as may be adopted from
time to time;
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Trust or the Funds;
(f) any other applicable provisions of state or federal law; and
In addition, any code of ethics adopted by the Sub-Advisers in compliance
with Rule 17j-1 under the 1940 Act shall include policies, prohibitions and
procedures which substantially conform to the recommendations regarding personal
investing approved by
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<PAGE>
the Board of Governors of the Investment Company Institute on June 30, 1994, as
such recommendations may be amended from time to time, and that comply with any
amendments to Rule 17j-1 under the 1940 Act.
Section 6. Broker-Dealer Relationships. The Sub-Adviser is responsible for
the purchase and sale of securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Sub-Adviser's primary
consideration in effecting a security transaction will be to obtain the best
price and execution. In selecting a broker-dealer to execute each particular
transaction for a Fund, the Sub-Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker-
dealer to the Fund on a continuing basis. Accordingly, the price to the Fund in
any transaction may be less favorable than that available from another broker-
dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Trust's
Board of Trustees may from time to time determine, the Sub-Adviser shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of having caused a Fund to pay a broker
or dealer that provides brokerage and research services to the Sub-Adviser an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Sub-Adviser with respect to the Fund and to other clients of the Sub-
Adviser. The Sub-Adviser is further authorized to allocate the orders placed by
it on behalf of the Funds to brokers and dealers who also provide research or
statistical material, or other services to the Funds or to the Sub-Adviser. Such
allocation shall be in such amounts and proportions as the Sub-Adviser shall
determine and the Sub-Adviser will report on said allocations regularly to the
Board of Trustees of the Trust indicating the brokers to whom such allocations
have been made and the basis therefor.
Section 7. Expenses of the Fund. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Trust include, but are not limited to, brokerage
commissions, taxes, legal, auditing or governmental fees, the cost of preparing
share certificates, custodian, transfer agent and shareholder service agent
costs, expense of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to trustees and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
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<PAGE>
Section 8. Compensation. As compensation for the sub-advisory services
provided under this Agreement, the Adviser shall pay the Sub-Adviser fees,
payable monthly, the annual rates indicated on Schedule A hereto, as such
Schedule may be amended or supplemented from time to time. It is understood
that the Adviser shall be responsible for the Sub-Adviser's fee for its services
hereunder, and the Sub-Adviser agrees that it shall have no claim against the
Trust or the Funds with respect to compensation under this Agreement.
Section 9. Standard of Care. The Trust and Adviser shall expect of the
Sub-Adviser, and the Sub-Adviser will give the Trust and the Adviser the benefit
of, the Sub-Adviser's best judgment and efforts in rendering its services to the
Trust, and as an inducement to the Sub-Adviser's undertaking these services at
the compensation level specified, the Sub-Adviser shall not be liable hereunder
for any mistake in judgment. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of obligations or duties hereunder on the part
of the Sub-Adviser or any of its officers, directors, employees or agents, the
Sub-Adviser shall not be subject to liability to the Trust or to any
shareholders in the Trust for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security.
Section 10. Non-Exclusivity. The services of the Sub-Adviser to the Adviser
and the Trust are not to be deemed to be exclusive, and the Sub-Adviser shall be
free to render investment advisory and administrative or other services to
others (including other investment companies) and to engage in other activities.
It is understood and agreed that officers or directors of the Sub-Adviser are
not prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
Section 11. Records. The Sub-Adviser shall, with respect to orders the Sub-
Adviser places for the purchase and sale of portfolio securities of the Funds,
maintain or arrange for the maintenance of the documents and records required
pursuant to Rule 31a-1 under the 1940 Act as well as trade tickets and
confirmations of portfolio trades and such other records as the Adviser or the
Funds' Administrator reasonably requests to be maintained. All such records
shall be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1 or any successor rule. All such records will be the
property of the Funds, and will be available for inspection and use by the Funds
and their authorized representatives (including the Adviser). The Sub-Adviser
shall promptly, upon the Trust's request, surrender to the Funds those records
which are the property of the Trust or any Fund. The Sub-Adviser will promptly
notify the Funds' Administrator if it experiences any difficulty in maintaining
the records in an accurate and complete manner.
Section 12. Term and Approval. This Agreement shall become effective with
respect to a Fund after it is approved in accordance with the express
requirements of the 1940 Act, and executed by the Trust, Adviser and Sub-Adviser
and shall thereafter
5
<PAGE>
continue from year to year, provided that the continuation of the Agreement is
approved in accordance with the requirements of the 1940 Act, which currently
requires that the continuation be approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of "a
majority of the outstanding voting securities" of the Fund (as defined in
Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's Trustees who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Trustees of the Trust), by
votes cast in person at a meeting specifically called for such purpose.
Section 13. Termination. As required under the 1940 Act, this Agreement
may be terminated with respect to a Fund at any time, without the payment of any
penalty, by vote of the Trust's Board of Trustees or by vote of a majority of a
Fund's outstanding voting securities, or by the Adviser or Sub-Adviser, on sixty
(60) days' written notice to the other party. The notice provided for herein may
be waived by the party entitled to receipt thereof. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for purposes of this paragraph having the meaning defined in Section 2(a)(4) of
the 1940 Act, as it may be interpreted by the Commission or its staff in
interpretive releases, or applied by the Commission staff in no-action letters,
issued under the 1940 Act.
Section 14. Indemnification by the Sub-Adviser. The Trust shall not be
responsible for, and the Sub-Adviser shall indemnify and hold the Trust or any
Fund of the Trust harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to the willful misfeasance, bad faith, negligent acts or reckless
disregard of obligations or duties of the Sub-Adviser or any of its officers,
directors, employees or agents.
Section 15. Indemnification by the Trust. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of duties hereunder on
the part of the Sub-Adviser or any of its officers, directors, employees or
agents, the Trust hereby agrees to indemnify and hold harmless the Sub-Adviser
against all claims, actions, suits or proceedings at law or in equity whether
brought by a private party or a governmental department, commission, board,
bureau, agency or instrumentality of any kind, arising from the advertising,
solicitation, sale, purchase or pledge of securities, whether of the Funds or
other securities, undertaken by the Funds, their officers, directors, employees
or affiliates, resulting from any violations of the securities laws, rules,
regulations, statutes and codes, whether federal or of any state, by the Funds,
their officers, directors, employees or affiliates. Federal and state
securities laws impose liabilities under certain circumstances on persons who
act in good faith, and nothing herein shall constitute a waiver or limitation of
any rights which a Fund may have and which may not be waived under any
applicable federal and state securities laws.
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<PAGE>
Section 16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
shall be c/o Stephens Inc., 111 Center Street, Suite 300, Little Rock, Arkansas
72201, Attention R. Greg Feltus, and that of the Adviser shall be 420 Market
Street, San Francisco, California 94104, Attention: Michael J. Hogan, and that
of the Sub-Adviser shall be [BLANK].
Section 17. Questions of Interpretation. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission, or
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
this Agreement is revised by rule, regulation or order of the Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. The duties and obligations of the parties under this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
Section 18. Amendment. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. If shareholder approval of an amendment is required
under the 1940 Act, no such amendment shall become effective until approved by a
vote of the majority of the outstanding shares of the affected Funds. Otherwise,
a written amendment of this Agreement is effective upon the approval of the
Board of Trustees, the Adviser and the Sub-Adviser.
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<PAGE>
Section 19. Wells Fargo Name. The Sub-Adviser and the Trust each agree
that the name "Wells Fargo," which comprises a component of the Trust's name, is
a property right of the parent of the Adviser. The Trust agrees and consents
that: (i) it will use the words "Wells Fargo" as a component of its corporate
name, the name of any series or class, or all of the above, and for no other
purpose; (ii) it will not grant to any third party the right to use the name
"Wells Fargo" for any purpose; (iii) the Adviser or any corporate affiliate of
the Adviser may use or grant to others the right to use the words "Wells Fargo,"
or any combination or abbreviation thereof, as all or a portion of a corporate
or business name or for any commercial purpose, other than a grant of such right
to another registered investment company not advised by the Adviser or one of
its affiliates; and (iv) in the event that the Adviser or an affiliate thereof
is no longer acting as investment adviser to any Fund or class of a Fund, the
Trust shall, upon request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing the words "Wells
Fargo" and following such change, shall not use the words "Wells Fargo," or any
combination thereof, as a part of its corporate name or for any other commercial
purpose, and shall use its best efforts to cause its trustees, officers and
shareholders to take any and all actions that the Adviser may request to effect
the foregoing and to reconvey to the Adviser any and all rights to such words.
8
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IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO VARIABLE TRUST
on behalf of the Funds
By: /s/
-----------------------------------------
R. Greg Feltus, President
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/
----------------------------------------
Michael J. Hogan
Executive Vice President
By:________________________________________
C. David Messman
Vice President
WELLS CAPITAL MANAGEMENT
on behalf of the Sub-Adviser
By: /s/
--------------------------------------
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Appendix A
Variable Trust Funds
--------------------
Corporate Bond Fund
Equity Value Fund
Growth Fund
Income Equity Fund
International Equity Fund
Money Market Fund
Small Cap Fund
Approved by Board of Trustees: March 26, 1999
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SCHEDULE A
WELLS FARGO VARIABLE TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the ____ day of September, 1999, as
amended ____________, by and between Wells Fargo Bank, N.A. (the "Adviser") and
Wells Capital Management, Inc. (the "Subadviser") and
WHEREAS, the parties and Wells Fargo Variable Trust (the "Trust") have
entered into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement")
whereby the Sub-Adviser provides investment management advice to each series of
the Trust as listed in Schedule A to the Sub-Advisory Agreement (each a "Fund"
and collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid
to the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be paid to the Sub-
Adviser under the Sub-Advisory Agreement shall be calculated as follows on a
monthly basis by applying the following annual rates listed for each Fund listed
in Appendix A.
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/
----------------------------------------
Michael J. Hogan
Executive Vice President
By: ________________________________________
C. David Messman
Vice President
WELLS CAPITAL MANAGEMENT
on behalf of the Sub-Adviser
By: /s/
----------------------------------------
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<PAGE>
Appendix A
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Name of Fund Sub-advisory Rate
- -----------------------------------------------------------------------------------------
<S> <C>
Corporate Bond Fund 0-400M 0.15
400-800M 0.125
more than 800M 0.10
- -----------------------------------------------------------------------------------------
Equity Value Fund 0-200M 0.25
200-400M 0.20
more than 400M 0.15
- -----------------------------------------------------------------------------------------
Growth Fund 0-200M 0.25
200-400M 0.20
more 400M 0.15
- -----------------------------------------------------------------------------------------
Income Equity Fund 0-200M 0.25
200M-400M 0.20
more than 400M 0.15
- -----------------------------------------------------------------------------------------
International Equity Fund 0-400M 0.35
400-800M 0.25
more than 800M 0.15
- -----------------------------------------------------------------------------------------
Money Market Fund 0-1000M 0.05
more than 1000M 0.04
- -----------------------------------------------------------------------------------------
Small Cap Fund 0-200M 0.25
200-400M 0.20
more than 400M 0.15
- -----------------------------------------------------------------------------------------
</TABLE>
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EXHIBIT 99.B(e)
DISTRIBUTION AGREEMENT
Wells Fargo Variable Trust
111 Center Street
Little Rock, Arkansas 72201
THIS AGREEMENT is made as of this ___ day of September, 1999, by and between
Wells Fargo Variable Trust, a Delaware business trust (the "Trust") and
Stephens, Inc., an Arkansas corporation (the "Distributor").
WHEREAS, the Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Distributor to render distribution
services to the Trust's investment portfolios listed on Appendix A
(individually, a "Fund" and collectively, the "Funds"), and the Distributor is
willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties agree as follows:
1. As the Trust's agent, the Distributor shall be the exclusive
distributor for the shares of the Fund registered under the Securities Act of
1933 (the "1933 Act"). In addition to providing all share distribution services
for the Funds, the Distributor will maintain a service desk dedicated to the
Funds, and will maintain and preserve all records of the Funds, including
financial and corporate records.
2. The Trust shall sell through the Distributor, as the Trust's agent,
and deliver, upon the terms set forth herein, Fund shares that the Distributor
orders from the Trust and for which the Distributor has received and confirmed
unconditional purchase orders. All orders from the Distributor shall be subject
to acceptance and confirmation by the Trust. The Trust shall have the right, at
its election, to deliver either shares issued upon original issue or treasury
shares.
3. As the Trust's agent, the Distributor may sell and distribute Fund
shares in such manner not inconsistent with the provisions hereof as the
Distributor may determine from time to time. In that connection the Distributor
shall comply with all laws, rules and regulations applicable to it, including,
without limiting the generality of the foregoing, all applicable rules or
regulations under the 1933 Act, the 1940 Act and of any securities association
registered under the Securities Exchange Act of 1934 (the "1934 Act").
4. The Trust reserves the right to sell Fund shares to purchasers to
the extent that it or the transfer agent for Fund shares receives purchase
applications therefor. The Distributor's right to accept purchase orders for
Fund shares or to make sales thereof shall not apply to Fund shares that may be
offered by the Trust to shareholders for the reinvestment of cash distributed to
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<PAGE>
shareholders by the Trust or Fund shares that may otherwise be offered by the
Trust to shareholders, unless the Distributor is otherwise notified by the
Trust.
5. All shares offered for sale and sold by the Distributor shall be
offered for sale and sold by the Distributor to or through securities dealers or
banks and other depository institutions having agreements with the Distributor
("Selling Agents") upon the terms and conditions set forth in paragraph 7(b)
hereof or to investors at the price per share (the "offering price", which is
the net asset value per share plus the applicable sales charge, if any)
specified and determined as provided in the Prospectus (the "Prospectus")
included in the Trust's Registration Statement, as amended from time to time,
under the 1933 Act and the 1940 Act (the "Registration Statement"), relating to
the offering of its shares for sale. If the offering price is not an exact
multiple of one cent, it shall be adjusted to the nearest full cent. The Trust
shall determine and furnish promptly to the Distributor a statement of the
offering price at least once on each day on which the Prospectus states the
Trust is required to determine the Trust's net asset value for the purpose of
pricing purchase orders. Each offering price shall become effective at the time
and shall remain in effect during the period specified in the statement. Each
such statement shall show the basis of its computation. For purposes of
establishing the offering price, the Trust shall consider a purchase order to
have been presented to it at the time it was originally entered by the
Distributor for transmission to it, provided the original purchase order and the
Distributor's fulfilling order to the Trust are appropriately time stamped or
evidenced to show the time of original entry and that the Distributor's
fulfilling order to the Trust is received by the Trust within a time deemed by
it to be reasonable after the purchase order was originally entered. Purchases
of shares shall be made for full and fractional shares, carried to the third
decimal place.
6. Ownership of Fund shares sold hereunder shall be registered in such
names and denominations as are specified in writing to the Trust or to its agent
designated for the purpose. No certificates for shares of the Fund will be
issued.
7. (a) The Distributor shall from time to time employ or associate
with it such persons as it believes necessary to assist it in carrying out its
obligations under this agreement. The compensation of such persons shall be paid
by the Distributor.
(b) The Distributor shall have the right to enter into selling
agreements with Selling Agents of its choice for the sale or marketing of Fund
shares at the offering price and upon the terms and conditions set forth in the
Prospectus. The initial form of selling agreement is attached hereto as Appendix
B. The Distributor may amend those agreements, or modify the form of agreement,
only upon approval of the Trust.
(c) The Distributor shall pay all expenses incurred in connection
with its qualification as a dealer or broker under Federal or state laws.
(d) The Distributor shall pay for all expenses incurred in
connection with (i) printing and distributing such number of copies of the
Prospectus as the Distributor deems necessary for use in connection with
offering Fund shares to prospective investors, (ii) preparing, printing and
distributing any other literature and advertising deemed appropriate by the
Distributor for use in connection with offering Fund shares for sale and (iii)
all other expenses
2
<PAGE>
incurred in connection with the sale of Fund shares as contemplated by this
agreement, except as otherwise specifically provided in this agreement. In
addition, it is understood and agreed that, so long as a plan of distribution of
the Fund adopted pursuant to Rule 12b-1 of the 1940 Act (the "Plan") continues
in effect, any expenses incurred by the Distributor hereunder may be paid from
amounts received by it from the Fund under the Plan. So long as the Plan
continues in effect, the Distributor shall be entitled to receive reimbursement
from the Trust under the Plan for actual expenses incurred in connection with
the Fund to the extent such expenses are reimbursable under the Plan. The
Treasurer of the Trust shall provide to the Board of Trustees of the Trust and
the Board of Trustees shall review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were made.
(e) The Trust shall pay all expenses incurred in connection with (i)
the preparation, printing and distribution to stockholders of the Prospectus and
reports and other communications to Fund shareholders; (ii) registrations of
Fund shares under the 1933 Act and the Fund under the 1940 Act; (iii) amendments
to the Registration Statement; (iv) qualification of Fund shares for sale in
jurisdictions designated by the Distributor; (v) qualification of the Trust as a
dealer or broker under the laws of jurisdictions designated by the Distributor;
(vi) qualification of the Trust as a foreign corporation authorized to do
business in any jurisdiction if the Distributor determines that such
qualification is necessary or desirable for the purpose of facilitating sales of
Fund shares; (vii) maintaining facilities for the issue and transfer of Fund
shares; (viii) supplying information, prices and other data to be furnished by
the Trust under this agreement; and (ix) original issue taxes or transfer taxes
applicable to the sale or delivery of Fund shares.
(f) The Trust shall execute all documents and furnish any
information which may be reasonably necessary in connection with the
qualification of Fund shares of the Trust for sale in a jurisdiction designated
by the Distributor.
(g) The Trust shall pay to the Distributor the amount that is
payable pursuant to, and in accordance with, the Distribution Plan applicable to
a Fund or class of shares of a Fund, or the maximum amount payable under
applicable laws, regulations and rules, whichever is less. The actual amount
payable with respect to such Fund in any month is to be determined by mutual
agreement.
8. The Trust shall furnish the Distributor from time to time, for use
in connection with the sale of Fund shares, such written information with
respect to the Trust as the Distributor may reasonably request. In each case
such written information shall be signed by an authorized officer of the Trust.
The Trust represents and warrants that such information, when signed by one of
its officers, shall be true and correct. The Trust shall also furnish to the
Distributor copies of its reports to its stockholders and such additional
information regarding the Trust's financial condition as the Distributor may
reasonably request from time to time.
9. The Registration Statement and the Prospectus have been or will be,
as the case may be, prepared in conformity with the 1933 Act, the 1940 Act and
the rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "SEC"). The Trust represents and warrants to the
Distributor that the Registration Statement and the Prospectus contain or will
contain all statements required to be stated therein in accordance with
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<PAGE>
the 1933 Act, the 1940 Act and the Rules and Regulations, that all statements of
fact contained or to be contained therein are or will be true and correct at the
time indicated or the effective date, as the case may be, and that neither the
Registration Statement nor the Prospectus, when it shall become effective under
the 1933 Act or be authorized for use, shall include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of Fund
shares. The Trust shall from time to time file such amendment or amendments to
the Registration Statement and the Prospectus as, in the light of future
developments, shall, in the opinion of the Trust's counsel, be necessary in
order to have the Registration Statement and the Prospectus at all times contain
all material facts required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of Fund shares. If the Trust
shall not file such amendment or amendments within 15 days after receipt by the
Trust of a written request from the Distributor to do so, the Distributor may,
at its option, terminate this agreement immediately. The Trust shall not file
any amendment to the Registration Statement or the Prospectus without giving the
Distributor reasonable notice thereof in advance, provided that nothing in this
agreement shall in any way limit the Trust's right to file at any time such
amendments to the Registration Statement or the Prospectus as the Trust may deem
advisable. The Trust represents and warrants to the Distributor that any
amendment to the Registration Statement or the Prospectus filed hereafter by the
Trust will, when it becomes effective under the 1933 Act, contain all statements
required to be stated therein in accordance with the 1933 Act, the 1940 Act and
the Rules and Regulations, that all statements of fact contained therein will,
when the same shall become effective, be true and correct, and that no such
amendment, when it becomes effective, will include an untrue statement of a
material fact or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of Fund shares.
10. Subject to the provisions of paragraph 7, the Trust shall prepare
and furnish to the Distributor from time to time such number of copies of the
most recent form of the Prospectus filed with the SEC as the Distributor may
reasonably request. The Trust authorizes the Distributor and Selling Agents to
use the Prospectus, in the form furnished to the Distributor from time to time,
in connection with the sale of Fund shares. The Trust shall indemnify, defend
and hold harmless the Distributor, its officers and partners and any person who
controls the Distributor within the meaning of the 1933 Act, from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Distributor, its officers or
partners or any such controlling person, may incur under the 1933 Act, the 1940
Act, other statutes, the common law or otherwise, arising out of or based upon
any alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus or arising out of or based upon any alleged omission
to state a material fact required to be stated in either thereof or necessary to
make the statements in either thereof not misleading. Notwithstanding the
foregoing, this indemnity agreement, to the extent that it might require
indemnity of any person who is an officer or partner of the Distributor and who
is also a director of the Trust, shall not inure to the benefit of such officer
or partner unless a court of competent jurisdiction shall determine, or it shall
have been determined by controlling precedent, that such result would not be
against public policy as expressed in the 1933 Act or the 1940 Act, and in no
event shall anything contained herein be so construed as to protect the
Distributor against any liability to the Trust or its stockholders to which the
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith or negligence in the performance of its duties or by reason of its
reckless
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<PAGE>
disregard of its obligations and duties under this agreement. This indemnity
agreement is expressly conditioned upon the Trust's being notified of any action
brought against the Distributor, its officers or partners or any such
controlling person, which notification shall be given by letter or by telegram
addressed to the Trust at its principal office in Little Rock, Arkansas, and
sent to the Trust by the person against whom such action is brought within ten
days after the summons or other first legal process shall have been served. The
failure to notify the Trust of any such action shall not relieve the Trust from
any liability which it may have to the person against whom such action is
brought by reason of any such alleged untrue statement or omission otherwise
than on account of the indemnity agreement contained in this paragraph. The
Trust shall be entitled to assume the defense of any suit brought to enforce any
such claim, demand or liability, but, in such case, the defense shall be
conducted by counsel chosen by the Trust and approved by the Distributor. If the
Trust elects to assume the defense of any such suit and retain counsel approved
by the Distributor, the defendant or defendants in such suit shall bear the fees
and expenses of any additional counsel retained by any of them, but in case the
Trust does not elect to assume the defense of any such suit, or in case the
Distributor does not approve of counsel chosen by the Trust, the Trust will
reimburse the Distributor, its officers and partners or the controlling person
or persons named as defendant or defendants in such suit, for the fees and
expenses of any counsel retained by the Distributor or them. In addition, The
Distributor shall have the right to employ one separate counsel to represent it,
its officers and partners and any such controlling person who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Distributor against the Trust hereunder if in the reasonable judgment of
the Distributor it is advisable because of existing or potential differing
interests between the Distributor, its officers and partners or such controlling
person and the Trust in the conduct of the defense of such action, for the
Distributor, its officers and partners or such controlling person to be
represented by separate counsel, in which event the fees and expenses of such
separate counsel shall be borne by the Trust. This indemnity agreement and the
Trust's representations and warranties in this agreement shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of the Distributor, its officers and partners or any such controlling
person and shall survive the delivery of any shares as provided in this
agreement. This indemnity agreement shall inure exclusively to the benefit of
the Distributor and its successors, the Distributor's officers and partners and
their respective estates and any such controlling persons and their successors
and estates. The Trust shall promptly notify the Distributor of the commencement
of any litigation or proceedings against it in connection with the issue and
sale of any Fund shares.
11. The Distributor agrees to indemnify, defend and hold harmless the
Trust, its officers and directors and any person who controls the Trust within
the meaning of the 1933 Act, from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in connection
therewith) which the Trust, its officers or directors or any such controlling
person, may incur under the 1933 Act, the 1940 Act, other statutes, the common
law or otherwise, but only to the extent that such liability or expense incurred
by the Trust, its officers or directors or such controlling person resulting
from such claims or demands shall arise out of or be based upon (a) any alleged
untrue statement of a material fact contained in information furnished in
writing by the Distributor to the Trust specifically for use in the Registration
Statement or the Prospectus or shall arise out of or be based upon any alleged
omission required to be stated in the Registration Statement or the Prospectus
or necessary to make such information not misleading,
5
<PAGE>
(b) any alleged act or omission on the Distributor's part as the Trust's agent
that has not been expressly authorized by the Trust in writing, or (c) any
alleged willful misfeasance, bad faith or negligence in the performance of the
Distributor's obligations and duties under the Agreement or by reason of its
alleged reckless disregard thereof. This indemnity agreement is expressly
conditioned upon the Distributor's being notified of any action brought against
the Trust, its officers and directors or any such controlling person, which
notification shall be given by letter or telegram, addressed to the Distributor
at its principal office in Little Rock, Arkansas, and sent to the Distributor by
the person against whom such action is brought, within 10 days after the summons
or other first legal process shall have been served. The failure to notify the
Distributor of any such action shall not relieve the Distributor from any
liability which it may have to the Trust, its officers or directors or such
controlling person by reason of any such alleged misstatement or omission on the
Distributor's part otherwise than on account of the indemnity agreement
contained in this paragraph. The Distributor shall have a right to control the
defense of such action with counsel of its own choosing and approved by the
Trust if such action is based solely upon such alleged misstatement or omission
on the Distributor's part, and in any other event the Trust, its officers and
directors or such controlling person shall each have the right to participate in
the defense or preparation of the defense of any such action at their own
expense.
12. No Fund shares shall be sold through the Distributor or by the Trust
under this agreement and no orders for the purchase of Fund shares shall be
confirmed or accepted by the Trust if and so long as the effectiveness of the
Registration Statement shall be suspended under any of the provisions of the
1933 Act. Nothing contained in this paragraph 12 shall in any way restrict,
limit or have any application to or bearing upon the Trust's obligation to
redeem Fund shares from any shareholder in accordance with the provisions of its
Declaration of Trust. The Trust will use its best efforts at all times to have
Fund shares effectively registered under the 1933 Act.
13. The Trust agrees to advise the Distributor immediately:
(a) of any request by the SEC for amendments to the Registration
Statement or the Prospectus or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the Prospectus
under the 1933 Act or the initiation of any proceedings for that purpose;
(c) of the happening of any material event that makes untrue any
statement made in the Registration Statement or the Prospectus or that requires
the making of a change in either thereof in order to make the statements therein
not misleading; and
(d) of any action of the SEC with respect to any amendments to the
Registration Statement or the Prospectus that may from time to time be filed
within the SEC under the 1933 Act or the 1940 Act.
14. Insofar as they concern the Trust, the Trust shall comply with all
applicable laws, rules and regulations, including, without limiting the
generality of the foregoing, all rules or
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<PAGE>
regulations made or adopted pursuant to the 1933 Act, the 1940 Act or by any
securities association registered under the 1934 Act.
15. The Distributor may, if it desires and at its own cost and expense,
appoint or employ agents to assist it in carrying out its obligations under this
agreement, but no such appointment or employment shall relieve the Distributor
of any of its responsibilities or obligations to the Trust under this agreement.
16. The following provisions shall apply with respect to the sale by
Distributor of Class B Shares of any Fund, notwithstanding any other provision
herein to the contrary:
(a) Distributor shall have the obligation to pay all applicable
dealer allowances ("B Share Allowances") to which Selling Agents are entitled to
receive in connection with the sale of Class B Shares, including any such B
Share Allowances, or portions thereof, to which registered representatives of
Distributor are entitled to receive.
(b) To the extent that Distributor engages and uses a third-party to
finance its obligation to pay B Share Allowances as set forth in this section,
Distributor shall have the right to assign to such third-party all or any
portion of Distributor's right hereunder to receive fees in connection with the
sale of Class B Shares and to direct the Company, upon written notice, to make
direct payment of these fees to such party, free and clear of any rights to
offset or claims of the Trust or any Fund against Distributor.
(c) The Trust acknowledges that, under the applicable Distribution
Plan for Class B Shares of the Funds, any payments that the Funds make to
Distributor with respect to Class B Shares shall continue, in accordance with,
and subject to, the applicable terms relating to the Class B Shares, regardless
of whether Distributor is acting as the principal underwriter for the Trust (and
affected Funds); provided that the Distribution Plan for the Class B Shares has
not been terminated or modified in a way which affects the payment of such
amounts.
17. Subject to the provisions of paragraph 9, this agreement shall
continue in effect until such time as there shall remain no shares registered
under the 1933 Act, provided that this agreement shall continue in effect for a
period of more than one year from the date hereof only so long as such
continuance is specifically approved at least annually in accordance with the
1940 Act and the rules thereunder. This agreement shall terminate automatically
in the event of its assignment (as defined in the 1940 Act). This agreement
may, in any event, be terminated at any time, without the payment of any
penalty, by the Trust upon 60 days' written notice to the Distributor or by the
Distributor at any time after the second anniversary of the effective date of
this agreement on 60 days' written notice to the Trust.
18. Nothing in this Agreement shall require the Trust to take any action
contrary to any provision of its Declaration of Trust or to any applicable
statute or regulation.
19. Miscellaneous.
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Trust or the Distributor shall be
sufficiently given if addressed to
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<PAGE>
that party and received by it at its office set forth below or at such other
place as it may from time to time designate in writing.
To the Trust:
Wells Fargo Variable Trust
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank, Secretary
With a copy to:
Wells Fargo Bank, N.A.
525 Market Street, 12th Floor
San Francisco, CA 94105
Attention: C. David Messman, Vice President and Senior Counsel
To the Distributor:
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank, Senior Vice President
(b) This Agreement shall extend to and be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be subject to assignment (as that term is defined under the
1940 Act).
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and which collectively shall be
deemed to constitute only one agreement.
(e) If any provision of this Agreement is declared to be prohibited
or unenforceable, the remaining provisions of this Agreement shall continue to
be valid and fully enforceable.
In witness whereof, the parties have caused this Agreement to be executed by
their duly authorized officers as of the day and year first above written.
8
<PAGE>
WELLS FARGO VARIABLE TRUST
By: ______________________________
Richard H. Blank
Chief Operating Officer
STEPHENS INC.
By: ______________________________
R. Greg Feltus
Executive Vice President
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Appendix A
----------
Funds of Wells Fargo Variable Trust Covered by This Agreement
---------------------------------
Variable Trust Funds
---------------------------------
Asset Allocation Fund
---------------------------------
Corporate Bond Fund
---------------------------------
Equity Value Fund
---------------------------------
Growth Fund
---------------------------------
Income Equity Fund
---------------------------------
International Equity Fund
---------------------------------
Large Company Growth Fund
---------------------------------
Money Market Fund
---------------------------------
Small Cap Fund
---------------------------------
Each of the Funds is subject to a maximum 0.25% distribution fee.
Approved by Board of Trustees: March 26, 1999
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Appendix B
----------
Form of Selling Group Agreement
STEPHENS INC.
111 Center Street
Little Rock, Arkansas 72201
WELLS FARGO VARIABLE TRUST
________________________________
________________________________
________________________________
Ladies and Gentlemen:
We are the exclusive distributor of the shares of capital stock of the
several portfolios (each a "Fund" and collectively the "Funds") of Wells Fargo
Variable Trust (the "Trust"), a Delaware business trust, pursuant to the terms
of a Distribution Agreement between us and the Trust. We invite you to
participate in the distribution of the shares of capital stock of certain of the
Funds (as identified to you from time to time) ("Shares") on the following
terms:
1. You represent and warrant that you are either (a) a registered broker
or dealer pursuant to the Securities Exchange Act of 1934 ("1934 Act"),
and a member of the National Association of Securities Dealers, Inc.
(the "NASD"), and that you will maintain such registration and
membership and abide by the Rules of Fair Practice, the Constitution and
By-Laws of the NASD and all other rules and regulations that are now or
may become applicable to you and your activities hereunder; or (b) a
bank exempt from registration as a broker-dealer under the federal
securities laws, and that you will conduct your activities hereunder and
otherwise in a manner so as to remain exempt from such registration and
in compliance with the provisions of the Glass-Steagall Act and all
other rules and regulations that are now or may become applicable to you
and your activities hereunder.
2. You represent and warrant that you are registered or qualified to act
as a broker or dealer (or are exempt from being required to register or
qualify as such) in the states or other jurisdictions where you transact
business. You agree that you will maintain such registrations or
qualifications in full force and effect throughout the term of this
Agreement (and if an exemption becomes no longer available, to
immediately so qualify or register). You agree to comply with all
applicable federal, state and local laws, including, without limiting
the generality of the foregoing, the Securities Act of 1933, the 1934
Act and the Investment Company Act of 1940, and all applicable rules or
regulations thereunder. You agree to offer and sell Shares only in the
states and other jurisdictions in which we have indicated that such
offers and sales can be made and in which you are qualified to so act.
You further agree not to
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<PAGE>
offer or sell Shares outside the several states, territories and
possessions of the United States.
3. You agree to offer and sell Shares of the Funds to your customers
only at the applicable public offering price (which is the net asset
value per share plus the applicable sales load, if any) then in effect
as described in the respective Fund's then currently effective
prospectus, including any supplements or amendments thereto
("Prospectus"). You may establish and charge reasonable service fees to
your clients for processing exchange or redemption orders for Shares,
provided you disclose the fees to your clients.
4. Purchase orders for Shares ("Purchase Orders") received from you and
accepted by us will be executed at the applicable public offering price
next determined after our receipt and acceptance of such Purchase Order,
in accordance with the Prospectuses. All Purchase Orders must meet the
applicable minimum initial and subsequent investment requirements as
described and set forth in the Prospectuses. You agree to date and time
stamp all orders received by you and to promptly forward all Purchase
Orders to us or the Trust's Transfer Agent in time for processing at the
public offering price next determined after receipt by you. You agree
that you will not withhold Purchase Orders or purchase shares in
anticipation of receiving Purchase Orders from customers. The
procedures applicable to the handling of Purchase Orders shall be
subject to such instructions as may be issued by us from time to time.
5. All Purchase Orders are subject to acceptance by us and confirmation
by the Trust or its Transfer Agent. We reserve the right in our sole
discretion to reject any Purchase Order, including contingent or
conditional Purchase Orders, in whole or in part. We also reserve the
right in our discretion without notice to you to suspend sales or
withdraw the offering of Shares, in whole or in part, or to cancel this
Agreement.
6. You agree to purchase Shares only through us or from your customers.
Purchases through us shall be made only for the purpose of covering
Purchase Orders already received from your customers or for your bona
fide investment. Purchases from your customers, if any, shall be at a
price that is not less than the applicable net asset value quoted by the
Trust at the time of such purchase as determined in the manner set forth
in the Prospectuses. All transactions in Shares shall be subject to the
terms and provisions set forth in the Prospectuses.
7. Shares purchased hereunder will not be issued in certificated form
except where permitted by the applicable Prospectus, upon written
request by you or your customer, and only when payment and proper
registration or transfer instructions have been received by the Trust or
its Transfer Agent.
8. If a customer's account with a Fund is established without the
customer signing an Account Application, you represent that the
instructions relating to the registration and shareholder options
selected (whether on the Account Application, in some other
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<PAGE>
document or orally) are in accordance with the customer's instructions,
and you shall be responsible to the Trust, its Transfer Agent and us for
any losses, claims, damages or expenses resulting from acting upon such
instructions.
9. If payment for Shares purchased hereunder is not received or made
within the applicable time period specified in the governing Prospectus,
or if you cancel any order at any time after our acceptance of the
Purchase Order, we reserve the right to cancel the sale (or, at our
option, to redeem the Shares), in which case you shall be responsible to
the Trust, its Transfer Agent and us for any losses, claims, damages or
expenses resulting from your failure to make payment or cancellation as
aforesaid.
10. You have no authority whatsoever to act as agent for, partner of or
participant in a joint venture with the Trust or us or any other member
of the Selling Group, and nothing in this Agreement shall constitute
either of us the agent of the other or shall constitute you or the Trust
the agent of each other. In all transactions in the Shares, you are
acting as principal or as agent for your customer and we are acting as
agent for the Trust and not as principal. We are not responsible for
registering or qualifying the Shares for sale in any jurisdiction. We
also are not responsible for the issuance, form, validity,
enforceability or value of the Trust's Shares.
11. No person is authorized to act for us or to make any representations
concerning the Trust or its Shares except those contained in the
Prospectuses and the Statements of Additional Information, and in sales
literature issued by us supplemental to the Prospectuses and Statements
of Additional Information ("Sales Literature"). In purchasing Shares
through us, you shall rely solely upon the representations contained in
the Prospectuses, the Statements of Additional Information and the Sales
Literature. We will furnish you, upon request, with a reasonable
quantity of copies of the Prospectuses, Statements of Additional
Information, Sales Literature and amendments and supplements thereto.
You agree that if and when we supply you with copies of any supplements
to any Prospectus, you will affix copies of such supplements to all such
Prospectuses in your possession, that thereafter you will distribute
such Prospectuses only with such supplements affixed, and that you will
present Purchase Orders only from persons who have received Prospectuses
with such supplements affixed. You agree not to use Sales Literature in
connection with the solicitation of Purchase Orders unless accompanied
or preceded by the relevant Prospectus.
12. As compensation, you shall be entitled to receive that portion of
the sales load assessed on the purchase of the Shares equal to the
dealer allowance, as set forth in the Prospectuses. Sales loads and
dealer allowances shall take into account volume discounts, rights of
accumulation, letters of intent, certain reinvestments of redemption
proceeds, certain reductions for designated persons or groups and
exchanges and any other arrangements for the reduction or elimination of
sales loads and dealer allowances, all as described in the Prospectuses.
You are responsible for obtaining from your customer such information as
you deem necessary to establish a reasonable basis for believing that
the customer is eligible for any claimed reductions in or elimination of
sales loads, and for obtaining from your customer requisite tax
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<PAGE>
identification numbers and certifications. By transmitting Purchase
Orders to us or to the Trust's Transfer Agent, you shall be deemed to
have represented and warranted to us, the Trust, and its Transfer Agent
that you have a reasonable basis for believing, and do believe, that the
customer is eligible for such reduction or elimination and that, unless
you advise us otherwise, you have obtained the requisite tax
identification numbers and certifications.
13. As further compensation for distribution-related services performed
by you in connection with the distribution of Shares of certain of the
Funds which have distribution plans in effect under Rule 12b-1 under the
1940 Act that provide for compensation for distribution-related
services, you also may receive a periodic fee based upon a percentage of
the average daily net asset value of Shares of the respective Funds
attributable to you, in accordance with the applicable Distribution
Plans as disclosed in the governing Prospectus.
14. If any Shares are repurchased or tendered for redemption by the
Trust within seven business days after acceptance by us or the Trust of
the Purchase Order for such Shares, you shall forfeit the right to and
promptly refund to us the full dealer allowance paid or reallowed to you
in connection with the original Purchase Order.
15. You agree to indemnify the Trust, its Transfer Agent and us for any
losses, claims, damages or expenses arising out of or in connection with
any wrongful act or omission by you, your representatives, agents or
sub-agents not in accordance with this Agreement, provided that such
losses, claims, damages or expenses were not caused by the indemnitees'
willful misfeasance, bad faith or gross negligence.
16. This Agreement shall become effective upon receipt by us of a signed
copy hereof, and shall cancel and supersede any and all prior Selling
Group Agreements or similar agreements or contracts relating to the
distribution of the Shares. Any amendments to this Agreement shall be
deemed accepted by you, and will take effect with respect to, and on the
date of, any orders placed by you after the date set forth in any notice
of amendment sent by us to you. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Arkansas.
17. This Agreement may be terminated upon written notice by either party
at any time, and shall automatically terminate upon its attempted
assignment by you, whether by operation of law or otherwise, or by us
otherwise than by operation of law. We reserve the right to cancel this
Agreement at any time without notice if any Shares are offered for sale
by you at less than the applicable public offering price as set forth in
the Prospectuses.
18. This Agreement is in all respects subject to statements regarding
the sale and repurchase or redemption of Shares made in the
Prospectuses, and to the Rules of Fair Practice of the NASD, which shall
control and override any provision to the contrary in this Agreement.
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<PAGE>
19. All communications to us shall be sent to us by mail or by confirmed
telefacsimile at 111 Center Street, Little Rock, Arkansas 72201. Any
notice to you shall be duly given if sent by mail or by confirmed
telefacsimile to you at your address as set forth on the signature page
hereof. Any party that changes its address shall promptly notify the
other party in accordance with the terms of this paragraph.
Date: ____________
STEPHENS INC.
By: ________________________
Name: R. Greg Feltus
Title: President
The undersigned accepts this invitation to become a member of the Selling
Group and agrees to abide by the foregoing terms and conditions.
Date: _______________
Address:
Telephone:
Telefacsimile:
By: ______________________ By: ______________________
(Authorized Signature) (Authorized Signature)
Name: ________________ Name: ________________
Title: ______________ Title: ______________
Please execute this Agreement in duplicate and return one copy to
Stephens Inc.
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EXHIBIT 99.B(g)(1)
CUSTODY AGREEMENT
Wells Fargo Variable Trust
111 Center Street
Little Rock, Arkansas 72201
This Agreement is made as of this 12th day of December, 1997 (the
"Agreement"), by and between WELLS FARGO VARIABLE TRUST (the "Trust"), on behalf
of the Funds listed on Appendix F hereto, as such Appendix may be revised from
time to time (each a "Fund" and, collectively, the "Funds"), and BARCLAYS GLOBAL
INVESTORS, N.A. (the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth, the
Trust and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meaning:
1. "Authorized Person" shall be deemed to include the treasurer, the
controller or any other person, whether or not any such person is an Officer or
employee of the Trust, duly authorized by the Board of Trustees ("Trustees") to
give Oral Instructions and Written Instructions on behalf of a Fund and listed
in the Certificate attached hereto as Appendix A or such other Certificate as
may be received from time to time by the Custodian.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency securities, its successor(s)
and its nominee(s).
3. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf of a
Fund by any two Officers of the Trust.
4. "Clearing Member" shall mean a registered broker-dealer that is a
member of a national securities exchange qualified to act as a custodian for an
investment company, or any broker-dealer reasonably believed by the Custodian to
be such a clearing member.
5. "Depository" shall mean The Depository Trust Company ("DTC"),
Participants Trust Company ("PTC"), and any other clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, its successor(s) and its nominee(s), provided the
Custodian has received a certified copy of a resolution of the Board of Trustees
specifically approving deposits in DTC, PTC or such other clearing agency. The
term "Depository" shall further mean and include any person authorized to act as
a depository pursuant to Section 17, Rule 17f-4 or Rule 17f-5 thereunder, under
the Investment Company Act of 1940, its successor(s) and its
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nominee(s), specifically identified in a certified copy of a resolution of the
Board of Trustees approving deposits therein by the Custodian.
6. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, or Clearing Member, or in the name of the Trust or a Fund for
the benefit of a broker, dealer, or Clearing Member, or otherwise, in accordance
with an agreement between the Trust on behalf of a Fund, the Custodian and a
broker, dealer, or Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or moneys of
a Fund shall be deposited and withdrawn from time to time in connection with
such transactions as a Fund may from time to time determine. Securities held in
the Book-Entry System or the Depository shall be deemed to have been deposited
in, or withdrawn from, a Margin Account upon the Custodian's effecting an
appropriate entry on its books and records.
7. "Money Market Securities" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to principal and interest
by the government of the United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers' acceptances, repurchase
and reverse repurchase agreements with respect to the same and bank time
deposits, where the purchase and sale of such securities normally requires
settlement in federal funds on the same date as such purchase or sale.
8. "Officers" shall be deemed to include the President, Vice President,
the Secretary, the Treasurer, the Controller, any Assistant Secretary, any
Assistant Treasurer or any other person or persons duly authorized by the
Trustees of the Trust to execute any Certificate, instruction, notice or other
instrument on behalf of a Fund and listed in the Certificate attached hereto as
Appendix B or such other Certificate as may be received by the Custodian from
time to time.
9. "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from an Authorized Person or from a person reasonably believed
by the Custodian to be an Authorized Person.
10. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which a Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
11. "Security" or "Securities" shall be deemed to include, without
limitation, Money Market Securities, Reverse Repurchase Agreements, common stock
and other instruments or rights having characteristics similar to common stocks,
preferred stocks, debt obligations issued by state or municipal governments and
by public authorities (including, without limitation, general obligations
bonds), bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or any property or assets.
12. "Segregated Security Account" shall mean an account maintained under
the terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or other
assets of a Fund shall be deposited and withdrawn from time to time in
accordance with Certificates received by the Custodian in connection with such
transactions as a Fund may from time to time determine.
13. "Shares" shall mean the shares of common stock of a Fund, each of
which, in the case of a Fund having Series, is allocated to a particular Series.
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14. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the authenticity of the sender
of such communication.
ARTICLE II
APPOINTMENT OF A CUSTODIAN
1. The Trust on behalf of a Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys at any time owned by a
Fund during the term of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees
to perform all the duties thereof as set forth in this Agreement.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in Article V, a Fund will deliver or
cause to be delivered to the Custodian all Securities and all moneys owned by
it, including cash received for the issuance of its Shares, at any time during
the term of this Agreement. The Custodian will not be responsible for such
Securities and such moneys until actually received by it. The Custodian will be
entitled to reverse any credits made on a Fund's behalf where such credits have
been previously made and moneys are not finally collected. A Fund shall deliver
to the Custodian a certified resolution of the Trustees of the Trust authorizing
and instructing the Custodian on a continuous and ongoing basis to deposit in
the Book-Entry System all Securities eligible for deposit therein and to utilize
the Book-Entry System to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities, and deliveries and
returns of Securities collateral. Prior to a deposit of Securities of a Fund in
the Depository, a Fund shall deliver to the Custodian a certified resolution of
the Trustees of the Trust approving, authorizing and instructing the Custodian
on a continuous and ongoing basis until instructed to the contrary by a
Certificate actually received by the Custodian to deposit in the Depository all
Securities eligible for deposit therein and to utilize the Depository to the
extent possible in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of Securities collateral.
Securities and moneys of a Fund deposited in either the Book-Entry System or the
Depository will be represented in accounts which include only assets held by the
Custodian for customers, including, but not limited to, accounts in which the
Custodian acts in a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account in the name of a
Fund all moneys received by it for the account of a Fund, and shall disburse the
same only:
(a) In payment for Securities purchased, as provided in Article IV
hereof;
(b) In payment of dividends or distributions, as provided in Article
VIII hereof;
(c) In payment of original issue or other taxes, as provided in Article
IX hereof;
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(d) In payment for Shares redeemed by it, as provided in Article IX
hereof;
(e) Pursuant to Certificate(s) setting forth the name(s) and address(es)
of the person(s) to whom the payment is to be made, and the purpose for which
payment is to be made; or
(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article XII hereof.
3. Promptly after the close of business on each day, the Custodian
shall furnish a Fund with confirmations and a summary of all transfers to or
from the account of a Fund during said day. Where Securities are transferred to
the account of a Fund, the Custodian shall also by book-entry or otherwise
identify as belonging to a Fund a quantity of Securities in a fungible bulk of
Securities registered in the name of the Custodian (or its nominee) or shown on
the Custodian's account on the books of the Book-Entry System or the Depository.
The Custodian shall furnish a Fund at least monthly with a detailed statement of
the Securities and moneys held for a Fund under this Agreement.
4. Except as otherwise provided in Article V, all Securities held for a
Fund which are issued or issuable only in bearer form, except such Securities as
are held in the Book-Entry System, shall be held by the Custodian in that form;
all other Securities held for a Fund may be registered in the name of a Fund, in
the name of any duly appointed registered nominee of the Custodian as the
Custodian may from time to time determine, or in the name of the Book-Entry
System or the Depository or their successor(s) or their nominee(s). The Trust
agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-Entry System or the
Depository, any Securities which it may hold for the account of a Fund and which
may from time to time be registered in the name of a Fund. The Custodian shall
hold all such Securities which are not held in the Book-Entry System or in the
Depository in a separate account in the name of a Fund physically segregated at
all times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to the
Securities therein deposited, shall, with respect to all Securities held for a
Fund in accordance with this Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may be amended at
any time by the Custodian upon five business days' prior notification to a Fund;
(c) Present for payment and collect the amount payable upon all
Securities which mature;
(d) Surrender Securities in temporary form for definitive Securities;
(e) Execute, as Custodian, any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
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(f) Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of a Fund all
rights and similar securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments whereby
the authority of a Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for a Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for a Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
(d) Make such transfer or exchanges of the assets of a Fund and take
such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of a Fund; and
(e) Present for payment and collect the amount payable upon Securities
not described in preceding paragraph 5(b) of this Article which may be called as
specified in the Certificate.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase or sale (as applicable) of Securities
by a Fund, other than a purchase or sale of any Reverse Repurchase Agreement, a
Fund shall deliver to the Custodian (i) with respect to each purchase or sale of
Securities which are not Money Market Securities, a Certificate; and (ii) with
respect to each purchase or sale of Money Market Securities, a Certificate, Oral
Instructions or Written Instructions, specifying with respect to each such
purchase or sale: (a) the name of the issuer and the title of the Securities;
(b) the number of shares or the principal amount purchased or sold and accrued
interest, if any; (c) the date of purchase or sale and settlement date; (d) the
purchase or sale price per unit; (e) the total amount payable upon such purchase
or sale; (f) the name of the person from whom or the broker through whom the
purchase or sale was made, and the name of the clearing broker, if any; (g) in
the case of a purchase, the name of the broker to which payment is to be made;
and (h) in the case of a sale, the name of the broker to whom the Securities are
to be delivered. In the case of a purchase, the Custodian shall, upon receipt of
Securities purchased by or for a Fund, pay out of the moneys held for the
account of a Fund the total amount payable to the person from whom, or the
broker through whom, the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral Instructions or
Written Instructions. In the case of a sale, the Custodian shall deliver the
Securities upon receipt of the total amount payable to a Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions. Subject to the
foregoing, the Custodian may accept payment in such form as shall be
5
<PAGE>
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in securities.
ARTICLE V
SHORT SALES
1. Promptly after any short sale, a Fund shall deliver to the Custodian
a Certificate specifying: (a) the name of the issuer and the title of the
Security; (b) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (c) the dates of the sale and settlement; (d) the
sale price per unit; (e) the total amount credited to a Fund upon such sale, if
any (f) the amount of cash and/or the amount and kind of Securities, if any,
which are to be deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (g) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a Segregated Security
Account; and (h) the name of the broker through which such short sale was made.
The Custodian shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to a Fund upon such sale, if any,
as specified in the Certificate is held by such broker for the account of the
Custodian (or any nominee of the Custodian) as custodian of a Fund, issue a
receipt or make the deposits into the Margin Account and the Segregated Security
Account specified in the Certificate.
2. In connection with the closing-out of any short sale, a Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing-out: (a) the name of the issuer and the title of the Security; (b)
the number of shares or the principal amount, and accrued interest or dividends,
if any, required to effect such closing-out to be delivered to the broker; (c)
the dates of the closing-out and settlement; (d) the purchase price per unit;
(e) the net total amount payable to a Fund upon such closing-out; (f) the net
total amount payable to the broker upon such closing-out; (g) the amount of cash
and the amount and kind of Securities, if any, to be withdrawn, from the Margin
Account; (h) the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Segregated Security Account; and (i) the name of
the broker through which a Fund is effecting such closing-out. The Custodian
shall, upon receipt of the net total amount payable to a Fund upon such closing-
out and the return and/or cancellation of the receipts, if any, issued by the
Custodian with respect to the short sale being closed-out, pay out the moneys
held for the account of a Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Segregated
Security Account, as the same are specified in the Certificate.
ARTICLE VI
REVERSE REPURCHASE AGREEMENTS
1. Promptly after a Fund enters into a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, a Fund shall
deliver to the Custodian a Certificate, or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions or
Written Instructions specifying: (a) the total amount payable to a Fund in
connection with such Reverse Repurchase Agreement; (b) the broker or dealer
through or with which the Reverse Repurchase Agreement is entered; (c) the
amount and kind of Securities to be delivered by a Fund to such broker or
dealer; (d) the date of such Reverse Repurchase Agreement; and (e) the amount of
cash and/or the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable to a
Fund specified in the Certificate, Oral Instructions or Written Instructions
make the
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delivery to the broker or dealer, and the deposits, if any, to the Segregated
Security Account, specified in such Certificate, Oral Instructions or Written
Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
paragraph 1 of this Article VI, a Fund shall promptly deliver a Certificate or,
in the event such Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral Instructions or Written Instructions to the Custodian
specifying: (a) the Reverse Repurchase Agreement being terminated; (b) the total
amount payable by a Fund in connection with such termination; (c) the amount and
kind of Securities to be received by a Fund in connection with such termination;
(d) the date of termination; (e) the name of the broker or dealer with or
through which the Reverse Repurchase Agreement is to be terminated; and (f) the
amount of cash and/or the amount and kind of Securities to be withdrawn from the
Segregated Security Account. The Custodian shall, upon receipt of the amount and
kind of Securities to be received by a Fund specified in the Certificate, Oral
Instructions or Written Instructions, make the payment to the broker or dealer,
and the withdrawals, if any, from the Segregated Security Account, specified in
such Certificate, Oral Instructions or Written Instructions.
ARTICLE VII
MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Segregated Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the amount of cash
and/or the amount and kind of Securities to be deposited in, or withdrawn from,
the Segregated Security Account. In the event that a Fund fails to specify in a
Certificate the name of the issuer, the title and the number of shares or the
principal amount of any particular Securities to be deposited by the Custodian
into, or withdrawn from, a Segregated Securities Account, the Custodian shall be
under no obligation to make any such deposit or withdrawal and shall so notify a
Fund.
2. The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein.
5. On each business day, the Custodian shall furnish a Fund with a
statement with respect to a Fund's Margin Account in which money or Securities
are held specifying as of the close of business on the previous business day:
(a) the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker or dealer specified in the name of a Margin
Account a copy of the statement furnished a Fund with respect to such Margin
Account.
6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account, the Custodian
shall furnish a Fund with a statement with respect
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to a Fund's Collateral Account specifying the amount of cash and/or the amount
and kind of Securities held therein. No later than the close of business next
succeeding the delivery to a Fund of such statement, a Fund shall furnish the
Custodian with a Certificate or Written Instructions specifying the then market
value of the Securities described in such statement.
ARTICLE VIII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. A Fund shall furnish the Custodian with a copy of the resolution of
the Trustees, certified by the Secretary or any Assistant Secretary, either (i)
setting forth the date of the declaration of a dividend or distribution, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders of
record as of that date and the total amount payable to the Dividend Agent of a
Fund on the payment date, or (ii) authorizing the declaration of dividends and
distributions on a daily basis or some other periodic basis and authorizing the
Custodian to rely on Oral Instructions, Written Instructions or a Certificate
setting forth the date of the declaration of such dividend or distribution, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders of
record as of that date and the total amount payable to the Dividend Agent on the
payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions or Certificate, the Custodian shall pay out
the moneys held for the account of a Fund the total amount payable to the
Dividend Agent of a Fund.
ARTICLE IX
SALE AND REDEMPTION OF SHARES
1. Whenever a Fund shall sell any of its Shares, it shall deliver to the
Custodian a Certificate duly specifying the number of Shares sold, trade date,
price and the amount of money to be received by the Custodian for the sale of
such Shares.
2. Upon receipt of such money from the Transfer Agent or a co-transfer
agent, the Custodian shall credit such money to the account of a Fund.
3. Upon issuance of any of a Fund's Shares in accordance with the
foregoing provisions of this Article IX, the Custodian shall pay, out of the
money held for the account of a Fund, all original issue or other taxes required
to be paid by a Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever a Fund shall redeem any of
its Shares, it shall furnish the Custodian with a Certificate specifying the
number of Shares redeemed and the amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent or co-transfer agent of an
advice setting forth the number of Shares received by the Transfer Agent or co-
transfer agent for redemption, and that such Shares are valid and in good form
for redemption, the Custodian shall make payment to the Transfer Agent or co-
transfer agent, as the case may be, out of the moneys held for the account of a
Fund of the total amount specified in the Certificate issued pursuant to
paragraph 4 of this Article IX.
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6. Notwithstanding the above provisions regarding the redemption of any
of a Fund's Shares, whenever its Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by a Fund, the
Custodian, unless otherwise instructed by a Certificate, shall, upon receipt of
an advice from a Fund or its agent setting forth that the redemption is in good
form for redemption in accordance with the check redemption procedure, honor the
check presented as part of such check redemption privilege out of the money held
in the account of a Fund for such purposes.
ARTICLE X
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of a Fund which results in an overdraft because the moneys held by the
Custodian for the account of a Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a Certificate or
Oral Instructions issued pursuant to Article IV, or which results in an
overdraft for some other reason, or if a Fund is, for any other reason, indebted
to the Custodian (except a borrowing for investment or for temporary or
emergency purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this Article X), such
overdraft or indebtedness shall be deemed to be a loan made by the Custodian to
a Fund payable on demand and shall bear interest from the date incurred at a
rate per annum (based on a 360-day year for the actual number of days involved)
equal to 1/2% over the Custodian's prime commercial lending rate in effect from
time to time, such rate to be adjusted on the effective date of any change in
such prime commercial lending rate but in no event to be less than 6% per annum.
Any such overdraft or indebtedness shall be reduced by an amount equal to the
total of all amounts due a Fund which have not been collected by the Custodian
on behalf of a Fund when due because of the failure of the Custodian to make
timely demand or presentment for payment. In addition, the Trust on behalf of a
Fund hereby agrees that the Custodian shall have a continuing lien and security
interest in and to any property at any time held by it for the benefit of a Fund
or in which a Fund may have an interest which is then in the Custodian's
possession or control or in possession or control of any third party acting on
the Custodian's behalf. The Trust authorizes the Custodian, in its sole
discretion, at any time to charge any such overdraft or indebtedness together
with interest due thereon against any balance of account standing to a Fund's
credit on the Custodian's books.
2. A Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities as collateral for such borrowings, a notice or
undertaking in the form currently employed by any such bank setting forth the
amount which such bank will loan to a Fund against delivery of a stated amount
of collateral. A Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such borrowing: (a) the name of the bank; (b)
the amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by a Fund, or other loan
agreement; (c) the time and date, if known, on which the loan is to be entered
into; (d) the date on which the loan becomes due and payable; (e) the total
amount payable to a Fund on the borrowing date; (f) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal of any
particular Securities; and (g) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and a Fund's prospectus.
The Custodian shall deliver on the borrowing date specified in a Certificate the
specified collateral and the executed promissory note, if any, against delivery
by the lending bank of the total amount of the loan payable, provided that the
same conforms to the total amounts payable as set forth in the Certificate. The
Custodian may, at the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights
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therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. A Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it. In the event that a Fund fails to specify in a Certificate the name of the
issuer, the title and number of shares or the principal amount of any particular
Securities to be delivered as collateral by the Custodian, the Custodian shall
not be under any obligation to deliver any Securities.
ARTICLE XI
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. If a Fund is permitted by the terms of the Trust's Declaration of
Trust and as disclosed in a Fund's most recent and currently effective
prospectus to lend its portfolio Securities, within twenty-four (24) hours after
each loan of portfolio Securities a Fund shall deliver or cause to be delivered
to the Custodian a Certificate specifying with respect to each such loan; (a)
the name of the issuer and the title of the Securities; (b) the number of shares
or the principal amount loaned; (c) the date of loan and delivery; (d) the total
amount to be delivered to the Custodian against the loan of the Securities,
including the amount of cash collateral and the premium, if any, separately
identified; and (e) the name of the broker, dealer or financial institution to
which the loan was made. The Custodian shall deliver the Securities thus
designated to the broker, dealer or financial institution to which the loan was
made upon receipt of the total amount designated as to be delivered against the
loan of Securities. The Custodian may accept payment in connection with a
delivery otherwise than through the Book-Entry System or Depository only in the
form of a certified or bank cashier's check payable to the order of a Fund or
the Custodian drawn on New York Clearing House funds and may deliver Securities
in accordance with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by a Fund,
it shall deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan termination and return of Securities:
(a) the name of the issuer and the title of the Securities to be returned; (b)
the number of shares or the principal amount to be returned; (c) the date of
termination; (d) the total amount to be delivered by the Custodian (including
the cash collateral for such Securities minus any offsetting credits as
described in said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of a Fund, the total amount payable
upon such return of Securities as set forth in the Certificate.
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ARTICLE XII
THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its
nominee shall be liable for any loss or damage, including attorney's fees,
resulting from its action or omission to act or otherwise, either hereunder or
under any Margin Account Agreement, except for any such loss or damage arising
out of its own negligence or willful misconduct. The Custodian may, with respect
to questions of law arising hereunder or under any Margin Account Agreement,
apply for and obtain the advice and opinion of counsel to a Fund or of its own
counsel, at the expense of a Fund, and shall be fully protected with respect to
anything done or omitted by it in good faith in conformity with such advice or
opinion. The Custodian shall be liable to a Fund for any loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or willful misconduct on the part of the
Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold or
written by or for a Fund, the legality of the purchase, sale or writing thereof,
or the propriety of the amount paid or received thereof;
(b) The legality of the issue or sale of any of a Fund's Shares, or the
sufficiency of the amount to be received therefor;
(c) The legality of the redemption of any of a Fund's Shares, or the
propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any dividend by a
Fund;
(e) The legality of any borrowing by a Fund using Securities as
collateral;
(f) The legality of any loan of portfolio Securities pursuant to Article
XI of this Agreement, nor shall the Custodian be under any duty or obligation to
see to it that any cash collateral delivered to it by a broker, dealer or
financial institution or held by it at any time as a result of such loan of
portfolio Securities of a Fund is adequate collateral for a Fund against any
loss it might sustain as a result of such loan. The Custodian specifically, but
not by way of limitation, shall not be under any duty or obligation periodically
to check or notify a Fund that the amount of such cash collateral held by it for
a Fund is sufficient collateral for a Fund, but such duty or obligation shall be
the sole responsibility of a Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution to
which portfolio Securities of a Fund are lent pursuant to Article XI of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of a Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify a Fund in the event that such dividends or interest are not paid and
received when due; or
(g) The sufficiency or value of any amounts of money and/or Securities
held in any Margin Account, Segregated Security Account or Collateral Account in
connection with transactions by a Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer, or Clearing Member
makes payment to a Fund of any variation margin payment or similar payment which
a Fund
11
<PAGE>
may be entitled to receive from such broker, dealer, or Clearing Member, to see
that any payment received by the Custodian from any broker, dealer, or Clearing
Member is the amount a Fund is entitled to receive, or to notify a Fund of the
Custodian's receipt or non-receipt of any such payment; provided however that
the Custodian, upon a Fund's written request, shall as Custodian, demand from
any broker, dealer, or Clearing Member identified by a Fund the payment of any
variation margin payment or similar payment that a Fund asserts it is entitled
to receive pursuant to the terms of a Margin Account Agreement or otherwise from
such broker, dealer, or Clearing Member.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft or other
instrument for the payment of money, received by it on behalf of a Fund until
the Custodian actually receives and collects such money directly or by the final
crediting of the account representing a Fund's interest at the Book-Entry System
or the Depository.
4. The Custodian shall have no responsibility and shall not be liable
for ascertaining or acting upon any calls, conversions, exchanges, offers,
tenders, interest rate changes or similar matters relating to Securities held in
the Depository unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any responsibility or
liability for the failure of the Depository to collect, or for the late
collection or late crediting by the Depository of any amount payable upon
Securities deposited in the Depository which may mature or be redeemed, retired,
called or otherwise become payable. However, upon receipt of a Certificate from
a Fund of an overdue amount on Securities held in the Depository, the Custodian
shall make a claim against the Depository on behalf of a Fund, except that the
Custodian shall not be under any obligation to appear in, prosecute or defend
any action, suit or proceeding in respect to any Securities held by the
Depository which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to a Fund from the Transfer Agent
of a Fund nor to take any action to effect payment or distribution by the
Transfer Agent of a Fund of any amount paid by the Custodian to the Transfer
Agent of a Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
7. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as sub-custodian(s), including, but not limited
to, banking institutions located in foreign countries, of Securities and moneys
at any time owned by a Fund, upon terms and conditions approved in a
Certificate, which shall, if requested by the Custodian, be accompanied by an
approving resolution of the Trust's Board of Trustees adopted in accordance with
Rule 17f-5 under the Investment Company Act of 1940, as amended.
8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
a Fund are such as properly may be held by a Fund under the provisions of its
Declaration of Trust.
9. The Custodian shall be entitled to receive and each Fund agrees to
pay to the Custodian all out-of-pocket expenses and fees as set forth in
Appendix D attached hereto. The Custodian may
12
<PAGE>
charge such fees and any expenses incurred by the Custodian in the performance
of its duties against any money held by it for the account of a Fund. The
Custodian shall also be entitled to charge against any money held by it for the
account of a Fund the amount of any loss, damage, liability or expense,
including attorney's fees, for which it shall be entitled to reimbursement under
the provisions of this Agreement. The expense which the Custodian may charge
against the account of a Fund include, but are not limited to, the expenses of
Sub-Custodians of the Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities of a Fund.
10. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably believed
by the Custodian to be a Certificate. The Custodian shall be entitled to rely
upon any Oral Instructions and any Written Instructions actually received by the
Custodian pursuant to Article IV or VII hereof. A Fund agrees to forward to the
Custodian a Certificate or facsimile thereof, confirming such Oral Instructions
or Written Instructions in such manner so that such Certificate or facsimile
thereof is received by the Custodian, whether by hand delivery, telex or
otherwise, by the close of business of the same day that such Oral Instructions
or Written Instructions are given to the Custodian. A Fund agrees that the fact
that such confirming instructions are not received by the Custodian shall in no
way affect the validity of the transactions hereby authorized by a Fund. A Fund
agrees that the Custodian shall incur no liability to a Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such transactions,
provided such instructions reasonably appear to have been received from an
Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, or Clearing Member.
12. The books and records pertaining to a Fund which are in the
possession of the Custodian shall be the property of a Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws, rules and
regulations. A Fund, or a Fund's authorized representative(s), shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of a Fund, copies of any such books and records
shall be provided by the Custodian to a Fund or a Fund's authorized
representative(s) at a Fund's expense.
13. The Custodian shall provide the Trust with any report obtained by
the Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with such reports on its own systems of internal
accounting control as the Trust may reasonably request from time to time.
14. A Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article IX as part of any check redemption privilege program of a
Fund, except for any such liability, claim, loss and demand arising out of the
Custodian's own negligence or willful misconduct.
15. Subject to the foregoing provisions of this Agreement, the Custodian
may deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to be made and
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<PAGE>
received by the Custodian in accordance with the customs prevailing from time to
time among brokers or dealers in such Securities.
16. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement or Appendix D attached hereto, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
ARTICLE XIII
TERMINATION
1. This Agreement shall continue until January 1998, and thereafter
shall continue automatically for successive annual periods ending on the last
day of December of each year, provided such continuance is specifically approved
at least annually by (i) the Trust's Trustees or (ii) vote of a majority (as
defined in the Investment Company Act of 1940) of a Fund's outstanding voting
securities, provided that in either event its continuance also is approved by a
majority of the Trust's Trustees who are not "interested persons" (as defined in
said Act) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. This Agreement is terminable
without penalty, on sixty (60) days' notice, by the Trust's Trustees or, by vote
of holders of a majority of a Fund's Shares or, upon not less than ninety (90)
days' notice, by the Custodian. In the event such notice is given by a Fund, it
shall be accompanied by a copy of a resolution of the Trustees of the Trust on
behalf of a Fund, certified by the Secretary or any Assistant Secretary,
electing to terminate this Agreement and designating a successor custodian or
custodians, each of which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. In the event such
notice is given by the Custodian, a Fund shall, on or before the termination
date, deliver to the Custodian a copy of a resolution of the Trustees, certified
by the Secretary or any Assistant Secretary, designating a successor custodian
or custodians. In the absence of such designation by a Fund, the Custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon
the date set forth in such notice, this Agreement shall terminate and the
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date deliver directly to the successor custodian all
Securities and moneys then owned by a Fund and held by it as Custodian, after
deducting all fees, expenses, and other amounts for the payment of reimbursement
of which shall then be entitled.
2. If a successor custodian is not designated by the Trust on behalf of
a Fund or the Custodian in accordance with the preceding paragraph, a Fund
shall, upon the date specified in the notice of termination of this Agreement
and upon the delivery by the Custodian of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to a Fund) and moneys
then owned by a Fund, be deemed to be its own custodian, and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the Book-Entry
System, in any Depository or by a Clearing Member which cannot be delivered to a
Fund, to hold such Securities hereunder in accordance with this Agreement.
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ARTICLE XIV
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Trust under its seal, setting forth the names and the
signatures of the present Authorized Persons. The Trust agrees to furnish to
the Custodian a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or in the event that
other or additional Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Trust under its seal, setting forth the names and the
signatures of the present Officers of the Trust. A Fund agrees to furnish to
the Custodian a new Certificate in similar form in the event any such present
Officer ceases to be an Officer of the Trust, or in the event that other or
additional Officers are elected or appointed. Until such new Certificate shall
be received, the Custodian shall be fully be protected in acting under the
provisions of this Agreement upon the signatures of the Officers as set forth in
the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be deemed sufficiently given
if addressed to the Custodian and mailed or delivered to it at its offices at
420 Montgomery Street, San Francisco, California, 94105, or at such other place
as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given by or on behalf of a Fund, shall be deemed
sufficiently given if addressed to a Fund and mailed or delivered to it at its
office at 111 Center Street, Little Rock, Arkansas, 72201, or at such other
place as a Fund may from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties to this Agreement and approved by a
resolution of the Trustees of the Trust.
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successor(s) and assign(s); provided, however, that
this Agreement shall not be assignable by the Trust without the written consent
of the Custodian, or by the Custodian without the written consent of the Trust,
authorized or approved by a resolution of its Trustees.
7. This Agreement shall be construed in accordance with the laws of the
State of California without giving effect to the choice of law provisions
thereof.
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<PAGE>
8. This Agreement may be executed in any number of counterparts, each
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized, as of the day
and year first above written.
WELLS FARGO VARIABLE TRUST BARCLAYS GLOBAL INVESTORS, N.A.
By: ____________________ By: ____________________
Name: __________________ Name: __________________
Title: _________________ Title: _________________
By: ____________________
Name: __________________
Title: _________________
16
<PAGE>
EXHIBIT 99.B(g)(2)
CUSTODY AGREEMENT
WELLS FARGO VARIABLE TRUST
AGREEMENT, dated as of September __, 1999, between Wells Fargo Variable
Trust, a business Trust organized under the laws of the State of Delaware with
its principal place of business at 111 Center Street, Little Rock, Arkansas
72201 and Norwest Bank Minnesota, N.A. (the "Custodian"), a banking association
organized under the laws of the United States of America with its principal
place of business at Norwest Center, Sixth and Marquette, Minneapolis, Minnesota
55479.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company;
WHEREAS, the Trust desires to appoint the Custodian as custodian of the
securities and cash of each investment portfolio ("Fund") of the Trust and the
Custodian is willing to act in such capacity upon the terms and conditions set
forth below.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:
SECTION 1. DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
meanings specified, insofar as the context will allow.
(a) 1940 Act: The term 1940 Act shall mean the Investment Company Act of 1940,
--------
as amended from time to time.
(b) Authorized Person: The term Authorized Person shall be deemed to include
-----------------
the treasurer, the controller or any other person, whether or not any such
person is an Officer or employee of the Trust, duly authorized by the Board
of Trustees ("Trustees") to give Oral Instructions and Written Instructions
on behalf of the Fund and listed in the Certificate attached hereto as
Appendix A or such other Certificate as may be received from time to time
by the Custodian.
(c) Board: The term Board shall mean the Board of Trustees of the Trust.
-----
(d) Book-Entry Account: The term Book-Entry Account shall mean an account
------------------
maintained by a Federal Reserve Bank in which Book-Entry Securities are
held.
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<PAGE>
(e) Book-Entry Securities: The term Book-Entry Securities shall mean
---------------------
securities issued by the United States Treasury and United States Federal
agencies and instrumentalities that are maintained in the book-entry system
maintained by a Federal Reserve Bank.
(f) Certificate: The term Certificate shall mean any notice, instruction, or
-----------
other instrument in writing, authorized or required by this Agreement to be
given to the Custodian, which is actually received by the Custodian and
signed on behalf of a Fund by any two Officers of the Trust.
(g) Clearing Member: The Term Clearing Member shall mean a registered broker-
---------------
dealer that is a member of a national securities exchange qualified to act
as a custodian for an investment company, or any broker-dealer reasonably
believed by the Custodian to be such a clearing member.
(h) Depository: The term Depository shall mean The Depository Trust Company
----------
("DTC"), Participants Trust Company ("PTC"), and any other clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, its successor(s) and its nominee(s),
provided the Custodian has received a certified copy of a resolution of the
Board of Trustees specifically approving deposits in DTC, PTC or such other
clearing agency. The term "Depository" shall further mean and include any
person authorized to act as a depository pursuant to Section 17, Rule 17f-4
or Rule 17f-5 under the 1940 Act, its successor(s) and its nominee(s),
specifically identified in a certified copy of a resolution of the Board of
Trustees approving deposits therein by the Custodian.
(i) Custodian: The term Custodian shall mean the Custodian in its capacity as
---------
custodian under this Agreement.
(j) Foreign Securities: The term Foreign Securities shall mean "Foreign
------------------
Securities" as that term is defined in Rule 17f-5 under the 1940 Act.
(k) Foreign Sub-Custodian: The term Foreign Sub-Custodian shall mean "Eligible
---------------------
Foreign Sub-Custodian" as that term is defined in Rule 17f-5 under the 1940
Act.
(l) Fund Business Day: The term Fund Business Day shall mean a day that is a
-----------------
business day for a Fund as defined in the Fund's prospectus.
(m) Funds: The term Funds shall mean the Funds listed in Appendix A or any
-----
Fund that the Trust shall subsequently establish provided, that the
Custodian may decline to act as custodian for any Fund subsequently
established.
(n) Margin Account: The term Margin Account shall mean a segregated account in
--------------
the name of a broker, dealer, or Clearing Member, or in the name of the
Trust or a Fund for the benefit of a broker, dealer, or Clearing Member, or
otherwise, in accordance with an agreement between the Trust on behalf of a
Fund, the Custodian and a broker, dealer, or
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<PAGE>
Clearing Member (a "Margin Account Agreement"), separate and distinct from
the custody account, in which certain Securities and/or moneys of a Fund
shall be deposited and withdrawn from time to time in connection with such
transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's
effecting an appropriate entry on its books and records.
(o) Money Market Securities: The term Money Market Securities shall be deemed
-----------------------
to include, without limitation, debt obligations issued or guaranteed as to
principal and interest by the government of the United States or agencies
or instrumentalities thereof, commercial paper, certificates of deposit and
bankers' acceptances, repurchase and reverse repurchase agreements with
respect to the same and bank time deposits, where the purchase and sale of
such securities normally requires settlement in federal funds on the same
date as such purchase or sale.
(p) Officers: The term Officers shall be deemed to include the President, Vice
--------
President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary, any Assistant Treasurer or any other person or persons duly
authorized by the Trustees of the Trust to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund and listed in
the Certificate attached hereto as Appendix B [to follow] or such other
Certificate as may be received by the Custodian from time to time.
(q) Oral Instructions: The term Oral Instructions shall mean an authorization,
-----------------
instruction, approval, item or set of data, or information of any kind
transmitted to the Custodian in person or by telephone, vocal telegram or
other electronic means, by a person or persons reasonably believed in good
faith by the Custodian to be a person or persons authorized by a resolution
of the Board to give Oral Instructions on behalf of the Trust. Each Oral
Instruction shall specify whether it is applicable to the entire Trust or a
specific Fund of the Trust.
(r) Reverse Repurchase Agreement: The term Reverse Repurchase Agreement shall
----------------------------
mean an agreement pursuant to which a Fund sells Securities and agrees to
repurchase such Securities at a described or specified date and price.
(s) Securities: The term Securities shall mean bonds, debentures, notes,
----------
stocks, shares, evidences of indebtedness, and other securities and
investments from time to time owned by the Trust.
(t) Securities Depository: The term Securities Depository shall mean a system,
---------------------
domestic or foreign, for the central handling of securities in which all
securities of any particular class or series of any issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the securities and shall
include any system for the issuance of Book-Entry Securities.
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<PAGE>
(u) Segregated Security Account: shall mean an account maintained under the
---------------------------
terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or
other assets of a Fund shall be deposited and withdrawn from time to time
in accordance with Certificates received by the Custodian in connection
with such transactions as a Fund may from time to time determine.
(v) Share Certificates: The term Share Certificates shall mean the
------------------
certificates for the Shares.
(w) Shareholders: The term Shareholders shall mean the registered owners from
------------
time to time of the Shares, as reflected on the share registry records of
the Trust.
(x) Shares: The term Shares shall mean the shares of common stock of a Fund,
------
each of which, in the case of a Fund having Series, is allocated to a
particular Series.
(y) Sub-Custodian: The term Sub-Custodian shall mean any person selected by
-------------
the Custodian under Section 20 hereof and in accordance with the
requirements of the 1940 Act to custody any or all of the Securities and
cash of the Trust, and shall include Foreign Sub-Custodians.
(z) Trust: The term Trust shall mean Wells Fargo Variable Trust.
-----
(aa) Written Instructions: The term Written Instructions shall mean an
--------------------
authorization, instruction, approval, item or set of data, or information
of any kind transmitted to the Custodian in original writing containing
original signatures, or a copy of such document transmitted by telecopy,
including transmission of such signature, or other mechanical or
documentary means, at the request of a person or persons reasonably
believed in good faith by the Custodian to be a person or persons
authorized by a resolution of the Board to give Written Instructions on
behalf of the Trust. Each Written Instruction shall specify whether it is
applicable to the entire Trust or a specific Fund of the Trust.
SECTION 2. APPOINTMENT
The Trust hereby appoints the Custodian as custodian of the Securities and
cash of each Fund from time to time on deposit hereunder. The Securities and
cash of the Trust shall be and remain the sole property of the Trust and the
Custodian shall have only custody thereof. The Custodian shall hold, earmark and
physically segregate for the appropriate Fund account of the Trust all non-cash
property, including all Securities that are not maintained pursuant to Section 6
in a Securities Depository or Book-Entry Account. The Custodian will collect
from time to time the dividends and interest of the Securities held by the
Custodian.
The Custodian shall open and maintain a separate bank or trust account or
accounts in the name of the Trust, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement, and shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Trust. Notwithstanding the foregoing, a separate
bank account may be established by the Trust to be used as a petty cash account
in
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<PAGE>
accordance with Rule 17f-3 under the 1940 Act and the Custodian shall have not
duty or liability with regard to such account.
Upon receipt of Written Instructions, funds held by the Custodian for the
Trust may be deposited by the Custodian to its credit in the banking department
of the Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
SECTION 3. DELIVERY OF BOARD RESOLUTIONS
The Trust shall, as necessary, file with the Custodian a certified copy of
the operative resolution of the Board authorizing execution of Written
Instructions and the number of signatories required and setting forth authentic
signatures of all signatories authorized to sign on behalf of the Trust or any
Fund thereof. Such resolution shall constitute conclusive evidence of the
authority of all signatories designated therein to act and shall be considered
in full force and effect, with the Custodian fully protected in acting in
reliance thereon, until the Custodian receives a certified copy of a replacement
resolution adding or deleting a person or persons authorized to give written
Instructions.
The Trust shall, as necessary, file with the Custodian a certified copy of
the operative resolution of the Board authorizing the transmittal of Oral
Instructions and specifying the person or persons authorized to give Oral
Instructions on behalf of the Trust or any Fund. Such resolution shall
constitute conclusive evidence of the authority of the person or persons
designated therein to act and shall be considered in full force and effect, with
the Custodian fully protected in acting in reliance therein, until the Custodian
actually receives a certified copy of a replacement resolution adding or
deleting a person or persons authorized to give Oral Instructions. If the
officer certifying the resolution is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Trust.
SECTION 4. INSTRUCTIONS
For all purposes under this Agreement, the Custodian is authorized to act
upon receipt of the first of any Written or Oral Instruction it receives. If the
first Instruction is an Oral Instruction, the Trust shall deliver or have
delivered to the Custodian a confirmatory Written Instruction; and if the
Custodian receives an Instruction, whether Written or Oral, with respect to a
Securities transaction, the Trust shall cause the broker or dealer to send a
written confirmation of the transaction to the Custodian. The Custodian shall be
entitled to rely on the first Instruction received and, for any act or omission
undertaken in compliance therewith, shall be free of liability and fully
indemnified and held harmless by the Trust. The sole obligation of the Custodian
with respect to any confirmatory Written Instruction or broker or dealer written
confirmation shall be to make reasonable efforts to detect any discrepancy
between the original Instruction and such confirmation and to report such
discrepancy to the Trust. The Trust shall be responsible, at the Trust's
expense, for taking any action, including any reprocessing, necessary
-5-
<PAGE>
to correct any discrepancy or error, and to the extent such action requires the
Custodian to act, the Trust shall give the Custodian specific Written
Instructions as to the action required.
SECTION 5. DEPOSIT OF TRUST ASSETS
The Trust will initially transfer and deposit or cause to be transferred
and deposited with the Custodian all of the Securities, other property and cash
owned by the Trust at the time this Agreement becomes effective, provided that
the Custodian shall have the right, in its sole discretion, to refuse to accept
any securities or other property that are not in proper form for deposit or any
reason. Such transfer and deposit shall be evidenced by appropriate schedules
duly executed by the Trust. The Trust may deposit with the Custodian additional
Securities of the Trust and dividends or interest collected on such Securities
as the same are acquired from time to time.
The Trust will cause to be deposited with the Custodian from time to time
(i) the net proceeds of Securities sold, (ii) the applicable net asset value of
Shares sold, whether representing initial issue or any other securities and
(iii) cash as may be acquired. Deposits with respect to sales of Shares shall be
accompanied by Written or Oral Instructions stating the amount to be deposited
with the Custodian and registration instructions.
SECTION 6. DEPOSIT OF TRUST ASSETS WITH THIRD PARTIES
The Trust hereby authorizes the Custodian to deposit assets of the Trust as
follows:
(a) With the Custodian or any other bank licensed and regularly examined
by the United States or any state thereof assets held in the Option Account
created pursuant to Section 13(b).
(b) In the Custodian or Sub-Custodian's account(s) with any Securities
Depository as the Trust shall permit by Written or Oral Instruction.
(c) Book-Entry Securities belonging to the Trust in a Book-Entry Account
maintained for the Custodian.
So long as any deposit referred to in (b) or (c) above is maintained for
the Trust, the Custodian shall: (i) deposit the Securities in an account that
includes only assets held by the Custodian for customers; (ii) send the Trust a
confirmation (i.e., an advice of notice of transaction) of any transfers of the
Trust to or from the account; (iii) with respect to Securities of the Trust
transferred to the account, identify as belonging to the Trust a quantity of
securities in a fungible bulk of securities that are registered in the name of
the Custodian or its nominee, or credited to the Custodian's account on the
books of a Securities Depository or the Custodian's agent; (iv) promptly send to
the Trust all reports it receives from the appropriate Federal Reserve Bank or
Securities Depository on its respective system of internal accounting control;
and (v) send to the Trust such reports of the systems of internal accounting
control of the Custodian and
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its agents through which Securities are deposited as are available and as the
Trust may reasonably request from time to time.
The Custodian shall be liable to the Trust for any loss or damage to the
Trust resulting from the negligence (including failure to act), fault or willful
misconduct of the Custodian, its agents or employees in selecting a Securities
Depository or Book-Entry Account. The Custodian shall not waive any rights it
may have against a Securities Depository or Federal Reserve Bank. The Trust may
elect to be subrogated to the rights of the Custodian against the Securities
Depository or Federal Reserve Bank or any other person with respect to any claim
that the Custodian may have as a consequence of any such loss or damage, if and
to the extent that the Trust has not been made whole for any such loss or
damage.
SECTION 7. REGISTRATION OF SECURITIES
The Securities held by the Custodian, unless payable to bearer or
maintained in a Securities Depository or Book-Entry Account pursuant to Section
6, shall be registered in the name of the Custodian or in the name of its
nominee, or if directed by Written Instructions, in the name of the Trust or its
nominee. In the event that any Securities are registered in the name of the
Trust or its nominee, the Trust will endorse, or cause to be endorsed, to the
Custodian dividend and interest checks, or will issue appropriate orders to the
issuers of the Securities to pay dividends and interest to the Custodian.
Securities, excepting bearer securities, delivered from time to time to the
Custodian shall, in all cases, be in due form for transfer, or registered as
above provided.
SECTION 8. DISBURSEMENTS OF CASH
The Custodian is hereby authorized and directed to disburse cash to or from
the Trust from time to time as follows:
(a) For the purchase of Securities by the Trust, upon receipt by the
Custodian of (i) Written or Oral Instructions specifying the Securities and
stating the purchase price and the name of the broker, investment banker or
other party to or upon whose order the purchase price is to be paid and (ii)
either the Securities so purchased, in due form for transfer or already
registered as provided in Section 7, or notification by a Securities Depository
or a Federal Reserve Bank that the Securities have been credited to the
Custodian's account with the Securities Depository or Federal Reserve Bank.
(b) For transferring funds, including mark-to-the-market payments, in
connection with a repurchase agreement covering Securities that have been
received by the Custodian as provided in subsection (a) above, upon receipt by
the Custodian of (i) Written or Oral Instruction specifying the Securities, the
purchase price and the party to whom the purchase price is to be paid and (ii)
written agreement to repurchase the Securities from the Trust.
(c) For transferring funds to a duly-designated redemption paying agent to
redeem or repurchase Shares, upon receipt of (i) either Share Certificates in
due form for transfer, or proper
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processing of Shares for which no Share Certificates are outstanding and (ii)
Written or Oral Instructions stating the applicable redemption price.
(d) For exercising warrants and rights received upon the Securities, upon
timely receipt of Written or Oral Instructions authorizing the exercise of such
warrants and rights and stating the consideration to be paid.
(e) For repaying, in whole or in part, any loan of the Trust, or returning
cash collateral for Securities loaned by the Trust, upon receipt of Written or
Oral Instructions directing payment and stating the Securities, if any, to be
received against payment.
(f) For paying over to a duly-designated dividend disbursing agent such
amounts as may be stated in Written or Oral Instructions as the Trust deems
appropriate to include in dividends or distributions declared on the Shares.
(g) For paying or reimbursing the Trust for other corporate expenditures,
upon receipt of Written or Oral Instructions stating that such expenditures are
or were authorized by resolution of the Board and specifying the amount of
payment, the purposes for which such payment is to be made, and the person or
persons to whom payment is to be made.
(h) For transferring funds to any Sub-Custodian, upon receipt of Written
or Oral Instructions and upon agreement by the Custodian.
(i) To advance or pay out accrued interest on bonds purchased, dividends
on stocks sold and similar items.
(j) To pay proper compensation and expenses of the Custodian.
(k) To pay, or provide the Trust with money to pay, taxes, upon receipt of
appropriate Written or Oral Instructions.
(l) To transfer funds to a separate checking account maintained by the
Trust.
(m) To pay interest, management or supervisory fees, administration,
dividend and transfer agency fees and costs, compensation of personnel and
operating expenses, including but not limited to fees for legal, accounting and
auditing services.
Before making any payments or disbursements, however, the Custodian shall
receive, and may conclusively rely upon, Written or Oral Instructions requesting
such payment or disbursement and stating that it is for one or more or the
purposes enumerated above. Notwithstanding the foregoing, the Custodian may
disburse cash for other corporate purposes; provided, however, that such
disbursement maybe made only upon receipt of Written or Oral Instructions
stating that such disbursement was authorized by resolution of the Board.
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SECTION 9. DELIVERY OF SECURITIES
The Custodian is hereby authorized and directed to deliver Securities of
the Trust from time to time as follows:
(a) For completing sales of Securities sold by the Trust, upon receipt of
(i) Written or Oral Instructions specifying the Securities sold, the amount to
be received and the broker, investment banker or other party to or upon whose
order the Securities are to be delivered and (ii) the net proceeds of sale;
provided, however, that the Custodian may accept payment in connection with the
sale of Book-Entry Securities and Securities on deposit with a Securities
Depository by means of a credit in the appropriate amount to the account
described in Section 6(b) or (c) above.
(b) For exchanging Securities for other Securities (and cash, if
applicable), upon timely receipt of (i) Written or Oral Instructions stating the
Securities to be exchanged, cash to be received and the manner in which the
exchange is to be made and (ii) the other Securities (and cash, if applicable)
as specified in the Written or Oral Instructions.
(c) For exchanging or converting Securities pursuant to their terms or
pursuant to any plan of conversion, consolidation, recapitalization,
reorganization, re-adjustment or otherwise, upon timely receipt of (i) Written
or Oral Instructions authorizing such exchange or conversion and stating the
manner in which such exchange or conversion is to be made and (ii) the
Securities, certificates of deposit, interim receipts, and/or cash to be
received as specified in the Written or Oral Instructions.
(d) For presenting for payment Securities that have matured or have been
called for redemption;
(e) For delivering Securities upon redemption of Shares in kind, upon
receipt of (i) Share Certificates in due form for transfer, or proper processing
of Shares for which no Share Certificates are outstanding and (ii) appropriate
Written or Oral Instructions.
(f) For depositing with the lender Securities to be held as collateral for
a loan to the Trust or depositing with a borrower Securities to be loaned by the
Trust, (i) upon receipt of Written or Oral Instructions directing delivery to
the lender or borrower and suitable collateral, if Securities are loaned or (ii)
pursuant to the terms of a separate securities lending agreement.
(g) For complying with a repurchase agreement, upon receipt of Written or
Oral Instructions stating (i) the securities to be delivered and the payment to
be received and (ii) payment.
(h) For depositing with a depository agent in connection with a tender or
other similar offer to purchase Securities of the Trust, upon receipt of Written
or Oral Instructions.
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(i) For depositing Securities with the issuer thereof, or its agents, for
the purpose of transferring such Securities into the name of the Trust, the
Custodian or any nominee of either in accordance with Section 7.
(j) For other proper corporate purposes; provided, that the Custodian
shall receive Written or Oral Instructions requesting such delivery.
(k) Notwithstanding the foregoing, the Custodian may, without Written or
Oral Instructions, surrender and exchange Securities for other Securities in
connection with any reorganization, recapitalization, or similar transaction in
which the owner of the Securities is not given an option; provided, however,
that the Custodian has no responsibility to effect any such exchange unless it
has received actual notice of the event permitting or requiring such exchange.
To facilitate any such exchange, the Custodian is authorized to surrender
against payment maturing obligations and obligations called for redemption and
to effectuate the exchange in accordance with customary practices and procedures
established in the market for exchanges.
SECTION 10. BORROWINGS
The Trust will cause any person (including the Custodian) from which it
borrows money using Securities as collateral to deliver to the Custodian a
notice of undertaking in the form currently employed by the lender setting forth
the amount that the lender will loan to the Trust against delivery of a stated
amount of collateral. The Trust shall promptly deliver to the Custodian Written
or Oral Instructions for each loan, stating (i) the name of the lender, (ii) the
amount and terms of the loan, which terms may be specified by incorporating by
reference an attached promissory note or loan agreement duly endorsed by the
Trust, (iii) the time and date, if known, on which the loan will be consummated
(the "borrowing date"), (iv) the date on which the loan becomes due and payable,
(v) the total amount payable to the Trust on the borrowing date, (vi) the market
value of Securities to be delivered as collateral for such loan and (vii) the
name of the issuer, the title and the number of shares or principal amount of
the Securities to be delivered as collateral. The Custodian shall deliver on the
borrowing date such specified collateral and the executed promissory note, if
any, and receive from the lender the total amount of the loan proceeds;
provided, however, that no delivery of Securities shall occur if the amount of
loan proceeds does not conform to the amount set forth in the Written or Oral
Instructions, or if such Instruction do not contain the requirements of (vii)
above. The Custodian may, at the option of the lender, keep such collateral in
its possession; provided such collateral is subject to all rights given the
lender by any promissory note or loan agreement executed by the Trust.
The Custodian shall deliver, from time to time, any Securities required as
additional collateral for any transaction described in this Section, upon
receipt of Written or Oral Instructions. The Trust shall cause all Securities
released from collateral status to be returned directly to the Custodian.
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SECTION 11. INDEBTEDNESS TO CUSTODIAN
If, in its sole discretion, the Custodian advances funds to the Trust to
pay for the purchase of Securities, to cover an overdraft of the Trust's account
with the Custodian, or to pay any other indebtedness to the Custodian, the
Trust's indebtedness shall be deemed to be a loan by the Custodian to the Trust,
payable on demand and bearing interest at the rate then charged by the Custodian
for such loans; provided, however, that the Custodian shall give the Trust
notice of any such advance that exceeds five percent of the value of the
Securities and cash held by the Custodian at the time of the advance. The Trust
hereby agrees that the Custodian shall have a continuing lien and security
interest, to the extent of any such overdraft or indebtedness, in any property
then held by the Custodian or its agents for the benefit of the Trust, or in
which the Trust may have an interest. The Trust authorizes the Custodian, in its
sole discretion at any time, to charge any such overdraft or indebtedness,
together with interest due thereon, against any balance then credited to the
Trust on the Custodian's books.
SECTION 12. SECURITIES LOANS
The Custodian may from time to time lend securities of the Trust in
accordance with and pursuant to a separate securities lending agreement.
SECTION 13. OPTIONS, FUTURES CONTRACTS AND SEGREGATED ACCOUNTS
The Custodian's responsibilities regarding option contracts will be
governed by the following sub-paragraphs:
(a) Options.
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(i) Upon receipt of Written or Oral Instructions relating to the
purchase of an option or sale of a covered call option, the Custodian shall: (A)
receive and retain confirmations or other documents, if any, evidencing the
purchase or writing of the option; (B) if the transaction involves the sale of a
covered call option, deposit and maintain in a segregated account the Securities
(either physically or by book-entry in a Securities Depository) subject to the
covered call option written on behalf of the Funds; and (C) pay, release and/or
transfer such securities, cash or other assets in accordance with any notices or
other communications evidencing the expiration, termination or exercise of such
options which are furnished to the Custodian by the Options Clearing Corporation
(the "OCC"), the Securities or Options Exchanges on which such options were
traded, or such other organization as may be responsible for handling such
option transactions.
(ii) Upon receipt of instructions relating to the sale of a naked
option (including stock index and commodity options), the Custodian, the Trust
and the broker-dealer shall enter into an agreement to comply with the rules of
the OCC or of any registered national securities exchange or similar
organizations(s). Pursuant to that agreement and any Written or Oral
Instructions, the
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Custodian shall: (A) receive and retain confirmations or other documents, if
any, evidencing the writing of the option; (B) deposit and maintain in a
segregated account Securities (either physically or by book-entry in a
Securities Depository cash and/or other assets; and (C) pay, release and/or
transfer such Securities, cash or other assets in accordance with any such
agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the Securities or Options Exchanges on which such options
were traded, or such other organization as may be responsible for handling such
option transactions. The Custodian shall not be responsible for determining the
quality and quantity of assets held in any segregated account established in
compliance with applicable margin maintenance requirements and the performance
of other terms of any option contract.
(b) Futures Contracts. Upon receipt of Written or Oral Instructions, the
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custodian shall enter into a futures margin procedural agreement among the Fund,
the Custodian and the designated futures commission merchant (a "Procedural
Agreement"). Under the Procedural Agreement the Custodian shall: (A) receive and
retain confirmations, if any, evidencing the purchase or sale of a futures
contract or an option on a futures contract by a Series; (B) deposit and
maintain in a segregated account cash, Securities and/or other assets designated
as initial, maintenance or variation "margin" deposits intended to secure the
Funds' performance of its obligations under any futures contracts purchased or
sold, or any options on futures contracts written by the Funds, in accordance
with the provisions of any Procedural Agreement designed to comply with the
provisions of the Commodity Futures Trading Commission and/or any commodity
exchange or contract market (such as the Chicago Board of Trade), or any similar
organization(s), regarding such margin deposits; and (C) release assets from
and/or transfer assets into such margin accounts only in accordance with any
such Procedural Agreements. The Custodian shall not be responsible for
determining the type and amount of assets held in the segregated account or paid
to the broker-dealer in compliance with applicable margin maintenance
requirements and the performance of any futures contract or option on a futures
contract in accordance with its terms.
(c) Segregated Accounts. Upon receipt of Written or Oral Instructions, the
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Custodian shall establish and maintain on its books a segregated account or
accounts for and on behalf of the Funds, into which account or accounts may be
transferred assets of each Fund, including Securities maintained by the
Custodian in a Securities Depository, said account or accounts to be maintained
(i) for the purpose of compliance by the Fund with the procedures required by
SEC 1940 Act Release Number 10666 or any subsequent release or releases relating
to the maintenance of segregated accounts by registered investment companies or
(ii) for such other purposes as may be set forth, from time to time in Written
or Oral Instructions. The Custodian shall not be responsible for the
determination of the type or amount of assets to be held in any segregated
account referred to in this paragraph.
SECTION 14. EXERCISE OF POWERS WITH RESPECT TO SECURITIES
The Custodian assumes no duty, obligation or responsibility whatsoever to
exercise any voting or consent powers with respect to the Securities held by it
from time to time hereunder.
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The Trust or such persons as it may designate shall have the right to vote,
consent or otherwise act with respect to Securities. The Custodian will exercise
its best efforts (as defined in Section 16) to furnish to the Trust in a timely
manner all proxies or other appropriate authorizations with respect to
Securities registered in the name of the Custodian or its nominee, so that the
Trust or its designee may vote, consent or otherwise act.
SECTION 15. COMPENSATION
(a) The Trust agrees to pay to the Custodian compensation for its services
as set forth in Appendix A hereto, or as shall be set forth in written
amendments to Appendix A approved by the Trust and the Custodian from time to
time.
(b) The Trust shall pay all fees and expenses of any Sub-Custodian
approved by the Trust.
SECTION 16. CORPORATE ACTIVITY
The Custodian will exercise its best efforts to forward to the Trust in a
timely manner all notices of shareholder meetings, proxy statements, annual
reports, conversion notices, call notices, or other notices or written materials
of any kind (excluding share certificates and dividend, principal and interest
payments) sent to the Custodian as registered owner of Securities. Best efforts
as used in this Agreement shall mean the efforts reasonably believed in good
faith by the Custodian to be adequate in the circumstances.
Upon receipt of warrants or rights issued in connection with the assets of
the Trust, the Custodian shall enter into its ledgers appropriate notations
indicating such receipt and shall notify the Trust of such receipt. However, the
Custodian shall have no obligation to take any other action with respect to such
warrants or rights, except as directed in Written or Oral Instructions.
Custodian shall take all reasonable actions, as agreed to by the Trust and
the Custodian, to assist the Trust in obtaining from year to year favorable
opinions from the Trust's independent auditors with respect to the Custodian's
activities hereunder.
SECTION 17. RECORDS
The Custodian acknowledges and agrees that all books and records maintained
for the Trust in any capacity under this Agreement are the property of the Trust
and may be inspected by the Trust or any authorized regulatory agency at any
reasonable time. Upon request all such books and records will be surrendered
promptly to the Trust. The Custodian agrees to make available upon request and
to preserve for the periods prescribed in Rule 31a-2 of the 1940 Act any records
related to services provided under this Agreement and required to be maintained
by Rule 31a-1 under the 1940 Act.
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SECTION 18. LIABILITY
The Custodian assumes only the usual duties and obligations normally
performed by custodians of open-end investment companies. The Custodian
specifically assumes no responsibility for the management, investment or
reinvestment of the Securities from time to time owned by the Trust, whether or
not on deposit hereunder. The Custodian assumes no duty, obligation or
responsibility whatsoever with respect to Securities not deposited with the
Custodian.
The Custodian may rely upon the advice of counsel, who may be counsel for
the Trust or for the Custodian, and upon statements of accountants, brokers or
other persons believed by the Custodian in good faith to be expert in the
matters upon which they are consulted. The Custodian shall not be liable for any
action taken in good faith reliance upon such advice or statements. The
Custodian shall not be liable for action taken in good faith in accordance with
any Written or Oral Instructions, request or advice of the Trust or its
officers, or information furnished by the Trust or its officers. The Custodian
shall not be liable for any non-negligent action taken in good faith and
reasonably believed by it to be within the powers conferred upon it by this
Agreement.
No liability of any kind, other than to the Trust, shall attach to the
Custodian by reason of its custody of the Securities and cash held by the
Custodian hereunder or otherwise as a result of its custodianship. In the event
that any claim shall be made against the Custodian, it shall have the right to
pay the claim and reimburse itself from the assets of the Trust; provided,
however, that no such reimbursement shall occur unless the Trust is notified of
the claim and is afforded an opportunity to contest or defend the claim, if it
so elects. The Trust agrees to indemnify and hold the Custodian harmless for any
loss, claim, damage or expense arising out of the custodian relationship under
this Agreement; provided such loss, claim, damage or expense is not the direct
result of the Custodian's negligence or willful misconduct.
SECTION 19. TAXES
The Custodian shall not be liable for any taxes, assessments or
governmental charges that may be levied or assessed upon the Securities held by
it hereunder, or upon the income therefrom. Upon Written or Oral Instruction,
the Custodian may pay any such tax, assessment or charge and reimburse itself
out of the monies of the Trust or the Securities held hereunder.
SECTION 20. SUB-CUSTODIANS
(a) The Custodian may from time to time request appointment of one or more
Sub-Custodians. Upon receipt of Written or Oral Instructions authorizing the use
of a Sub-Custodian, the Custodian shall appoint one or more Sub-Custodians or
Foreign Sub-Custodians of Securities and cash owned by the Trust from time to
time.
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(b) Custodian shall cause Foreign Securities and amounts of cash
reasonably required to effect Trust's Foreign Securities transactions in
the Custodian Account to be held in such countries or other jurisdictions
as Trust shall direct in Written or Oral Instructions.
Custodian may hold Foreign Securities and cash in sub-custody accounts,
which shall be deemed part of the Custodian Account and which have been
established by Custodian or by a Sub-Custodian with those Foreign Sub-Custodians
as Trust shall approve in Written or Oral Instructions.
Each Foreign Sub-Custodian is authorized to hold Foreign Securities in an
account with any foreign Securities Depository as the Trust shall approve in
Written or Oral Instructions.
The contractual agreement between the Custodian and any Foreign Sub-
Custodian must provide at a minimum that the Foreign Sub-Custodian shall
provide, obtain or use its best efforts to assist the Trust in obtaining
information responsive to the "notes" to Rule 17f-5 under the 1940 Act with
respect to (i) each country or jurisdiction where the Trust's assets are
proposed to be maintained, are maintained or in the future may be maintained and
(ii) each Foreign Sub-Custodian which is proposed to hold, holds or in the
future may hold Foreign Securities or cash of the Trust. Notwithstanding any
other provisions of this Agreement, each Foreign Sub-Custodian's undertaking to
assist the Trust in obtaining such information shall neither increase the
Foreign Sub-Custodian's duty of care nor reduce the Trust's responsibility to
determine for itself the prudence of entrusting its assets to any particular
Foreign Sub-Custodian or foreign Securities Depository.
The Custodian shall deposit Foreign Securities and cash of the Trust with a
Foreign Sub-Custodian only in an account of the Foreign Sub-Custodian which
holds only assets held by Custodian as custodian for its customers. In the event
that a Foreign Sub-Custodian is authorized to hold any of the Foreign Securities
placed in its care in a foreign Securities Depository, Custodian will direct the
Foreign Sub-Custodian to identify the Foreign Securities on the books of the
foreign Securities Depository as being held for the account of Custodian as
custodian for its customers.
(c) The Custodian shall have no liability to the Trust by reason of any
act or omission of any Sub-Custodian approved by the Trust, and the Trust shall
indemnify the Custodian and hold it harmless from and against any and all
actions, suits, claims, losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising directly or indirectly out of or in connection
with the performance of any Sub-Custodian approved by the Trust. The Custodian
assigns to the Trust any and all claims for any losses, costs, expenses, or
damages that may be incurred by the Trust by reason of the negligence, gross
negligence or misconduct of any Sub-Custodian approved by the Trust, or by
reason of the failure of a Sub-Custodian approved by the Trust to perform in
accordance with any applicable agreement, including instructions of the
Custodian. The Custodian shall be under no obligation to prosecute or to defend
any action, suit or claim arising out of, or in connection with, the performance
of any Sub-Custodian approved by the Trust, if, in the opinion of the
Custodian's counsel, such action will involve expense or liability to the
Custodian. The Trust shall, upon request, furnish the Custodian with
satisfactory
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indemnity against such expense or liability, and upon request of the Custodian,
the Trust shall assume the entire defense of any action, suit, or claim subject
to the foregoing indemnity.
With respect to each Sub-Custodian not approved by the Trust, which may not
be a Foreign Sub-Custodian, the Custodian shall be liable to the Trust for any
loss which shall occur as a result of the failure of the Sub-Custodian to
exercise reasonable care with respect to the safekeeping of assets to the same
extent that the Custodian would be liable to the Trust if the Custodian were
holding such assets in its own premises. The Custodian shall be liable to the
Trust under this paragraph only to the extent of the Trust's direct damages, to
be determined based on the market value of the assets which are subject to loss
and without reference to any special conditions or circumstances.
SECTION 21. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement may be executed in more than one counterpart, each of
which shall be deemed to be an original, and shall become effective on the date
hereof. This Agreement shall remain in effect for a period of one year from the
date of its effectiveness and shall continue in effect for successive twelve-
month periods; provided that such continuance is specifically approved at least
annually by the Board and by a majority of the Trustees who are not parties to
this Agreement or interested persons of any such party.
(b) This Agreement may be terminated by either party upon notice to the
other. The termination shall become effective at the time specified in the
notice but no earlier than sixty (60) days after the date of the notice. Upon
notice of termination, the Trust shall use its best efforts to obtain a
successor custodian. If a successor custodian is not appointed within ninety
(90) days after the date of the notice of termination, the Board shall, by
resolution, designate the Trust as its own custodian. Each successor custodian
shall be a person qualified to serve under the 1940 Act. Promptly following
receipt of written notice from the Trust of the appointment of a successor
custodian and receipt of Written or Oral Instructions, the Custodian shall
deliver all Securities and cash it then holds directly to the successor
custodian and shall, upon request of the Trust and the successor custodian and
upon payment of the Custodian's reasonable charges and disbursements, (i)
execute and deliver to the successor custodian an instrument approved by the
successor custodian's counsel transferring to the successor custodian all the
rights, duties and obligations of the Custodian, (ii) transfer to the successor
custodian the originals or copies of all books and records maintained by the
Custodian hereunder and (iii) cooperate with, and provide reasonable assistance
to, the successor custodian in the establishment of the books and records
necessary to carry out the successor custodian's responsibilities hereunder.
Upon delivery of the Securities and other assets of the Trust and compliance
with the other requirements of this Section 21, the Custodian shall have no
further duty or liability hereunder. Every successor custodian appointed
hereunder shall execute and deliver an appropriate written acceptance of its
appointment and shall thereupon become vested with the rights, duties and
obligations of the predecessor custodian.
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SECTION 22. REQUIRED PERFORMANCE ON FUND BUSINESS DAYS
Nothing contained in this Agreement is intended to or shall require the
Custodian, in any capacity hereunder, to perform any functions or duties on any
day other than a Fund Business Day. Functions or duties normally scheduled to be
performed on any day which is not a Fund Business Day shall be performed on, and
as of, the next Fund Business Day unless otherwise required by law.
SECTION 23. MISCELLANEOUS
(a) This Agreement shall extend to and bind the parties hereto and their
respective successors and assigns; provided, however, that this Agreement shall
not be assignable by the Trust without the written consent of the Custodian, or
by the Custodian without the written consent of the Trust. Notwithstanding the
foregoing, either party may assign this Agreement without the consent of the
other party so long as the assignee is an affiliate, parent or subsidiary of the
assigning party and the assignee of the Custodian is qualified to serve as
custodian under the 1940 Act.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of Minnesota.
(c) The captions inserted herein are for convenience of reference and
shall not affect, in any way, the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
WELLS FARGO VARIABLE TRUST
By: _________________________________________
Richard H. Blank, Jr.
Chief Operating Officer
NORWEST BANK MINNESOTA, N.A.
By: _________________________________________
Name: ______________________________________
Title: ______________________________________
-17-
<PAGE>
CUSTODY AGREEMENT
Wells Fargo Variable Trust
Appendix A
For its custodial services, the Custodian shall receive a fee, with respect to
each Fund listed below:
-------------------------------------------------------------
Funds of Wells Fargo Variable Trust Covered by This Agreement
-------------------------------------------------------------
Corporate Bond Fund
Equity Value Fund
Growth Fund
Income Equity Fund
International Equity Fund
Large Company Growth Fund
Money Market Fund
Small Cap Fund
-------------------------------------------------------------
Approved by the Board of Trustees: March 26, 1999
-18-
<PAGE>
EXHIBIT 99.B(h)(1)
ADMINISTRATION AGREEMENT
Wells Fargo Variable Trust
111 Center Street
Little Rock, Arkansas 72201
THIS AGREEMENT is made as of this ___ day of September, 1999, by and
between Wells Fargo Variable Trust, a Delaware business trust (the "Trust") and
Wells Fargo Bank, N.A., a national banking association ("Wells Fargo").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain Wells Fargo to render certain
administrative services to the Trust's investment portfolios listed on Appendix
A (individually, a "Fund" and collectively, the "Funds"), and Wells Fargo is
willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. The Trust hereby appoints Wells Fargo to act as
-----------
Administrator of the Funds, and Wells Fargo hereby accepts such appointment and
agrees to render such services and duties set forth in Paragraph 3, for the
compensation and on the terms herein provided. Each new investment portfolio
established in the future by the Trust shall automatically become a "Fund" for
all purposes hereunder as if it were listed on Appendix A, absent written
notification to the contrary by either the Trust or Wells Fargo.
2. Delivery of Documents. The Trust shall furnish to, or cause to be
---------------------
furnished to, Wells Fargo originals of, or copies of, all books, records, and
other documents and papers related in any way to the administration of the
Trust.
3. Duties as Administrator. Wells Fargo shall, at its expense, provide
-----------------------
the following administrative services in connection with the operations of the
Trust and the Funds:
(a) receive and tabulate shareholder votes;
(b) furnish statistical and research data;
(c) coordinate (or assist in) the preparation and filing with the U.S.
Securities and Exchange Commission ("SEC") of registration
statements, notices, shareholder reports, and other material
required to be filed under applicable laws;
<PAGE>
(d) prepare and file with the states registration statements, notices,
reports, and other material required to be filed under applicable laws;
(e) prepare and file Form 24F-2s and N-SARs;
(f) review bills submitted to the Funds and, upon determining that a
bill is appropriate, allocating amounts to the appropriate Funds and Classes
thereof and instructing the Funds' custodian to pay such bills;
(g) coordinate (or assist in) the preparation of reports and other
information materials regarding the Funds including proxies and other
shareholder communications, and review prospectuses;
(h) prepare expense table information for annual updates;
(i) provide legal and regulatory advice to the Funds in connection
with its other administrative functions, including assignment of matters to
outside legal counsel on behalf of the Trust and supervising the work of such
counsel;
(j) provide office facilities and clerical support for the Funds;
(k) develop and implement procedures for monitoring compliance with
regulatory requirements and compliance with the Funds' investment objectives,
policies and restrictions;
(l) serve as liaison between the Funds and their independent
auditors;
(m) prepare and file tax returns;
(n) review payments of Fund expenses;
(o) prepare expense budgeting and accruals;
(p) provide communication, coordination, and supervision services with
regard to the Funds' transfer agent, custodian, fund accountant, any co-
administrators, and other service organizations that render recordkeeping or
shareholder communication services;
(q) provide information to the Funds' distributor concerning fund
performance and administration;
(r) assist the Trust in the development of additional investment
portfolios;
(s) provide reports to the Funds' board of directors regarding
its activities;
2
<PAGE>
(t) assist in the preparation and assembly of meeting materials,
including comparable fee information, as required, for the Funds' board of
directors; and
(u) provide any other administrative services reasonably necessary for
the operation of the Funds other than those services that are to be provided by
the Trust's transfer and dividend disbursing agent, custodian, and fund
accountant, provided that nothing in this Agreement shall be deemed to require
Wells Fargo to provide any services that may not be provided by it under
applicable banking laws and regulations.
In performing all services under this Agreement, Wells Fargo shall:
(a) act in conformity with the Trust's Declaration of Trust (and By-Laws, if
any), the 1940 Act, and any other applicable laws as may be amended from time to
time, and with the Trust's registration statement under the Securities Act of
1933 and the 1940 Act, as may be amended from time to time; (b) consult and
coordinate with legal counsel to the Trust as necessary and appropriate; and (c)
advise and report to the Trust and its legal counsel, as necessary and
appropriate, with respect to any compliance or other matters that come to its
attention.
In connection with its duties under this Paragraph, Wells Fargo may,
at its own expense, enter into sub-administration agreements with other service
providers, provided that each such service provider agrees with Wells Fargo to
comply with this Agreement and all relevant provisions of the 1940 Act, the
Investment Advisers Act of 1940, any other applicable laws as may be amended
from time to time, and all relevant rules thereunder. Wells Fargo will provide
the Trust with a copy of each sub-administration agreement it executes relating
to the Trust. Wells Fargo will be liable for acts or omissions of any such sub-
administrators under the standards of care described herein under Paragraph 5.
4. Compensation. In consideration of the administration services to
------------
be rendered by Wells Fargo under this Agreement, the Trust shall pay Wells Fargo
a monthly fee, as shown on Appendix A, of the average daily value (as determined
on each business day at the time set forth in the Prospectus for determining net
asset value per share) of the Funds' net assets during the preceding month. If
the fee payable to Wells Fargo pursuant to this Paragraph begins to accrue
before the end of any month or if this Agreement terminates before the end of
any month, the fee for the period from the effective date to the end of that
month or from the beginning of that month to the termination date, respectively,
shall be prorated according to the proportion that the period bears to the full
month in which the effectiveness or termination occurs. For purposes of
calculating each such monthly fee, the value of each Fund's net assets shall be
computed in the manner specified in that Fund's registration statement as then
on file with the SEC for the computation of the value of the Fund's net assets
in connection with the determination of the net asset value of Fund shares. For
purposes of this Agreement, a "business day" is any day that the Trust is open
for trading.
5. Limitation of Liability; Indemnification.
----------------------------------------
(a) Wells Fargo shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
performance of its obligations and
3
<PAGE>
duties under this Agreement, except a loss resulting from Wells Fargo's willful
misfeasance, bad faith, or negligence in the performance of its obligations and
duties or that of its agents or sub-administrators, or by reason of its or their
reckless disregard thereof. Any person, even though also an officer, director,
employee or agent of Wells Fargo, shall be deemed, when rendering services to
the Trust or acting on any business of the Trust (other than services or
business in connection with Wells Fargo's duties as Administrator hereunder), to
be acting solely for the Trust and not as an officer, director, employee, or
agent or one under the control or discretion of Wells Fargo even though paid by
it.
(b) The Trust, on behalf of each Fund, will indemnify Wells Fargo
against and hold it harmless from any and all losses, claims, damages,
liabilities, or expenses (including reasonable counsel fees and expenses)
resulting from any claim, demand, action, or suit relating to the particular
Fund and not resulting from willful misfeasance, bad faith, or negligence of
Wells Fargo or its agents or sub-administrators in the performance of their
obligations and duties, or by reason of its or their reckless disregard thereof.
Wells Fargo will not confess any claim or settle or make any compromise in any
instance in which the Trust will be asked to provide indemnification, except
with the Trust's prior written consent. Any amounts payable by the Trust under
this Subparagraph shall be satisfied only against the assets of the Fund
involved in the claim, demand, action, or suit and not against the assets of any
other Fund.
(c) Wells Fargo will indemnify the Trust against and hold it harmless
from any and all losses, claims, damages, liabilities, or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand, action,
or suit against the Trust or any Fund that resulted from a failure of Wells
Fargo or its agents to act in accordance with the standard of care set forth in
Subparagraph (a) above; provided that such loss, claim, damage, liability or
expense did not result primarily from willful misfeasance, bad faith, or
negligence of the Trust or its agents (other than Wells Fargo or agents of Wells
Fargo) in the performance of their obligations and duties, or by reason of its
or their reckless disregard thereof. The Trust will not confess any claim or
settle or make any compromise in any instance in which Wells Fargo will be asked
to provide indemnification, except with Wells Fargo's prior written consent.
6. Allocation of Expenses. Wells Fargo assumes and shall pay for
----------------------
maintaining the staff and personnel necessary to perform its obligations under
this Agreement and shall, at its own expense, provide its own office space,
facilities and equipment. In addition to the fees described in Section 4 of
this Agreement, the Trust (or its other service providers, as may be provided
pursuant to their respective agreements and contracts with the Trust) shall pay
all of its expenses which are not expressly assumed by Wells Fargo hereunder.
The expenses of legal counsel and accounting experts retained by Wells Fargo,
after consulting with the Trust's legal counsel and independent auditors, as may
be reasonably necessary or appropriate for the performance by Wells Fargo of its
duties under this Agreement shall be deemed to be expenses of, and shall be paid
for by, the Trust.
7. Amendments. This Agreement may be amended at any time by mutual
----------
agreement in writing of the Trust and Wells Fargo, provided that the Board of
Trustees of the Trust,
4
<PAGE>
including a majority of the trustees who are not interested persons of the Trust
or any party to this Agreement, as defined by the 1940 Act, approves any such
amendment in advance.
8. Administrator's Other Businesses. Except to the extent necessary
--------------------------------
to perform Wells Fargo's obligations under this Agreement, nothing herein shall
be deemed to limit or restrict the right of Wells Fargo, or any affiliate or
employee of Wells Fargo, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
9. Duration. This Agreement shall become effective on its execution
--------
date and shall remain in full force and effect for one year or until terminated
pursuant to the provisions in Paragraph 10, and it may be reapproved at least
annually by the Board of Trustees, including a majority of the directors who are
not interested persons of the Trust or any party to this Agreement, as defined
by the 1940 Act.
10. Termination of Agreement. This Agreement may be terminated at any
------------------------
time, without the payment of any penalty, by a vote of a majority of the members
of the Trust's Board of Trustees, on 60 days' written notice to Wells Fargo; or
by Wells Fargo on 60 days' written notice to the Trust.
11. Expense Waivers. If in any fiscal year the total expenses of a
---------------
Fund incurred by, or allocated to, the Fund, excluding taxes, interest,
brokerage commissions and other portfolio transaction expenses, other
expenditures that are capitalized in accordance with generally accepted
accounting principles, extraordinary expenses and amounts accrued or paid under
a Rule 12b-1 Plan of the Fund and including only the fees provided for in
Paragraph 4 and those provided for pursuant to the Fund's advisory agreement
("includible expenses"), exceed the applicable voluntary expense waivers, if
any, set forth in the Prospectus, Wells Fargo shall waive or reimburse that
portion of the excess derived by multiplying the excess by a fraction, the
numerator of which shall be the percentage at which the fee payable pursuant to
this Agreement is calculated under Paragraph 4, and the denominator of which
shall be the sum of such percentage plus the percentage at which the fee payable
pursuant to the Fund's advisory agreement is calculated (the "Applicable
Ratio"), but only to the extent of the fee hereunder for the fiscal year. If
the fees payable under this Agreement and/or the Fund's advisory agreement
contributing to such excess portion are calculated at more than one percentage
rate, the Applicable Ratio shall be calculated separately for and applied
separately to the portions of excess attributable to, the period to which a
particular percentage rate applied. At the end of each month of the Trust's
fiscal year, the Trust shall review the includible expenses accrued during that
fiscal year to the end of that period and shall estimate the includible expenses
for the balance of that fiscal year. If as a result of that review and
estimation it appears likely that the includible expenses will exceed the
limitations referred to in this Paragraph for a fiscal year with respect to the
Fund, the monthly fee set forth in Paragraph 4 payable to Wells Fargo for such
month shall be reduced, subject to a later adjustment, by an amount equal to the
Applicable Ratio times the estimated excess pro rated over the remaining months
of the fiscal year (including the month just
5
<PAGE>
ended). For purposes of computing the excess, if any, the value of the Fund's
net assets shall be computed in the manner specified in Paragraph 4, and any
reimbursements required to be made by Wells Fargo shall be made once a year
promptly after the end of the Trust's fiscal year.
12. Trust not bound to violate its Articles. Nothing in this
---------------------------------------
Agreement shall require the Trust to take any action contrary to any provision
of its Declaration of Trust or to any applicable statute or regulation.
13. Miscellaneous.
-------------
(a) Any notice or other instrument authorized or required by
this Agreement to be given in writing to the Trust or Wells Fargo shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Trust:
Wells Fargo Variable Trust
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank, Jr.
To Wells Fargo:
Wells Fargo Bank, N.A.
525 Market Street, 12th Floor
San Francisco, California 94105
Attention: Michael J. Hogan
(b) This Agreement shall extend to and be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be subject to assignment (as that term is defined
under the 1940 Act) without the written consent of the other party.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(d) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and which
collectively shall be deemed to constitute only one agreement.
(e) The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
6
<PAGE>
(f) If any provision of this Agreement is declared to be ;prohibited
or unenforceable, the remaining provisions of this Agreement shall continue to
be valid and fully enforceable.
In witness whereof, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
WELLS FARGO VARIABLE TRUST
By:____________________________
Richard H. Blank, Jr.
Secretary
WELLS FARGO BANK, N.A.
By:____________________________
Michael J. Hogan
Senior Vice President
By:____________________________
C. David Messman
Vice President
7
<PAGE>
Appendix A
Funds of Wells Fargo Variable Trust Covered by This Agreement
Fee of 0.15% of average daily
- -----------------------------
net assets on an annual basis:
- -----------------------------
- -----------------------------------------------------------------------------
1. Asset Allocation Fund
- -----------------------------------------------------------------------------
2. Corporate Bond Fund
- -----------------------------------------------------------------------------
3. Equity Value Fund
- -----------------------------------------------------------------------------
4. Growth Fund
- -----------------------------------------------------------------------------
5. Income Equity Fund
- -----------------------------------------------------------------------------
6. International Equity Fund
- -----------------------------------------------------------------------------
7. Large Company Growth Fund
- -----------------------------------------------------------------------------
8. Money Market Fund
- -----------------------------------------------------------------------------
9. Small Cap Fund
- -----------------------------------------------------------------------------
Approved by Board of Trustees: March 26, 1999
A-1
<PAGE>
EXHIBIT 99.B(h)(2)
WELLS FARGO VARIABLE TRUST
FUND ACCOUNTING AGREEMENT
September 17, 1999
AGREEMENT made as of the 17th day of September, 1999, by and between Wells
Fargo Variable Trust, a business trust organized under the laws of the State of
Delaware, with its principal office and place of business at 111 Center Street,
Little Rock, Arkansas 72201 (the "Trust"), and Forum Accounting Services, LLC
("Forum") a Delaware limited liability company with its principal office and
place of business at Two Portland Square, Portland, Maine 04101.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company and
may issue its shares of beneficial interest (the "Shares"), in separate series
and classes; and
WHEREAS, the Trust offers shares in various series as listed in Appendix A
hereto (each such series, together with all other series subsequently
established by the Trust and subject to this Agreement in accordance with
Section 6, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust offers shares of various classes of each Fund as listed
in Appendix A hereto (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes");
WHEREAS, the Trust desires that Forum perform certain fund accounting
services for each Fund and Class thereof and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints Forum, and Forum hereby agrees, to act as fund
accountant of the Trust for the period and on the terms set forth in this
Agreement. In connection therewith, the Trust has delivered to Forum copies of
(i) the Trust's Trust Instrument and, if applicable, Bylaws (collectively, as
amended from time to time, "Organic Documents"), (ii) the Trust's Registration
Statement and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the 1940 Act (the "Registration Statement"), (iii) the
Trust's current Prospectus and Statement of Additional Information of each Fund
(collectively, as currently in effect and as amended or supplemented, the
"Prospectus") and (iv) all procedures adopted by the Trust with respect to the
Funds (e.g., repurchase agreement procedures), and shall promptly furnish Forum
with all amendments of or supplements to the foregoing. The Trust shall deliver
to Forum a certified copy of the resolution of the Board of Trustees of the
Trust (the "Board") appointing Forum and authorizing the execution and delivery
of this Agreement.
<PAGE>
SECTION 2. DUTIES OF FORUM
(a) Forum and Wells Fargo Bank, N.A., the Trust's administrator
(collectively with its agents, the "Administrator"), may from time to time adopt
such procedures as they agree upon to implement the terms of this Section. With
respect to each Fund, Forum shall perform the following services:
(i) calculate the net asset value per share ("NAV") with the frequency
prescribed in each Fund's then-current Prospectus;
(ii) calculate each item of income, expense, deduction, credit, gain and
loss, if any, as required by the Trust and in conformance with generally
accepted accounting practice ("GAAP"), the SEC's Regulation S-X (or any
successor regulation) and the Internal Revenue Code of 1986, as amended (or
any successor laws)(the "Code");
(iii) Maintain each Fund's general ledger and record all income, gross
expenses, capital share activity and security transactions of each Fund;
(iv) calculate the yield, effective yield, tax equivalent yield and total
return for each Fund, and each Class thereof, as applicable, and such other
measure of performance as may be agreed upon between the parties hereto;
(v) provide the Trust and such other persons as the Administrator may
direct with the following reports (A) a current security position report,
(B) a summary report of transactions and pending maturities (including the
principal, cost, and accrued interest on each portfolio security in
maturity date order), and (C) a current cash position and projection
report;
(vi) prepare and record, as of each time when the net asset value of a
Fund is calculated or as otherwise directed by the Trust, either (A) a
valuation of the assets of the Fund (based upon the use of outside services
normally used and contracted for this purpose by Forum in the case of
securities for which information and market price or yield quotations are
readily available and based upon evaluations conducted in accordance with
the Trust's instructions in the case of all other assets) or (B) a
calculation confirming that the market value of the Fund's assets does not
deviate from the amortized cost value of those assets by more than a
specified percentage;
(vii) make such adjustments over such periods as the Administrator deems
necessary to reflect over-accruals or under-accruals of estimated expenses
or income;
(viii)request any necessary information from the Administrator and the
Trust's transfer agent and distributor and prepare the Trust's Form N-SAR;
-2-
<PAGE>
(ix) provide appropriate records to assist the Trust's independent
accountants and, upon approval of the Trust or the Administrator, any
regulatory body in any requested review of the Trust's books and records
maintained by Forum;
(x) prepare the Funds' semi-annual financial statements to the Trust's
shareholders;
(xi) file the Funds' semi-annual financial statements with the SEC or
ensure that the Funds' semi-annual financial statements are filed with the
SEC;
(xii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information with respect to investment companies;
(xiii) provide the Trust or the Administrator with the data requested by
the Trust or the Administrator that is required to update the Registration
Statement;
(xiv) provide the Trust or independent accountants with all information
requested with respect to the preparation of the Trust's income, excise and
other tax returns;
(xv) prepare, or prepare, execute and file all Federal income and excise
tax returns and state income and other tax returns, including any
extensions or amendments, each as agreed between the Trust and Forum;
(xvi) produce quarterly compliance reports for investment advisers to the
Trust and the Board and provide information to the Administrator,
investment advisers to the Trust and other appropriate persons with respect
to questions of Fund compliance;
(xvii) determine the amount of distributions to shareholders as necessary
to, among other things, maintain the qualification of each Fund as a
regulated investment company under the Code, and prepare and distribute to
appropriate parties notices announcing the declaration of distributions to
shareholders;
(xviii)transmit to and receive from each Fund's transfer agent
appropriate data to reconcile daily Shares outstanding and other data with
the transfer agent;
(xix) periodically reconcile all appropriate data with each Fund's
custodian;
(xx) verify investment trade tickets when received from an investment
adviser and maintain individual ledgers and historical tax lots for each
security;
(xxi) report to the Trust and the Administrator within 15 days after the
end of each calendar month, Forum's compliance for the prior month with the
written service level standards agreed upon from time to time by the Trust
and Forum (the "Service Standards"). The initial Service Standards are
attached as Appendix B hereto; and
-3-
<PAGE>
(xxii) perform such other recordkeeping, reporting and other tasks as may
be specified from time to time in the procedures adopted by the Board
pursuant to mutually acceptable compensation and implementation agreements.
(b) Forum shall prepare and maintain on behalf of the Trust the
following books and records of each Fund, and each Class thereof, pursuant to
Rule 31a-1 under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of cash
and all other debits and credits, as required by subsection (b)(1) of the
Rule;
(ii) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by subsection
(b)(2) of the Rule (but not including the ledgers required by subsection
(b)(2)(iv) of the Rule);
(iii) A record of each brokerage order given by or on behalf of the Trust
for, or in connection with, the purchase or sale of securities, whether
executed or not, and all other portfolio purchases or sales, as required by
subsections (b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any direct
or indirect interest or which the Trust has granted or guaranteed and a
record of any contractual commitments to purchase, sell, receive or deliver
any property, as required by subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by subsection (b)(8) of the Rule; and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to those provisions of the Rule
applicable to portfolio transactions and as agreed upon between the parties
hereto.
(c) The books and records prepared and maintained pursuant to Section
2(b) shall be prepared and maintained in such form, for such periods and in such
locations as may be required by the 1940 Act. The books and records pertaining
to the Trust that are in possession of Forum shall be the property of the Trust.
The Trust, the Administrator, or the Trust's or the Administrator's authorized
representatives, shall have access to such books and records at all times during
Forum's normal business hours. Upon the reasonable request of the Trust or the
Administrator, copies of any such books and records shall be provided promptly
by Forum to the Trust or the Trust's authorized representatives at the Trust's
expense. In the event the Trust designates a successor that shall assume any of
Forum's obligations hereunder, Forum shall, at the expense and direction of the
Trust, transfer to such successor all relevant books, records and other data
established or maintained by Forum under this Agreement.
-4-
<PAGE>
(d) Forum shall provide the Trust and, subject to agreement to be bound by
the following sentence, the Administrator and any other service provider to the
Trust specified by the Trust, nightly snapshots of such data and information
from Forum's fund accounting system as may be agreed to in writing from time to
time. The Trust acknowledges that the databases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals maintained by Forum on databases under the control and ownership of
Forum or a third party hired by Forum constitute copyrighted, trade secret, or
other proprietary information (collectively, "Proprietary Information") of
substantial value to Forum or the third party. The Trust agrees to treat all
Proprietary Information as proprietary to Forum and further agrees that it shall
not divulge any Proprietary Information to any person or organization except as
may be provided under this Agreement.
(e) Forum shall implement the accounting practices and procedures approved
by the Board as soon as practical following receipt of written notice thereof,
subject to Section 2(a)(xxi).
(f) Nothing contained herein shall be construed to require Forum to
perform any service that could cause Forum to be deemed an investment adviser
for purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended,
or that could cause a Fund to act in contravention of the Fund's Prospectus or
any provision of the 1940 Act. Except as otherwise specifically provided herein,
the Trust assumes all responsibility for ensuring that the Trust complies with
all applicable requirements of the Securities Act, the 1940 Act and any laws,
rules and regulations of governmental authorities with jurisdiction over the
Trust. All references to any law in this Agreement shall be deemed to include
reference to the applicable rules and regulations promulgated under authority of
the law and all official interpretations of such law or rules or regulations.
SECTION 3. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION
(a) Forum shall be under no duty to take any action except as specifically
set forth herein or as may be specifically agreed to by Forum in writing. Forum
shall use its best judgment and efforts in rendering the services described in
this Agreement. Forum shall not be liable to the Trust or any of the Trust's
shareholders for any action or inaction of Forum relating to any event
whatsoever in the absence of bad faith, willful misfeasance or negligence in the
performance or disregard of Forum's duties or obligations under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its employees,
agents, directors, officers and managers and any person who controls Forum
within the meaning of section 15 of the Securities Act or section 20 of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), ("Forum
Indemnitees"), against and from any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees
and other expenses of every nature and character arising out of or in any way
related to Forum's actions taken or failures to act with respect to a Fund that
are consistent with the standard of care set forth in Section 3(a) or based, if
applicable, on good faith reliance upon an
-5-
<PAGE>
item described in Section 3(d) (a "Forum Claim"). The Trust shall not be
required to indemnify any Forum Indemnitee if, prior to confessing any Forum
Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not give
the Trust written notice of and reasonable opportunity to defend against the
Forum Claim in its own name or in the name of the Forum Indemnitee.
(c) Forum agrees to indemnify and hold harmless the Trust, its employees,
agents, directors, officers and managers and any person who controls the Trust
within the meaning of section 15 of the Securities Act or section 20 of the 1934
Act ("Trust Indemnitees"), against and from any and all claims, demands,
actions, suits, judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character arising
out of or in any way related to (i) Forum's actions taken or failures to act
with respect to a Fund that are not consistent with the standard of care set
forth in Section 3(a) or based, if applicable, on good faith reliance upon an
item described in Section 3(d), or (ii) any breach of Forum's representation set
forth in Section 13 (a "Trust Claim"). Forum shall not be required to indemnify
any Trust Indemnitee if, prior to confessing any Trust Claim against the Trust
Indemnitee, the Trust or the Trust Indemnitee does not give Forum written notice
of and reasonable opportunity to defend against the Trust Claim in its own name
or in the name of the Trust Indemnitee.]
(d) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of reputable counsel, who may be counsel
to the Trust or counsel to Forum, or the advice of in-house counsel of the
Administrator or its affiliates;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by a person or persons authorized by
the Board to give such oral instruction. Provided that Forum has such
reasonable belief, Forum shall have no duty or obligation to make any
inquiry or effort of certification of such oral instruction;
(iii) any written instruction or certified copy of any resolution of the
Board, and Forum may rely upon the genuineness of any such document or copy
thereof reasonably believed in good faith by Forum to have been validly
executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
Forum to be genuine and to have been signed or presented by the Trust or
other proper party or parties;
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
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<PAGE>
(e) Forum shall not be liable for the errors of other service providers to
the Trust, including the errors of pricing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
standard contracts entered into by Forum) and errors in information provided by
an investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
(f) Forum shall reimburse each applicable Fund for any net losses to the
Fund during each NAV Error Period resulting from an NAV Difference that is at
least $0.01 per Fund share but that, as a percentage of Recalculated NAV of such
Fund, is less than 1/2 of 1%. Forum shall reimburse the Fund on its own behalf
and on behalf of each Fund shareholder for any losses experienced by the Fund or
any Fund shareholder, as applicable, during each NAV Error Period resulting from
an NAV Difference that is at least $0.01 per Fund share and that, as a
percentage of Recalculated NAV of such Fund, is at least 1/2 of 1%; provided,
however, that Forum shall not be responsible for reimbursing any Fund with
respect to any shareholder that experiences a loss during any NAV Error Period
of less than $10.
(g) For purposes of this Agreement, (i) the NAV Difference shall mean the
difference between the NAV at which a shareholder purchase or redemption should
have been effected ("Recalculated NAV") and the NAV at which the purchase or
redemption is effected, (ii) NAV Error Period shall mean any Fund business day
or series of two or more consecutive Fund business days during which an NAV
Difference of $0.01 per Fund share or more exists, (iii) NAV Differences and any
Forum liability therefrom are to be calculated each time a Fund's (or Class's)
NAV is calculated, (iv) in calculating any amount for which Forum would
otherwise be liable under this Agreement for a particular NAV error, Fund (or
Class) losses and gains shall be netted and (v) in calculating any amount for
which Forum would otherwise be liable under this Agreement for a particular NAV
error that continues for a period covering more than one NAV determination, Fund
(or Class) losses and gains for the period shall be netted.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to this
Agreement, the Trust shall pay Forum, with respect to each Fund, the fees set
forth in Clause (i) of Appendix C hereto. In consideration of the services
provided by Forum to begin the operations of a new Fund, the Trust shall pay
Forum, with respect to each Fund, the fees set forth in clause (ii) of Appendix
C hereto. In consideration of additional services provided by Forum to perform
certain functions, the Trust shall pay Forum, with respect to each Fund the fees
set forth in clause (iii) of Appendix C hereto. Nothing in this Agreement shall
require Forum to perform any of the services listed in Section 2(a)(xv) and
clause (iii) of Appendix C hereto, as such services may be performed by the
Fund's independent accountant if appropriate in the judgment of Forum.
All fees payable hereunder shall be accrued daily by the Trust. The fees
payable for the services listed in clauses (i) and (iii) of Appendix C hereto
shall be payable monthly in advance on the tenth Fund business day of each
calendar month for services to be performed during that month. The fees payable
for the services listed in clause (ii) of Appendix C hereto shall be payable
monthly in arrears on the fifth Fund business day of the calendar month
following the
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<PAGE>
month in which a Fund commences operations. If fees payable for the services
listed in clause (i) begin to accrue in the middle of a month or if this
Agreement terminates before the end of any month, all fees for the period from
the date on which such accrual begins to the end of that month or from the
beginning of that month to the date of termination, as the case may be, shall be
prorated according to the proportion that the period bears to the full month in
which the commencement or termination occurs. Upon the termination of this
Agreement with respect to a Fund, the Trust shall pay to Forum such compensation
as shall be payable prior to the effective date of termination.
(b) In connection with the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to reimburse Forum for the
expenses set forth in Clause (iv) of Appendix C hereto. Reimbursements shall be
payable as incurred. In addition, the Trust, on behalf of the applicable Fund,
shall reimburse Forum for all reasonably incurred expenses and employee time (at
150% of salary) attributable to any review of the Trust's accounts and records
by the Trust's independent accountants or any regulatory body outside of routine
and normal periodic reviews. Should the Trust exercise its right to terminate
this Agreement, the Trust, on behalf of the applicable Fund, shall reimburse
Forum for all reasonably incurred out-of-pocket expenses and employee time (at
150% of salary) associated with the copying and movement of records and material
to any successor person and providing assistance to any successor person in the
establishment of the accounts and records necessary to carry out the successor's
responsibilities.
(c) Forum may, with respect to questions of law relating to its services
hereunder, apply to and obtain the advice and opinion of counsel to the Trust or
counsel to Forum; provided, however, that Forum shall in all cases first
reasonably attempt to apply to and obtain the advice and opinion of in-house
counsel to the Administrator. In the event that Forum is unable to contact in-
house counsel to the Administrator, it shall nonetheless inform a Vice President
or more senior person at the Administrator of the matters for which it intends
to seek advice and opinion. The costs of any such advice or opinion shall be
borne by the Trust.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund or
Class on the later of September 17, 1999 or the date of the commencement of
operations of the Fund or Class. Upon effectiveness of this Agreement, it shall
supersede all previous agreements between the parties hereto covering the
subject matter hereof insofar as any such agreement may have been deemed to
relate to the Funds.
(b) This Agreement shall continue in effect with respect to each Fund
until September 30, 2002 (the "Initial Term") and shall continue in effect
thereafter until terminated.
(c) Notwithstanding Section 5(b), this Agreement may be terminated with
respect to any or all Funds at any time after the expiration of the Initial
Term, without the payment of any
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<PAGE>
penalty (i) by the Board on 60 days' written notice to Forum or (ii) by Forum on
60 days' written notice to the Trust.
(d) Notwithstanding Section 5(b), this Agreement may be terminated by
either party hereto at any time without notice, whether prior to or after the
expiration of the Initial Term, if:
(i) the other party breaches any material provision of this Agreement,
the terminating party has provided written notice of such breach to the
breaching party and the breaching party has not cured the breach within 30
days of receipt of such notice; provided that such termination notice shall
not be given more than 30 days after the breaching party has cured the
breach;
(ii) the other party becomes the subject of any federal or state
bankruptcy proceeding that is not dismissed within 60 days after the
initiation of such proceeding; provided that such termination shall not
occur more than 60 days after the dismissal of such proceeding; or
(iii) the other party (or in the case of Forum, the Administrator) is
convicted of corporate criminal activity.
(e) Notwithstanding Section 5(b), this Agreement may be terminated by
the Trust at any time, whether prior to or after the expiration of the Initial
Term, if:
(i) Forum fails to meet or exceed [ ]% of the Service Standards:
(A) in any three consecutive months; or
(B) in any six months during any consecutive period of twelve
months;or
(ii) the average cumulative Service Level Percentage (as defined below)
is less than [ ]% in any consecutive period of six months.
Compliance with the Service Standards shall be computed as a fraction, the
numerator of which shall be the number of Service Standard criteria that were
met or exceeded in the month and the denominator of which shall be the number of
Service Standard criteria applicable in such month. The Service level Percentage
shall mean such fraction expressed as a percentage.
Nothing in this paragraph (e) shall in any way diminish the Trust's right to
terminate this Agreement in the event of a breach of a material provision of
this Agreement by Forum pursuant to Section 5(d).
(f) Notwithstanding Section 5(b), this Agreement may be terminated by
Forum at any time, whether prior to or after the expiration of the Initial Term,
without the payment of any penalty on 180 days' written notice to the Trust.
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<PAGE>
(g) The provisions of Sections 2(c), 3, 4, 5(g), 5(h), 7, 8, 9(b), 12, 13
and 14 shall survive any termination of this Agreement.
(h) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares or one
or more classes of Shares after the effectiveness of this Agreement, such series
of Shares or classes of Shares, as the case may be, shall become Funds and
Classes under this Agreement; provided, that such series shall not become Series
hereunder if the Board reasonably determines that Forum is unable to perform the
services.
SECTION 7. CONFIDENTIALITY
Forum agrees to treat all records and other information related to the
Trust as proprietary information of the Trust and, on behalf of itself and its
employees, to keep confidential all such information, except that Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
Forum is advised by reputable counsel that it may be exposed to civil or
criminal contempt proceedings for failure to release the information (provided,
however, that Forum shall seek the approval of the Trust as promptly as possible
so as to enable the Trust to pursue such legal or other action as it may desire
to prevent the release of such information) or when so requested by the Trust.
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<PAGE>
SECTION 8. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons of the Trust, to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) Forum may subcontract any or all of its functions or responsibilities
pursuant to this Agreement to one or more affiliated persons who agree to comply
with the terms of this Agreement; provided, that any such subcontracting shall
not relieve Forum of its responsibilities hereunder. Forum shall be responsible
for the acts and omissions of any such person to the same extent as if Forum had
done such acts or made such omissions itself. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation or
reimbursement of expenses from the Trust.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require Forum,
in any capacity under this Agreement, to perform any functions or duties on any
day other than a business day of the Trust or of a Fund. Functions or duties
normally scheduled to be performed on any day which is not a business day of the
Trust or of a Fund shall be performed on, and as of, the next business day,
unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not be
liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in
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<PAGE>
asserting any rights or claims under this Agreement, it shall look only to the
assets and property of the Trust or the Fund to which Forum's rights or claims
relate in settlement of such rights or claims, and not to the trustees of the
Trust or the shareholders of the Funds.
SECTION 13. YEAR 2000
Forum confirms that it has taken all reasonable business steps to ensure
that any system or software used in the operation of its business that is an any
way related to the services provided herein:
(i) manages and manipulates data involving all dates from the 20th and
21st centuries without functional or data abnormality related to such
dates;
(ii) has user interfaces and data fields formatted to distinguish between
dates from the 20th and 21st centuries; and
(iii) represents all data to include indications of the millennium,
century, and decade, as well as the actual year.
SECTION 14. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement; provided,
however, that any damages suffered by the Trust by virtue of the loss by any
Fund of its status as a registered investment company under the 1940 Act shall
in no circumstances be treated as consequential damages for purposes of this
Agreement; provided, further, that the foregoing proviso shall not create any
implication that, in the absence of such proviso, consequential damages would
include any damages of the type or nature referred to therein.
(b) Except for Appendix A to add new Funds and Classes in accordance with
Section 6, no provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered
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<PAGE>
severable and not be affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid .
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or manager
of Forum shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting securities,"
"interested person" and "affiliated person" shall have the meanings ascribed
thereto in the 1940 Act.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
WELLS FARGO VARIABLE TRUST
By:__________________________
[Name]
President
FORUM ACCOUNTING SERVICES, LLC
By:____________________________
Stacey E. Hong
Director
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<PAGE>
EXHIBIT 99.B(h)(3)
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of May ____, 1999, by and between WELLS FARGO VARIABLE TRUST,
a Delaware business trust, having its principal office and place of business at
525 Market Street, San Francisco, California 94120 (the "Fund"), and BOSTON
FINANCIAL DATA SERVICES, INC. a Massachusetts corporation having its principal
office and place of business at 2 Heritage Drive, Quincy, Massachusetts 02171
(the "Transfer Agent")
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in series, such series shall
be named in the attached Schedule A which may be amended by the parties from
time to time (each such series, together with all other series subsequently
established by the Fund and made subject to this Agreement in accordance with
Section 18, being herein referred to as a "Portfolio," and collectively as the
- ----------
"Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Transfer
Agent as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities, and the
Transfer Agent desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Terms of Appointment and Duties
-------------------------------
1.1 Transfer Agency Services. Subject to the terms and conditions
set forth in this Agreement, the Fund, on behalf of the
Portfolios, hereby employs and appoints the Transfer Agent to
act as, and the Transfer Agent agrees to act as, transfer
agent for the Fund's issued and outstanding shares of
beneficial interest, ("Shares") and as dividend disbursing
agent, custodian of certain retirement plans and agent in
connection with any accumulation, open-account or similar plan
provided to the shareholders of each of the respective
Portfolios of the Funds ("Shareholders") and set out in the
currently effective prospectus and statement of additional
information ("Prospectus") of the Fund on behalf of the
applicable Portfolio, including without limitation any
periodic investment plan or periodic withdrawal program. In
accordance with procedures established from time to time by
agreement between the Fund on behalf of each of the
Portfolios, as applicable and the Transfer Agent, the Transfer
Agent agrees that it will perform the following services:
(a) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the Custodian of the Fund authorized pursuant to
the Fund's Declaration of Trust (the "Custodian");
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(b) Pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate Shareholder
account;
(c) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(d) In respect to the transactions in items (a), (b) and (c)
above, the Transfer Agent shall execute transactions directly
with broker-dealers authorized by the Fund;
(e) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any redemption,
pay over or cause to be paid over in the appropriate manner
such monies as instructed by the redeeming Shareholders;
(f) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(g) Prepare and transmit payments (or credit the appropriate
shareholder account) for dividends and distributions declared
by the Fund on behalf of the applicable Portfolio;
(h) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon receipt by
the Transfer Agent of indemnification satisfactory to the
Transfer Agent and protecting the Transfer Agent and the Fund,
and the Transfer Agent at its option, may issue replacement
certificates in place of mutilated stock certificates upon
presentation thereof and without such indemnity;
(i) Maintain records of account for and advise the Fund and
its Shareholders as to the foregoing; and
(j) Record the issuance of Shares of the Fund and maintain
pursuant to Regulation 17Ad-10(e) of the Securities Exchange
Act of 1934, as amended, (the "Exchange Act") a record of the
total number of Shares of the Fund which are issued and
outstanding. The Transfer Agent shall also provide the Fund on
a daily basis with the total number of Shares which are issued
and outstanding and shall have no other obligations with
respect to this item.
1.2 Additional Services. In addition to, and neither in lieu nor
in contravention of, the services set forth in the above
paragraph, the Transfer Agent shall perform the following
services:
(a) Other Customary Services. Perform the customary services
of a transfer agent, dividend disbursing agent, custodian of
certain retirement plans and, as relevant, agent in connection
with accumulation, open-account or similar plan (including
without limitation any periodic investment plan or periodic
withdrawal program), including but not limited to: maintaining
all Shareholder accounts, preparing Shareholder meeting lists,
Shareholder reports and prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien
2
<PAGE>
accounts, preparing and filing U.S. Treasury Department Forms
1099 and other appropriate forms required with respect to
dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation and
statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account
information.
(b) Control Book (also known as "Super Sheet"). Maintain a
daily record and produce a daily report for the Fund of all
transactions and receipts and disbursements of money and
securities and deliver a copy of such report for the Fund for
each business day to the Fund no later than 9:00 AM Eastern
Time, or such earlier time as the Fund may reasonably require
on the next business day.
(c) "Blue Sky" Reporting. The Fund shall (i) identify to the
Transfer Agent in writing those transactions and assets to be
treated as exempt from blue sky reporting for each State; and
(ii) verify the establishment of transactions for each State
on the system prior to activation and thereafter monitor the
daily activity for each State. The responsibility of the
Transfer Agent for the Fund's blue sky State registration
status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and
providing a system which will enable the Fund to monitor the
total number of Shares sold in each State.
(d) National Securities Clearing Corporation (the "NSCC"). (i)
accept and effectuate the registration and maintenance of
accounts through Networking and the purchase, redemption,
transfer and exchange of shares in such accounts through
Fund/SERV (Networking and Fund/SERV being programs operated by
the NSCC on behalf of NSCC's participants, including the
Fund), in accordance with, instructions transmitted to and
received by the Transfer Agent by transmission from NSCC on
behalf of broker-dealers and banks which have been established
by, or in accordance with the instruction of authorized
persons, as hereinafter defined on the dealer file maintained
by the Transfer Agent; (ii) issue instructions to Fund's banks
for the settlement of transactions between the Fund and NSCC
(acting on behalf of its broker dealer and bank participants);
(iii) provide account and transaction information from the
affected Fund's records on DST Systems, Inc. computer system
TA2000 ("TA2000 System") in accordance with NSCC's Networking
and Fund/SERV rules for those broker-dealers; and (iv)
maintain Shareholder accounts on TA2000 System through
Networking.
(e) New Procedures. New procedures as to who shall provide
certain of these services in Section 1 may be established in
writing from time to time by agreement between the Fund and
the Transfer Agent. The Transfer Agent may at times perform
only a portion of these services and the Fund or its agent may
perform these services on the Fund's behalf.
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<PAGE>
(f) Conversion Services. Upon completion of the contemplated
mutual fund reorganizations involving the Fund and Norwest
Advantage Funds ("NAF"), Transfer Agent shall convert and
merge the account information for SFI and NAF into one
platform for the conversion fee specified in Schedule 1.3(f).
2. Third Party Administrators for Defined Contribution Plans
---------------------------------------------------------
2.1 The Fund may decide to make available to certain of its
customers, a qualified plan program (the "Program") pursuant
to which the customers ("Employers") may adopt certain plans
of deferred compensation ("Plan or Plans") for the benefit of
the individual Plan participant (the "Plan Participant"), such
Plan(s) being qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended ("Code") and administered by
third party administrators which may be plan administrators as
defined in the Employee Retirement Income Security Act of
1974, as amended) (the "TPA(s)").
2.2 In accordance with the procedures established in the initial
Schedule 2.2 entitled "Third Party Administrator Procedures,"
------------
as may be amended by the Transfer Agent and the Fund from time
to time ("Schedule 2.2"), the Transfer Agent shall:
------------
(a) Treat and maintain accounts established by the Plans in
the name of the Trustees, Plans or TPA as omnibus accounts;
and
(b) Perform all services under Section 1 as transfer agent of
---------
the Funds and not as a record-keeper for the Plans.
2.3 Transactions identified under Section 2.3 of this Agreement
-----------
shall be deemed exception services ("Exception Services") when
such transactions require the Transfer Agent to use methods
and procedures other than those usually employed by the
Transfer Agent to perform services under Section 1 according
---------
to the Fund's prospectus, or under Section 2.2 of this
-----------
Agreement.
3. Fees and Expenses
-----------------
3.1 Fee Schedule. For the performance by the Transfer Agent
pursuant to this Agreement, the Fund agrees to pay the
Transfer Agent the fees set forth in the attached fee schedule
("Schedule 3.1"). Such fees and the out-of-pocket expenses and
------------
advances identified under Section 3.2 below may be changed
-----------
from time to time subject to mutual written agreement between
the Fund and the Transfer Agent.
3.2 Out-of-Pocket Expenses. In addition to the fee paid under
Section 3.1 above, the Fund agrees to reimburse the Transfer
-----------
Agent for out-of-pocket expenses at cost, including but not
limited to confirmation production, postage, forms, telephone,
microfilm, microfiche, records storage, or advances incurred
by the Transfer Agent for the items set out in Schedule 3.1
------------
attached hereto. In addition, any other expenses incurred by
the Transfer Agent at the request or with the consent of the
Fund, will be reimbursed by the Fund.
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<PAGE>
3.3 Postage. Postage for mailing of dividends, proxies, Fund
reports and other mailings to all shareholder accounts shall
be advanced to the Transfer Agent by the Fund at least seven
(7) days prior to the mailing date of such materials.
3.4 Invoices. The Fund agrees to pay all fees and reimbursable
expenses within thirty (30) days following the receipt of the
respective billing notice, except for any fees or expenses
which are subject to good faith dispute. In the event of such
a dispute, the Fund may only withhold that portion of the fee
or expense subject to the good faith dispute. The Fund shall
notify the Transfer Agent in writing within ninety (90)
calendar days following the receipt of each billing notice if
the Fund is disputing in good faith any amounts already paid.
3.5 Fee Increases. Prices will be increased annually during the
initial three (3) year term of the Agreement. The Transfer
Agent will increase the fees payable under this Agreement, on
an annual basis, by an amount not to exceed change in the CPI
Index. In no event, however, shall such cumulative increase be
greater than three percent (3%) over the fee charged during
the previous twelve (12) months. "CPI Index" shall mean the
United States Bureau of Labor Statistics, Consumer Price Index
for All Urban Consumers (CPI-U), All U.S. Cities Average
(1982-1984=100) published by the Bureau of Labor Statistics of
the United States Department of Labor, or such successor index
(appropriately converted to an equivalent reference base) as
shall be published by the Bureau of Labor Statistics.
4. Millennium Date Change
----------------------
4.1 Millennium Date Change. Transfer Agent will take all
commercially reasonable steps to ensure that its products (and
those of its third party providers) are Year 2000 Ready. For
purposes of this Agreement, "Year 2000 Ready" means that the
products will operate with dates in multiple centuries the
same way the products operate with dates in single centuries,
including, but not limited to, century recognition of dates
and calculations that correctly compute same century and
multi-century formulas and date values. If any changes are
required, the Transfer Agent will make changes to its computer
systems, including the computer systems provided by DST
Systems, Inc. ("DST Systems"), at a price to be agreed upon by
the parties and in a commercially reasonable time frame and
will require third party providers to do likewise; provided
--------
however, if any such changes are required pursuant to Section
------- -------
4 of this Agreement solely because of the DST Systems, the
-
Fund will not be required to pay a fee or out-of-pocket
expenses to the Transfer Agent for such changes. To the extent
that a change is necessary that will be charged to the Fund
and such change is not precipitated by a condition unique to
the Fund, the price and costs agreed upon will be based only
upon the Fund's pro rata share of such costs and fees spread
out over all of the Transfer Agent's affected customers. The
provisions of this Section 4 do not constitute a
---------
certification, guarantee, warranty or indemnity with respect
to Year 2000 Ready Products, but do constitute covenants.
5
<PAGE>
4.2 Year 2000 Project Plans. Transfer Agent agrees that it will
provide to the Funds, no later than the execution date of this
Agreement, a copy of the TA Y2K Report filed with the
Securities Exchange Commission and all required updates
thereto promptly. Transfer Agent agrees that it will cooperate
with Fund and its regulators, and the regulators of its
service providers, regarding the TA Y2K Report filed with the
Securities Exchange Commission and all required updates
thereto promptly.
5. Performance Standards
---------------------
5.1 Establishing Bench Mark. On or before October 15, 1999 the
Transfer Agent and the Fund will determine a baseline for the
establishment of performance standards and agree upon service
fee adjustments as either a reward or risk to the Transfer
Agent based on the relationship of its performance to such
performance standards. Thereafter, such performance standards
and service fee adjustments will to be set forth in Schedule
--------
5.1 of this Agreement.
---
5.2 Third Party Study. The parties shall retain, each contributing
equally to the expense, National Quality Review or another
firm to be chosen by the parties ("NQR" herein in any case) to
perform a study to determine a baseline of performance
standards to measure accuracy and timeliness of services. Such
study shall use, as a determining factor in establishing the
baseline, periodic Fund provided data which forecasts
predicted market and volume projections.
6. Representations and Warranties of the Transfer Agent
----------------------------------------------------
The Transfer Agent represents and warrants to the Fund that:
6.1 It is a Massachusetts corporation duly organized and existing
and in good standing under the laws of The Commonwealth of
Massachusetts.
6.2 It is duly qualified to carry on its business in The
Commonwealth of Massachusetts.
6.3 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this
Agreement.
6.4 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
6.5 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
6.6 It carries and will continue to carry general liability,
errors and omissions, fidelity bond and other policies, with
limits of not less than $5 million for aggregate general
liability, $20 million for errors and omissions and $80
million for fidelity bond and upon written request shall
provide certificates of liability insurance to the Fund.
6
<PAGE>
7. Representations and Warranties of the Fund
------------------------------------------
The Fund represents and warrants to the Transfer Agent that:
7.1 It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
7.2 It is empowered under applicable laws and by its Declaration
of Trust to enter into and perform this Agreement.
7.3 All corporate proceedings required by said Declaration of
Trust have been taken to authorize it to enter into and
perform this Agreement.
7.4 It is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as
amended.
7.5 A registration statement under the Securities Act of 1933, as
amended is currently effective and will remain effective, and
appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of the
Fund being offered for sale.
8. Wire Transfer Operating Guidelines/ Articles 4A of the Uniform
Commercial Code
---------------------------------------------------------------
8.1 The Transfer Agent is authorized to promptly debit the
appropriate Fund account(s) upon the receipt of a payment
order in compliance with the selected security procedure (the
"Security Procedure") chosen for funds transfer and in the
amount of money that the Transfer Agent has been instructed to
transfer. The Transfer Agent shall execute payment orders in
compliance with the Security Procedure and with the Funds'
instructions on the execution date provided that such payment
order is received by the customary deadline for processing
such a request, unless the payment order specifies a later
time. All payment orders and communications received after the
customary deadline will be deemed to have been received the
next business day.
8.2 The Fund acknowledges that the Security Procedure it has
designated on the Fund Selection Form was selected by the Fund
from security procedures offered by the Transfer Agent. The
Fund shall restrict access to confidential information
relating to the Security Procedure to authorized persons as
communicated to the Transfer Agent in writing. The Fund must
notify the Transfer Agent immediately if it has reason to
believe unauthorized persons may have obtained access to such
information or of any change in the Fund's authorized
personnel. The Transfer Agent shall verify the authenticity of
all Fund instructions according to the Security Procedure.
8.3 The Transfer Agent shall process all payment orders on the
basis of the account number contained in the payment order. In
the event of a discrepancy between any name indicated on the
payment order and the account number, the account number shall
take precedence and govern.
7
<PAGE>
8.4 The Transfer Agent reserves the right to decline to process or
delay the processing of a payment order which (a) is in excess
of the collected balance in the account to be charged at the
time of the Transfer Agent's receipt of such payment order;
(b) if initiating such payment order would cause the Transfer
Agent, in the Transfer Agent's sole judgment, to exceed any
volume, aggregate dollar, network, time, credit or similar
limits which are applicable to the Transfer Agent; or (c) if
the Transfer Agent, in good faith, is unable to satisfy itself
that the transaction has been properly authorized. If the
Transfer Agent exercises its rights pursuant to Section 8.4 of
-----------
this Agreement the Transfer Agent shall notify the Funds by
confirmation pursuant to Section 8.9 of this Agreement.
-----------
8.5 The Transfer Agent shall use reasonable efforts to act on all
authorized requests to cancel or amend payment orders received
in compliance with the Security Procedure provided that such
requests are received in a timely manner affording the
Transfer Agent reasonable opportunity to act. However, the
Transfer Agent assumes no liability if the request for
amendment or cancellation cannot be satisfied.
8.6 The Transfer Agent shall assume no responsibility for failure
to detect any erroneous payment order provided that the
Transfer Agent complies with the payment order instructions as
received and the Transfer Agent complies with the Security
Procedure. The Security Procedure is established for the
purpose of authenticating payment orders only and not for the
detection of errors in payment orders.
8.7 The Transfer Agent shall assume no responsibility for lost
interest with respect to the refundable amount of any
unauthorized payment order, unless the Transfer Agent is
notified of the unauthorized payment order within thirty (30)
days of notification by the Transfer Agent of the execution of
such payment order pursuant to Section 8.9 of this Agreement.
-----------
In no event (including failure to execute a payment order)
shall the Transfer Agent be liable for special, indirect or
consequential damages, even if advised of the possibility of
such damages.
8.8 When the Fund initiates or receives Automated Clearing House
credit and debit entries pursuant to these guidelines and the
rules of the National Automated Clearing House Association and
the New England Clearing House Association, the Transfer Agent
will act as an Originating Depository Financial Institution
and/or Receiving Depository Financial Institution, as the case
may be, with respect to such entries. Credits given by the
Transfer Agent with respect to an ACH credit entry are
provisional until the Transfer Agent receives final settlement
for such entry from the Federal Reserve Bank. If the Transfer
Agent does not receive such final settlement, the Fund agrees
that the Transfer Agent shall receive a refund of the amount
credited to the Fund in connection with such entry, and the
party making payment to the Fund via such entry shall not be
deemed to have paid the amount of the entry.
8
<PAGE>
8.9 Confirmation of Transfer Agent's execution of payment orders shall
ordinarily be provided within twenty-four (24) hours notice and may be
delivered to the Fund through the Transfer Agent's proprietary
information systems, or by facsimile or call-back. Fund must report
any objections to the execution of an order within thirty (30) days.
9. Data Access and Proprietary Information
---------------------------------------
9.1 The Fund acknowledges that the databases, computer programs, screen
formats, report formats (except such screen formats and report formats
as may be necessary to respond to Shareholder problems or inquiries),
interactive design techniques, and documentation manuals furnished to
the Fund by the Transfer Agent as part of the Fund's ability to access
certain Fund related data ("Customer Data") maintained by the Transfer
Agent on data bases under the control and ownership of the Transfer
Agent or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information
(collectively, "Proprietary Information") of substantial value to the
Transfer Agent or other third party. In no sense shall Proprietary
Information be deemed Customer Data. The Fund agrees to treat all
Proprietary Information as proprietary to the Transfer Agent and
further agrees that it shall not divulge any Proprietary Information
to any person or organization except as may be provided hereunder.
Without limiting the foregoing, the Fund agrees for itself and its
employees and agents to:
(a) Use such programs and databases (i) solely on the Fund's
computers, or (ii) solely from equipment at the location agreed to
between the Fund and the Transfer Agent and (iii) solely in accordance
with the Transfer Agent's applicable user documentation;
(b) Refrain from copying or duplicating in any way (other than in the
normal course of performing, processing on the Fund's computer(s)),
the Proprietary Information;
(c) Refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Transfer Agent's instructions;
(d) Refrain from causing or allowing information transmitted from the
Transfer Agent's computer to the Fund's terminal to be retransmitted
to any other computer terminal or other device except as expressly
permitted by the Transfer Agent (such permission not to be
unreasonably withheld);
(e) Allow the Fund to have access only to those authorized
transactions as agreed to between the Fund and the Transfer Agent; and
(f) Honor all reasonable written requests made by the Transfer Agent
to protect at the Transfer Agent's expense the rights of the Transfer
Agent in Proprietary
9
<PAGE>
Information at common law, under federal copyright law and under other
federal or state law.
9.2 Proprietary Information shall not include all or any portion of any of
the foregoing items that: (i) are or become publicly available without
breach of this Agreement; (ii) are released for general disclosure by
a written release by the Transfer Agent; or (iii) are already in the
possession of the receiving party at the time of receipt without
obligation of confidentiality or breach of this Agreement.
9.3 The Fund acknowledges that its obligation to protect the Transfer
Agent's Proprietary Information is essential to the business interest
of the Transfer Agent and that the disclosure of such Proprietary
Information in breach of this Agreement would cause the Transfer Agent
immediate, substantial and irreparable harm, the value of which would
be extremely difficult to determine. Accordingly, the parties agree
that, in addition to any other remedies that may be available in law,
equity, or otherwise for the disclosure or use of the Propriety
Information in breach of this Agreement, the Transfer Agent shall be
entitled to seek and obtain a temporary restraining order, injunctive
relief, or other equitable relief against the continuance of such
breach.
9.4 If the Fund notifies the Transfer Agent that any of the Data Access
Services do not operate in material compliance with the most recently
issued user documentation for such services, the Transfer Agent shall
endeavor in a timely manner to correct such failure. Organizations
from which the Transfer Agent may obtain certain data included in the
Data Access Services are solely responsible for the contents of such
data and the Fund agrees to make no claim against the Transfer Agent
arising out of the contents of such third-party data, including, but
not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL
COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION
THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE TRANSFER
AGENT EXPRESSLY DISCLAIM ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED
HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9.5 If the transactions available to the Fund include the ability to
originate electronic instructions to the Transfer Agent in order to:
(i) effect the transfer or movement of cash or Shares; or (ii)
transmit Shareholder information or other information, then in such
event the Transfer Agent shall be entitled to rely on the validity and
authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Transfer Agent from time to
time and communicated in writing to the Fund for its review prior to
their implementation.
9.6 Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Section 9. The obligations of this
---------
Section shall survive any earlier termination of this Agreement.
10
<PAGE>
10. Indemnification
---------------
10.1 The Transfer Agent shall not be responsible for, and the Fund shall
indemnify and hold the Transfer Agent, and as respects Section
-------
10.1(e), State Street Bank and Trust Company (the "Bank"), harmless
-------
from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of the Transfer Agent or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without negligence or willful
misconduct;
(b) The Fund's lack of good faith, negligence, or willful misconduct
which arise out of the breach of any representation or warranty of
the Fund hereunder;
(c) The reliance upon, and any subsequent use of or action taken or
omitted, by the Transfer Agent, or its agents or subcontractors on:
(i) any information, records, documents, data, stock certificates or
services which are received by the Transfer Agent or its agents or
subcontractors in conformity with procedures established by the
Transfer Agent by machine readable input, facsimile, CRT data entry,
electronic instructions or other similar means authorized by the
Fund, and which have been prepared, maintained or performed by the
Fund or any other person or firm on behalf of the Fund including but
not limited to any previous transfer agent or registrar; (ii) any
instructions or requests of the Fund or any of its officers received
in conformity with a procedure established by the Transfer Agent from
time to time and communicated to the Fund in writing prior to
implementation; (iii) any paper or document, reasonably believed to
be genuine, authentic, or signed by the proper person or persons that
are received in conformity with a procedure established by the
Transfer Agent from time to time and communicated to the Fund in
writing prior to implementation; or (iv) any instruction or opinions
from qualified legal counsel (which may be Fund counsel) with respect
to any matter (e.g., distribution of Shareholder account pursuant to
a divorce decree) arising in connection with the Transfer Agent's
performance of services under this Agreement.
(d) The offer or sale of Shares in violation of federal or state
securities laws or regulations requiring that such Shares be
registered or in violation of any stop order or other determination
or ruling by any federal or any state agency with respect to the
offer or sale of such Shares;
(e) The negotiation and processing of any checks including without
limitation for deposit into the Fund's demand deposit account
maintained by the Transfer Agent; or
(f) Upon the Fund's request entering into any agreements required by
the National Securities Clearing Corporation (the "NSCC") required by
the NSCC for the transmission of Fund or Shareholder data through the
NSCC clearing systems.
11
<PAGE>
10.2 The Fund shall not be responsible for, and the Transfer Agent shall
indemnify and hold the Fund harmless from and against, any and all
losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any actions or failure of
the Transfer Agent to act as a result of the Transfer Agent's lack of
good faith, negligence or willful misconduct.
10.3 Upon the assertion of a claim for which the indemnifying party (the
"Indemnitor") may be required to indemnify the party seeking
indemnity (the "Indemnitee"), the Indemnitee shall promptly notify
the Indemnitor of such assertion, and shall keep the Indemnitor
advised with respect to all developments concerning such claim. The
Indemnitor shall have the option to participate with the Indemnitee
in the defense of such claim or to defend against said claim in its
own name or in the name of the Indemnitee. The Indemnitee shall in no
case confess any claim or make any compromise in any case in which
the Indemnitor may be required to indemnify the Indemnitee except
with the Indemnitor 's prior written consent.
10.4 The parties agree that the Bank shall be a third-party beneficiary to
this Agreement with respect to the indemnification provided in
Section 10.1(e) herein.
---------------
11. Standard of Care
----------------
11.1 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy
of all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to
errors, including encoding and payment processing errors, unless said
errors are caused by its negligence, bad faith, or willful misconduct
or that of its employees or agents, except as provided in Section
-------
11.2 below. The parties agree that any encoding or payment processing
----
errors shall be governed by the above standard of care and the Fund
agrees as between the Fund and the Transfer Agent that the standard
of care created under Section 4-209 of the Uniform Commercial Code is
superseded by Section 11.1 of this Agreement.
------------
11.2 In the case of Exception Services as defined in Sections 2.3 herein,
------------
the Transfer Agent shall be held to a standard of gross negligence.
12. Confidentiality
---------------
12.1 Transfer Agent Proprietary Information. Fund agrees and acknowledges
that it will be exposed to the Services and that, as between Transfer
Agent and the Fund, the Services contain valuable trade secrets of
Transfer Agent embodying substantial creative efforts and
confidential information, ideas and expressions ("Transfer Agent
Proprietary Information"). All Transfer Agent Proprietary Information
will remain the sole property of Transfer Agent and Fund will have no
interest in or rights to such Transfer Agent Proprietary Information
except as expressly granted by this Agreement.
12.2 Fund Proprietary Information. Transfer Agent agrees and acknowledges
that it will be exposed to information concerning the Fund and its
Affiliates' business,
12
<PAGE>
products, proposed products, shareholders and related information,
including without limitation, shareholder data, testing procedures
and pricing policies, along with the record-bearing media containing
such information, all of which constitute confidential and
proprietary information of the Fund ("Fund Proprietary Information").
All Fund Proprietary Information will remain the sole property of the
Fund except the right to use the same to carry out the Services set
forth in this Agreement.
12.3 The Transfer Agent and the Fund agree that they will not, at any time
during the term of this Agreement or after its termination, reveal,
divulge, or make known to any person, firm, corporation or other
business organization, any Shareholder's lists, trade secrets, cost
figures and projections, profit figures and projections, or any other
secret or confidential information whatsoever, whether of the
Transfer Agent or of the Fund, used or gained by the Transfer Agent
or the Fund during performance under this Agreement. The Fund and the
Transfer Agent further covenant and agree that they will not, at any
time during the term of this Agreement or after its termination, use
confidential information of the other party in its own business,
except as necessary to perform the terms of this Agreement. The Fund
and the Transfer Agent further covenant and agree to retain all such
knowledge and information acquired during and after the term of this
Agreement respecting such lists, trade secrets, or any secret or
confidential information whatsoever in trust for the sole benefit of
the Transfer Agent or the Fund and their successors and assigns. In
the event of breach of the foregoing by either party, the remedies
provided by Section 9.3 shall be available to the party whose
-----------
confidential information is disclosed. The above prohibition of
disclosure shall not apply to the extent that the Transfer Agent must
disclose such data to its sub-contractor or Fund agent for purposes
of providing services under this Agreement.
12.4 In the event that any requests or demands are made for the inspection
of the Shareholder records of the Fund, other than request for
records of Shareholders pursuant to standard subpoenas from state or
federal government authorities (i.e., divorce and criminal actions),
the Transfer Agent will notify the Fund and secure instructions from
an authorized officer of the Fund as to such inspection. The Transfer
Agent expressly reserves the right, however, to exhibit the
Shareholder records to any person whenever it is required by law or
court order.
13. Covenants of the Fund and the Transfer Agent
--------------------------------------------
13.1 The Fund shall promptly furnish to the Transfer Agent the following:
(a) A certified copy of the resolution of the Board of Trustees of
the Fund authorizing the appointment of the Transfer Agent and the
execution and delivery of this Agreement; and
(b) A copy of the Fund's Declaration of Trust and all amendments
thereto.
13
<PAGE>
13.2 The Transfer Agent hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of
stock certificates, check forms and facsimile signature imprinting
devices, if any; and for the preparation or use, and for keeping
account of, such certificates, forms and devices.
13.3 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable.
To the extent required by Section 31 of the Investment Company Act of
1940, as amended, and the Rules thereunder, the Transfer Agent agrees
that all such records prepared or maintained by the Transfer Agent
relating to the services to be performed by the Transfer Agent
hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in
accordance with its request.
14. Termination of Agreement
------------------------
14.1 Term. The initial term of this Agreement (the "Initial Term") shall
be three years from the mutual execution of the contract unless
terminated pursuant to the provisions of this Section. Unless a
terminating party gives written notice to the other party ninety (90)
days before the expiration of the Initial Term this Agreement will
renew automatically from year to year ("Renewal Term"). Ninety (90)
days before the expiration of the Initial Term or a Renewal Term the
parties to this Agreement will agree upon a Fee Schedule for the
upcoming Renewal Term.
14.2 Termination for Cause by Fund. The Fund may terminate this Agreement
for default as provided in Section 14.3 herein, in the event that:
------------
(a) Transfer Agent, its employees or affiliated agents becomes unable
to materially perform the services under this Agreement, including
material failure of its operational capability for any reason other
than the actions of the Fund, third parties or as provided in Section
-------
17.3 herein;
----
(b) Testing or a material operational failure of the DST Systems due
to a Year 2000 issue demonstrates that the DST Systems are not Year
2000 Ready as defined in Section 4 of this Agreement;
---------
(c) During the Initial Term (i) the Transfer Agent fails to meet the
performance standards in Section 5 of this Agreement for a period of
---------
seven (7) consecutive months (each month in which performance
standards are met, or before the seventh (7th) consecutive month
requires commencement of a new consecutive month calculation for any
subsequent failure to meet performance standards) (ii) or if any time
during such term there are more than two instances in which a new
consecutive month calculation is commenced as a result of performance
standards being met in the seventh (7th) month; or
14
<PAGE>
(d) The performance of the services by the Transfer Agent becomes
unlawful.
14.3 Default and Cure. If either of the parties to this Agreement becomes
in default in the performance of its duties or obligations under this
Agreement, and such default has a material effect on the other party,
then the non-defaulting party may give notice to the defaulting party
specifying the nature of the default in sufficient detail to permit
the defaulting party to identify and cure the default within thirty
(30) days of receipt of such notice, or within longer periods as the
parties may agree is necessary for such cure. If the defaulting party
fails to cure such default within the 30-day cure period (or such
other time as agreed to by the parties), then the non-defaulting
party may terminate this Agreement immediately upon written notice to
the defaulting party. Such opportunity to cure shall include the
Transfer Agent taking commercially reasonable steps to make the DST
Systems Year 2000 Ready Products.
14.4 Immediate Termination. Either party may terminate this Agreement by
written notice to the other party, effective at any time specified
therein, in the event:
(a) bankruptcy, insolvency, dissolution or liquidation proceedings of
any nature are instituted by or against the other party and such
suit, conservatorship or receivership is not discharged within thirty
(30) days; or
(b) either party to this Agreement discontinues all or a significant
part of its business operations.
14.5 Costs When Fund Terminates. Should the Fund exercise its right to
terminate pursuant to either Sections 14.3 or 14.4 of this Agreement,
---------------------
Transfer Agent agrees that all direct out-of-pocket expenses or costs
associated with the movement of records and material will be borne by
the Transfer Agent.
14.6 Costs When Transfer Agent Terminates or Term Ends. If the Agreement
terminates at the end of the term specified in Section 14.1 of this
------------
Agreement, or the Transfer Agent exercises its right to terminate
pursuant to Sections 14.3 or 14.4 of this Agreement, all direct out-
---------------------
of-pocket expenses or costs associated with the movement of records
and material will be borne by the Fund. The Transfer Agent will
charge, and the Fund will pay for any services provided by the
Transfer Agent in connection with the conversion to a successor
transfer agent. Payment of such expenses or costs shall be in
accordance with Section 3 of this Agreement.
---------
14.7 Confidential Data. Upon termination of this Agreement, each party
shall return to the other party all copies of confidential or
proprietary materials or information received from such other party
hereunder, other than materials or information required to be
retained by such party under applicable laws or regulations.
15
<PAGE>
15. Assignment and Third Party Beneficiaries
----------------------------------------
15.1 Except as provided in Section 16.1, neither this Agreement nor any
------------
rights or obligations hereunder may be assigned by either party
without the written consent of the other party. Any attempt to do so
in violation of this Section shall be void. Unless specifically
stated to the contrary in any written consent to an assignment, no
assignment will release or discharge the assignor from any duty or
responsibility under this Agreement.
15.2 Except as explicitly stated elsewhere in this Agreement, nothing
under this Agreement shall be construed to give any rights or
benefits in this Agreement to anyone other than the Transfer Agent
and the Fund, and the duties and responsibilities undertaken pursuant
to this Agreement shall be for the sole and exclusive benefit of the
Transfer Agent and the Fund. This Agreement shall inure to the
benefit of and be binding upon the parties and their respective
permitted successors and assigns.
15.3 This Agreement does not constitute an agreement for a partnership or
joint venture between the Transfer Agent and the Fund. Other than as
provided in Section 16.1, neither party shall make any commitment
------------
with third parties that are binding on the other party without the
other party's prior written consent.
16. Subcontractors
--------------
16.1 The Transfer Agent may, without further consent on the part of the
Fund, subcontract for the performance hereof with a Transfer Agent
subsidiary or affiliate duly registered as a transfer agent;
provided, however, that the Transfer Agent shall be fully responsible
to the Fund for the acts and omissions of its subsidiary or affiliate
as it is for its own acts and omissions.
16.2 Except as provided in Section 16.4, the Transfer Agent shall be
------------
fully responsible to the Fund for the acts and omissions of any
subcontractor chosen by the Transfer Agent to provide any of the
services described in Sections 1.1, 1.2, or 2.2 of this Agreement.
-------------------------
16.3 Transfer Agent agrees that, as a condition of subcontracting with an
affiliated party to provide Services under this Agreement, it will
require the such affiliated subcontractor to comply with the
following:
(a) the DST's Computer Systems, programs and software meet the
standards specified in Section 4 of this Agreement;
---------
(b) the subcontractor, its employees and agents will agree to abide
by the limitations in Section 12.3 of this Agreement concerning the
------------
disclosure and use of the Fund's Proprietary Information.
16
<PAGE>
16.4 Nothing herein shall impose any duty upon the Transfer Agent
in connection with or make the Transfer Agent liable for the
actions or omissions to act of Airborne Services, Federal
Express, United Parcel Service, the U.S. Mails, the NSCC and
telecommunication companies or such similar third parties
providing similar services, provided, if the Transfer Agent
selected such company, the Transfer Agent shall have exercised
due care in selecting the same.
17. Miscellaneous
-------------
17.1 Amendment. This Agreement may be amended or modified by a
written agreement executed by both parties and authorized or
approved by a resolution of the Board of Trustees of the Fund.
17.2 Massachusetts Law to Apply. This Agreement shall be construed and
the provisions thereof interpreted under and in accordance with
the laws of The Commonwealth of Massachusetts.
17.3 Force Majeure. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of
God, strikes, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond
its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or
otherwise from such cause.
(a) Exceptions for Certain Computer Failures. This section shall
not excuse the Transfer Agent's failure to perform based upon
computer equipment failure arising from the Transfer Agent's
failure to meet its obligations under Section 4 of this
---------
Agreement.
(b) Exception Regarding Failure to Comply with Disaster Recovery
Plan. Transfer Agent represents that it has a reasonable back-up
and disaster recovery plan in place that requires the Transfer
Agent to maintain back-up files of the Fund's data or records
required to be maintained under the Investment Company Act at
another location other than the Transfer Agent's principal place
of business. This section shall not excuse the Transfer Agent's
failure to perform based upon a loss of Fund data unless the
Transfer Agent has maintained back-up files of the Fund's data or
records as noted in Section 17.3 (b) of this Agreement.
----------------
17.4 Consequential Damages. Neither party to this Agreement shall be
liable to the other part for consequential damages under any
provision of this Agreement or for any consequential damages
arising out of any act or failure to act hereunder.
17.5 Survival. All provisions regarding indemnification, warranty,
liability, and limits thereon, and confidentiality and/or
protections of proprietary rights and trade secrets shall survive
the termination of this Agreement.
17
<PAGE>
17.6 Severability. If any provision or provisions of this Agreement
shall be held invalid, unlawful, or unenforceable, the
validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired.
17.7 Priorities Clause. In the event of any conflict, discrepancy
or ambiguity between the terms and conditions contained in
this Agreement and any Schedules or attachments hereto, the
terms and conditions contained in this Agreement shall take
precedence.
17.8 Waiver. No waiver by either party or any breach or default of
any of the covenants or conditions herein contained and
performed by the other party shall be construed as a waiver of
any succeeding breach of the same or of any other covenant or
condition.
17.9 Merger of Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior
agreement with respect to the subject matter hereof whether
oral or written.
17.10 Counterparts. This Agreement may be executed by the parties
herein on any number of counterparts, and all of said
counterparts taken together shall be deemed to constitute one
and the same instrument.
17.11 Reproduction of Documents. This Agreement and all schedules,
exhibits, attachments and amendments hereto may be reproduced
by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process. The parties
hereto each agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial
or administrative proceeding, whether or not the original is
in existence and whether or not such reproduction was made by
a party in the regular course of business, and that any
enlargement, facsimile or further reproduction shall likewise
be admissible in evidence.
17.12 Audit; Annual Financial Statements.
(a) Transfer Agent will cooperate in providing to Fund or its
auditors which shall be a national independent public
accounting firm, at Fund's expense (including time and
materials expense associated with Transfer Agent' staff
participation) any information reasonably requested by Fund or
Fund's auditors which is necessary or required for the
performance by Fund of any audit of the accounts or records of
Services performed by Transfer Agent pursuant to the terms and
conditions of this Agreement to the extent required by law. If
during the course of such audit, the Fund or its auditors
identify a control weakness that could adversely impact
Transfer Agent's ability to materially perform under the terms
and conditions of this Agreement, Fund shall promptly inform
Transfer Agent in writing of such control weakness. The
Transfer Agent shall have ten (10) business days to respond to
this written notice, and thirty (30) days to remedy
18
<PAGE>
the weakness. The Transfer Agent reserves the right to cause its
independent public accounting firm that provided the most recent
Statement of Auditing Standards Number 70 ("SAS 70") to confirm
or refute to the parties any perceived control weakness.
(b) Transfer Agent shall provide to Fund, upon request, copies of
its SAS 70 Report which has been certified by an external
accounting firm.
17.13 Notices. All notices and other communications as required or
permitted hereunder shall be in writing and sent by first class
mail, postage prepaid, addressed as follows or to such other
address or addresses of which the respective party shall have
notified the other.
(a) If to Boston Financial Data Services, Inc., to:
Boston Financial Data Services, Inc.
Two Heritage Drive
Quincy, Massachusetts 02171
Attention: Legal Department
Facsimile: (617) 774-2287
(b) If to the Fund, to:
Stephens Inc.
111 Center Street
Little Rock, Arkansas 77201
Attention: Richard H. Blank, Jr.
Facsimile: (501) 377-2331 or
(501) 374-1324
18. Additional Funds
----------------
18.1 In the event that the Fund establishes one or more series of
Shares in addition to those listed in Schedule A with respect to
which it desires to have the Transfer Agent render services as
Transfer Agent under the terms hereof, it shall so notify the
Transfer Agent in writing, and if the Transfer Agent agrees in
writing to provide such services, such series of Shares shall
become a Portfolio hereunder.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their name and on their behalf by and through their duly authorized officers,
as of May __, 1999.
WELLS FARGO VARIABLE TRUST
BY: _______________________________
Richard H. Blank, Jr.
Treasurer
BOSTON FINANCIAL DATA SERVICES, INC
BY: ______________________________
Senior Vice President
20
<PAGE>
SCHEDULE A
WELLS FARGO VARIABLE TRUST
Asset Allocation Fund
Corporate Bond Fund
Equity Value Fund
Growth Fund
Income Equity Fund
International Equity Fund
Large Company Growth Fund
Money Market Fund
Small Cap Fund
WELLS FARGO VARIABLE TRUST BOSTON FINANCIAL DATA SERVICES,
INC.
BY: ________________________________ BY: ___________________________
Richard H. Blank, Jr.
Treasurer
May __, 1999.
21
<PAGE>
SCHEDULE 2.2
THIRD PARTY ADMINISTRATOR(S) PROCEDURES
1. On each Business Day, the TPA(s) shall receive, on behalf of and as agent
of the Fund(s), Instructions (as hereinafter defined) from the Plan.
Instructions shall mean as to each Fund (i) orders by the Plan for the
purchases of Shares, and (ii) requests by the Plan for the redemption of
Shares; in each case based on the Plan's receipt of purchase orders and
redemption requests by Plan Participants in proper form by the time
required by the term of the Plan, but not later than the time of day at
which the net asset value of a Fund is calculated, as described from time
to time in that Fund's prospectus. Each Business Day on which the TPA
receives Instructions shall be a "Trade Date."
2. The TPA(s) shall communicate the TPA(s)'s acceptance of such Instructions,
to the applicable Plan.
3. On the next succeeding Business Day following the Trade Date on which it
accepted Instructions for the purchase and redemption of Shares, (TD+1),
the TPA(s) shall notify the Transfer Agent of the net amount of such
purchases or redemptions, as the case may be, for each of the Plans. In the
case of net purchases by any Plan, the TPA(s) shall instruct the Trustees
of such Plan to transmit the aggregate purchase price for Shares by wire
transfer to the Transfer Agent on (TD+1). In the case of net redemptions by
any Plan, the TPA(s) shall instruct the Fund's custodian to transmit the
aggregate redemption proceeds for Shares by wire transfer to the Trustees
of such Plan on (TD+1). The times at which such notification and
transmission shall occur on (TD+1) shall be as mutually agreed upon by each
Fund, the TPA(s), and the Transfer Agent.
4. The TPA(s) shall maintain separate records for each Plan, which records
shall reflect Shares purchased and redeemed, including the date and price
for all transactions, and Share balances. The TPA(s) shall maintain on
behalf of each of the Plans a single master account with the Transfer Agent
and such account shall be in the name of that Plan, the TPA(s), or the
nominee of either thereof as the record owner of Shares owned by such Plan.
5. The TPA(s) shall maintain records of all proceeds of redemptions of Shares
and all other distributions not reinvested in Shares.
6. The TPA(s) shall prepare, and transmit to each of the Plans, periodic
account statements showing the total number of Shares owned by that Plan as
of the statement closing date, purchases and redemptions of Shares by the
Plan during the period covered by the statement, and the dividends and
other distributions paid to the Plan on Shares during the statement period
(whether paid in cash or reinvested in Shares).
7. The TPA(s) shall, at the request and expense of each Fund, transmit to the
Plans prospectuses, proxy materials, reports, and other information
provided by each Fund for delivery to its shareholders.
22
<PAGE>
8. The TPA(s) shall, at the request of each Fund, prepare and transmit to each
Fund or any agent designated by it such periodic reports covering Shares of
each Plan as each Fund shall reasonably conclude are necessary to enable
the Fund to comply with state Blue Sky requirements.
9. The TPA(s) shall transmit to the Plans confirmation of purchase orders and
redemption requests placed by the Plans; and
10. The TPA(s) shall, with respect to Shares, maintain account balance
information for the Plan(s) and daily and monthly purchase summaries
expressed in Shares and dollar amounts.
11. Plan sponsors may request, or the law may require, that prospectuses, proxy
materials, periodic reports and other materials relating to each Fund be
furnished to Plan Participants in which event the Transfer Agent or each
Fund shall mail or cause to be mailed such materials to Plan Participants.
With respect to any such mailing. the TPA(s) shall, at the request of the
Transfer Agent or each Fund, provide at the TPA(s)'s expense complete and
accurate set of mailing labels with the name and address of each Plan
Participant having an interest through the Plans in Shares.
WELLS FARGO VARIABLE TRUST BOSTON FINANCIAL DATA SERVICES,
INC.
BY: ________________________________ BY: ___________________________
Richard H. Blank, Jr.
Treasurer
May __, 1999.
23
<PAGE>
SCHEDULE 3.1
FEES
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
Norwest/Wells Fargo
Full Service
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
ANNUAL ACCOUNT SERVICE FEES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Direct Accounts $ 19.50
Level Three Networked Accounts $ 12.00
Closed Account Fee $ 2.00
Complex Base Fee $100,000
Fees are billable on a monthly basis at the rate of 1/12 of the annual fee. A charge is made for an account in the
month that an account opens or closes.
- ----------------------------------------------------------------------------------------------------------------------
ACTIVITY BASED FEES
- ----------------------------------------------------------------------------------------------------------------------
Telephone Calls $ 3.00/each
- ----------------------------------------------------------------------------------------------------------------------
CONVERSION FEES
- ----------------------------------------------------------------------------------------------------------------------
Per Account Fee $ 2.00
- ----------------------------------------------------------------------------------------------------------------------
IRA CUSTODIAL FEES
- ----------------------------------------------------------------------------------------------------------------------
Annual Maintenance $ 10.00/account*
- ----------------------------------------------------------------------------------------------------------------------
DEDICATED PROGRAMMING
- ----------------------------------------------------------------------------------------------------------------------
Per Dedicated Associate $150,000/per year
- ------------------------------------------------------------ ---------------------------------------------------------
OUT-OF-POCKET EXPENSES BILLED AS INCURRED
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
These fees will be subject to an annual Cost of Living Adjustment based on
regional consumer price index.
*Paid by shareholder.
For purposes of the complex base fee, the term "complex" includes all the of the
Portfolios of Stagecoach Funds, Inc., Stagecoach Trust, Life & Annuity Trust,
Norwest Advantage Funds and Norwest Select Trust. After the closing of the
Reorganization of the Stagecoach and Norwest fund families, the term "complex"
includes all of the Portfolios of Wells Fargo Funds Trust and Wells Fargo
Variable Trust,
24
<PAGE>
provided that the total amount of CUSIP numbers for the complex does not exceed
150. For each additional CUSIP number, the complex base fee will increase by
$7,000 per year.
Out-of-Pocket expenses include but are not limited to: confirmation statements,
investor statements, postage, forms, audio response, telephone, records
retention, customized programming/enhancements, federal wire, transcripts,
microfilm, microfiche, and expenses incurred at the specific direction of the
fund.
WELLS FARGO VARIABLE TRUST BOSTON FINANCIAL DATA SERVICES,
INC.
BY: ________________________________ BY: ___________________________
Richard H. Blank, Jr.
Treasurer
May __, 1999.
25
<PAGE>
EXHIBIT 99.B9
[MORRISON & FOERSTER LLP LETTERHEAD]
June 3, 1999
Wells Fargo Variable Trust
111 Center Street
Little Rock, Arkansas 72201
Re: Shares of Common Stock of
Wells Fargo Variable Trust
--------------------------
Ladies/Gentlemen:
We refer to the Registration Statement on Form N-1A (SEC File Nos. 333-
74283 and 811-09255) (the "Registration Statement") of Wells Fargo Variable
Trust (the "Trust") relating to the registration of an indefinite number of
shares of common stock of the Trust (collectively, the "Shares").
We have been requested by the Trust to furnish this opinion as Exhibit
(i) to the Registration Statement.
We have examined documents relating to the organization of the Trust and
its series and the authorization and issuance of shares of its series.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance and sale of the Shares by the Trust has been duly and
validly authorized by all appropriate corporate action, and assuming delivery by
sale or in accord with the Trust's dividend reinvestment plan in accordance with
the description set forth in the Funds' current prospectuses under the
Securities Act of 1933, as amended, the Shares will be legally issued, fully
paid and nonassessable by the Trust.
<PAGE>
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
In addition, we hereby consent to the use of our name and to the
reference to the description of advice rendered by our firm under the heading
"Counsel" in the Statement of Additional Information, which is included as part
of the Registration Statement.
Very truly yours,
/s/ MORRISON & FOERSTER LLP
MORRISON & FOERSTER LLP
<PAGE>
EXHIBIT 99.B(m)
WELLS FARGO VARIABLE TRUST
DISTRIBUTION PLAN
WHEREAS, Wells Fargo Variable Trust ("Trust") is registered as an open-
end management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust desires to adopt a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act on behalf of the classes of shares of
each Fund listed in Appendix A as it may be amended from time to time (each, a
"Fund" and, collectively, the "Funds") and the Board of Trustees, including a
majority of the Qualified Trustees (as defined below), has determined that there
is a reasonable likelihood that adoption of the Plan will benefit each class of
each Fund listed in Appendix A and its shareholders;
NOW THEREFORE, each Fund hereby adopts the Plan on behalf of each class
of each Fund listed in Appendix A, in accordance with Rule 12b-1 under the 1940
Act, on the following terms and conditions:
Section 1. The Trust, on behalf of each class of each Fund listed in
Appendix A, may pay to the principal underwriter(s) of such class (the
"Distributor(s)"), as compensation for services or other activities that are
primarily intended to result in the sale of shares, or reimbursement for
expenses incurred in connection with services or other activities that are
primarily intended to result in the sale of shares, a monthly amount that is no
higher than the annual rates as set forth on Appendix A. Subject to such
maximum annual rates, the actual amount payable to the Distributor(s) shall be
determined from time to time by mutual agreement between the Trust and the
Distributor(s). The Distributor(s) may enter into selling agreements with one
or more selling agents under which such agents may receive compensation for
distribution-related services from the Distributor(s), including, but not
limited to, commissions or other payments to such agents based on the average
daily net assets of Fund shares attributable to them. The Distributor(s) may
retain any portion of the amount payable hereunder to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses.
Section 2. The Plan shall be effective with respect to each class of a
Fund listed on Appendix A, (or each class of a Fund added to Appendix A from
time to time): (a) on the date upon which it is approved for such class (i) by
vote of a majority of the Trustees of the Trust, including a majority of the
Qualified Trustees, cast in person at a meeting called for the purpose of voting
on the approval of the Plan for such class, and (ii) by at least a majority of
the outstanding voting securities of the class or Fund, if required; or (b) on
the date the class commences operations, if such date is later.
1
<PAGE>
Section 3. Unless earlier terminated, the Plan and each related
agreement shall continue in effect for a period of one year from its respective
effective date and shall continue thereafter for successive annual periods,
provided that such Plan and agreement(s) are reapproved at least annually by
vote of a majority of the Trustees of the Trust, including a majority of the
Qualified Trustees, cast in person at a meeting called for the purpose of voting
on such reapproval.
Section 4. So long as the Plan is in effect, the Trust shall provide,
or shall cause the Distributor(s) to provide, to the Trust's Board of Trustees,
and the Trustees shall review, at least quarterly, a written report of the
amounts expended by the Trust under the Plan and each related agreement and the
purposes for which such expenditures were made.
Section 5. All agreements related to the Plan shall be in writing and
shall be approved by vote of a majority of both (a) the Trustees of the Trust
and (b) the Qualified Trustees, cast in person at a meeting called for the
purpose of voting on such approval. Any agreement related to the Plan shall
provide:
A. That such agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Qualified Trustees or by
vote of a majority of the outstanding voting securities of such class
of such Fund, on not more than 60 days' written notice to any other
party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 6. The Plan may not be amended to increase materially the
amount that may be expended by a class of a Fund pursuant to the Plan without
the approval by a vote of a majority of the outstanding voting securities of
such class of such Fund, and no material amendment to the Plan shall be made
unless approved by vote of a majority of both (a) the Trustees of the Trust and
(b) the Qualified Trustees, cast in person at a meeting called for the purpose
of voting on such approval.
Section 7. The Plan may be terminated with respect to any class at any
time by vote of a majority of the Qualified Trustees or by vote of a majority of
the outstanding voting securities of the class.
Section 8. While the Plan is in effect, the selection and nomination of
each Trustee who is not an interested person of the Trust shall be committed to
the discretion of the Trustees who are not interested persons.
Section 9. To the extent any payments made by the Fund pursuant to a
Shareholder Servicing Plan and Servicing Agreement are deemed to be payments for
the financing of any activity primarily intended to result in the sale of shares
within the context of Rule 12b-1 under the 1940 Act, such payments shall be
deemed to have been approved pursuant to the Plan. Notwithstanding anything
herein to the contrary, no Fund or class of shares shall be
2
<PAGE>
obligated to make any payments under the Plan that exceed the maximum amounts
payable under Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc.
Section 10. The Trust shall preserve copies of the Plan, each related
agreement and each written report presented to the Trust's Board of Trustees
pursuant to Section 4 hereof, for a period of not less than six years from the
date of the Plan, agreement or report, as the case may be, the first two years
in an easily accessible place.
Section 11. The provisions of the Plan are severable for each class of
each Fund listed in Appendix A, and whenever any action is to be taken with
respect to the Plan, such action shall be taken separately for each such class
affected.
Section 12. As used in the Plan, (a) the terms "assignment", "interested
person" and "vote of a majority of the outstanding voting securities" shall have
the respective meanings given them in the 1940 Act and the rules and regulations
thereunder, subject to such exemption or interpretation as may be provided by
the Securities and Exchange Commission or the staff thereof, and (b) the term
"Qualified Trustees" shall mean the Trustees of the Trust who (i) are not
"interested persons" of the Trust and (ii) have no direct or indirect financial
interest in the operation of the Plan or in any agreements related to the Plan.
The agreement(s) between the Trust and its Distributor(s) shall be considered to
be agreements related to the Plan. The agreement(s) between the Distributor(s)
and any selling agents shall not be considered to be agreements related to the
Plan.
Approved: March 26, 1999
3
