As filed with the Securities and Exchange Commission
on November 5, 1999
Registration No. 811-___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
------------------------
WELLS FARGO CORE TRUST
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
--------------------------
Registrant's Telephone Number, including Area Code: (800) 643-9691
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With a copy to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster LLP
2000 Pennsylvania Ave., N.W.
Washington, D.C. 20006
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EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant to Section
8(b) of the Investment Company Act of 1940, as amended. However, beneficial
interests in the Registrant are not being registered under the Securities Act of
1933, as amended (the "1933 Act"), since such interests will be issued solely in
private placement transactions which do not involve any "public offering" within
the meaning of Section 4(2) of the 1933 Act. Investments in the Registrant may
only be made by the investment companies or certain other entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any beneficial interests in the Registrant.
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Part A
WELLS FARGO CORE TRUST
PRIVATE PLACEMENT MEMORANDUM
Disciplined Growth Portfolio
Index Portfolio
Equity Income Portfolio
International Equity Portfolio
International Portfolio
Large Company Growth Portfolio
Managed Fixed Income Portfolio
Positive Return Bond Portfolio
Small Cap Index Portfolio
Small Cap Value Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Stable Income Portfolio
Strategic Value Bond Portfolio
November 5, 1999
Responses to Items 1 through 3 have been omitted pursuant to paragraph (B)(2)(b)
of the General Instructions to Form N-1A.
Wells Fargo Core Trust ("Trust") is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Trust is currently comprised of fourteen separate series of
Portfolios (each a "Portfolio" and collectively the "Portfolios"): Disciplined
Growth Portfolio, Index Portfolio, Income Equity Portfolio, International Equity
Portfolio, International Portfolio, Large Company Growth Portfolio, Managed
Fixed Income Portfolio, Positive Return Bond Portfolio, Small Cap Index
Portfolio, Small Cap Value Portfolio, Small Company Growth Portfolio, Small
Company Value Portfolio, Stable Income Portfolio, and Strategic Value Bond
Portfolio. The Trust's Declaration of Trust authorizes the Board of Trustees to
issue an unlimited number of beneficial interest ("Interests") and to establish
and designate such Interests into one or more Portfolios. Wells Fargo Bank, N.A.
("Wells Fargo" or "Advisor") serves as the investment advisor to each of the
Portfolios.
ITEM 4. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND RELATED RISKS.
The investment objective of each Portfolio is non-fundamental, and may be
changed by a vote of the Board of Trustees.
Disciplined Growth Portfolio: The Portfolio seeks capital appreciation by investing primarily in common stocks of larger companies.
The Portfolio seeks higher long-term returns by investing primarily in the
common stock of companies that, in the view of the Advisor, possess above
average potential for growth. The Portfolio invests in companies with average
market capitalizations greater than $5 billion.
The Portfolio seeks to identify growth companies that will report a level of
corporate earnings that exceed the level expected by investors. In seeking these
companies, the Advisor uses both quantitative and fundamental analysis. The
Advisor may consider, among other factors, changes of earnings estimates by
investment analysts, the recent trend of company earnings reports, and an
analysis of the fundamental business outlook for the company. The Advisor uses a
variety of valuation measures to determine whether or not the share price
already reflects any positive fundamentals identified by the Advisor. In
addition to approximately equal weighting of portfolio securities, the Advisor
attempts to constrain the variability of the investment returns by employing
risk control screens for price volatility, financial quality, and valuation.
The principal risk factor associated with this Portfolio is market risk. See the
"Related Risks" section below for a discussion of this risk and other risks of
investing in this Portfolio.
Index Portfolio: The Portfolio seeks to replicate the total rate of return of
the Standard & Poor's 500 Composite Stock Index (the "S&P 500 Index").
The Portfolio invests in substantially all of the common stocks listed on the
S&P 500 Index and attempts to achieve at least a 95% correlation between the
performance of the S&P 500 Index and the Portfolio's investment results, before
expenses. This correlation is sought regardless of market conditions.
A precise duplication of the performance of the S&P 500 Index would mean that
the net asset value of Interests, including dividends and capital gains would
increase or decrease in exact proportion to changes in the S&P 500 Index. Such a
100% correlation is not feasible. The Advisor's ability to track the performance
of the S&P 500 Index may be affected by, among other things, transaction costs
and shareholder purchases and redemptions. The Advisor continuously monitors the
performance and composition of the S&P 500 Index and adjusts the Portfolio's
securities as necessary to reflect any changes to the S&P 500 Index.
Under normal market conditions, the Portfolio invests in a diversified portfolio
of common stocks designed to provide a relative sample of the stocks listed on
the S&P 500 Index; in stock index futures and options on stock indexes as a
substitute for comparable position in the underlying securities, and in
interest-rate futures contracts, options or interest rate swaps and index swaps.
The principal risk factors associated with this Portfolio are index risk and
market risk. See the "Related Risks" section below for a discussion of these
risks and other risks of investing in this Portfolio.
Equity Income Portfolio: The Portfolio seeks long-term capital appreciation and above-average dividend income.
The Portfolio invests primarily in the common stock of large, high-quality
domestic companies that have above-average return potential based on current
market valuations. The Advisor primarily emphasizes investments in securities of
companies with above-average dividend income. The Advisor uses various valuation
measures when selecting securities for the portfolio, including above-average
dividend yields and below industry average price-to-earnings, price-to-book and
price-to-sales ratios. The Advisor considers "large" companies to be those whose
market capitalization is greater than the median of the Russell 1000 Index.
Under normal market conditions, the Portfolio invests at least 65% of total
assets in income-producing equity securities and in issues of companies with
market capitalization greater than the median of the Russell 1000 Index.
The Advisor may invest in preferred stocks, convertible securities, and
securities of foreign companies. The Advisor will normally limit investment in a
single issuer to 10% or less of total assets.
The principal risk factors associated with this Portfolio are market risk and
interest rate risk. See the "Related Risks" section below for a discussion of
these risks and other risks of investing in this Portfolio.
International Equity Portfolio: The Portfolio seeks total return, with an emphasis on capital appreciation, over the long-term, by
investing primarily in equity securities of non-U.S. companies.
The Portfolio seeks to earn total return by investing at least 80% of its assets
in common stock of companies located or operating in developed and emerging
markets. It is expected that the securities held by the Portfolio will be traded
on a stock exchange or other market in the country in which the issuer is based,
but they also may be traded in other countries, including the United States. The
Portfolio must invest its assets in the securities of at least five different
countries other than the United States. The Portfolio may also invest in
American Depository Receipts ("ADRs"), European Depository Receipts ("EDRs") and
similar instruments.
The Advisor applies a fundamentals-driven, value-oriented analysis to identify
companies with above-average potential for long-term growth. The Advisor
examines financial data including the company's historical performances and its
projected future earnings. The Advisor also considers other key criteria such as
a company's local, regional or global franchise; history of effective management
demonstrated by expanding revenues and earnings growth; and prudent financial
and accounting policies and ability to take advantage of a changing business
environment. In allocating among countries, regions and industry sectors, the
Advisor considers factors such as economic growth prospects, monetary and fiscal
policies, political stability, currency trends, market liquidity and investor
sentiment.
The principal risk factors associated with this Portfolio are currency risk,
emerging market risk, foreign risk, market risk and regulatory risk. See the
"Related Risks" section below for a discussion of these risks and other risks of
investing in this Portfolio.
International Portfolio: The Portfolio seeks long-term capital appreciation by
investing directly or indirectly in high-quality companies based outside the
United States. The Portfolio selects its investments on the basis of their
potential for capital appreciation without regard to current income. The
Portfolio may also invest in the securities of domestic closed-end investment
companies that invest primarily in foreign securities and may invest in debt
obligations of foreign governments or their political subdivisions, agencies, or
instrumentalities, of supranational organizations, and of foreign corporations.
The Portfolio's investments are generally diversified among securities of
issuers in foreign countries including, but not limited to Japan, Germany, the
United Kingdom, France, the Netherlands, Hong Kong, Singapore, and Australia. In
general, the Portfolio will invest only in securities of companies and
governments in countries that the Adviser, in its judgment, considers both
politically and economically stable. The Portfolio has no limit on the amount of
its assets that may be invested in any one type of foreign instrument or in any
foreign country; however, to the extent the Portfolio concentrates its assets in
a foreign country, it will incur greater risks.
Under normal circumstances, the International Portfolio will invest
substantially all of its assets, but not less than 65% of its net assets, in
equity securities of companies domiciled outside the United States. The
Portfolio may purchase preferred stock and convertible debt securities,
including convertible preferred stock. The Portfolio also may enter into foreign
exchange contracts, including forward contracts to purchase or sell foreign
currencies, in anticipation of its currency requirements and to protect against
possible adverse movements in foreign exchange rates and may purchase ADRs, EDRs
or other similar securities of foreign issuers.
The principal risk factors associated with this Portfolio are currency risk,
foreign risk and market risk. See the "Related Risks" section below for a
discussion of these risks and other risks of investing in this Portfolio.
Large Company Growth Portfolio: The Portfolio seeks long-term capital
appreciation by investing primarily in large, high-quality domestic companies
that the Advisor believes have superior growth potential. The Advisor considers
"large" companies to be those whose market capitalization is greater than the
median of the Russell 1000 Index. In selecting securities for the Portfolio, the
Advisor seeks issuers whose stock is attractively valued with fundamental
characteristics that are significantly better than the market average and that
support internal earnings growth capability. The Advisor may invest in the
securities of companies whose growth potential the Advisor believes is generally
unrecognized or misperceived by the market.
The Advisor will not invest more than 10% of the Portfolio's total assets in the
securities of a single issuer. The Advisor may invest up to 20% of the
Portfolio's total assets in the securities of foreign companies and may hedge
against currency risk by using foreign currency forward contracts.
The principal risk factors associated with this Portfolio are currency risk,
foreign risk, leverage risk and market risk. See the "Related Risks" section
below for a discussion of these risks and other risks of investing in this
Portfolio.
Managed Fixed Income Portfolio: The Portfolio seeks consistent fixed-income
returns by investing primarily in investment grade intermediate-term securities.
The Advisor invests in a diversified portfolio of fixed and variable rate U.S.
dollar denominated, fixed-income securities of a broad spectrum of U.S. and
foreign issuers, including securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or its instrumentalities ("U.S.
Government Securities"), and the debt securities of financial institutions,
corporations and others. The Advisor emphasizes the use of intermediate maturity
securities to lessen duration and employs low risk yield enhancement techniques
to enhance return over a complete economic or interest rate cycle. The Advisor
considers intermediate-term securities to be those with maturities of between 2
and 20 years.
The Portfolio will limit its investment in mortgage-backed securities to not
more than 65% of its total assets and its investment in asset-backed securities
to not more than 25% of its net assets. In addition, the Portfolio may not
invest more than 30% of its total assets in securities issued or guaranteed by
any single agency or instrumentality of the U.S. Government, except the U.S.
Treasury.
The Portfolio normally will have an average dollar-weighted portfolio maturity
of between 3 and 12 years and a duration of between 2 and 6 years.
While not a principal strategy, the Advisor also may purchase up to 10% of its
total assets in securities issued or guaranteed by foreign governments the
Advisor deems stable, or their subdivisions, agencies, or instrumentalities;
loan or security participations; securities of supranational organizations; and
municipal securities.
The principal risk factors associated with this Portfolio are credit risk,
leverage risk, foreign risk, market risk, interest rate risk and prepayment
risk. See the "Related Risks" section below for a discussion of these risks and
other risks of investing in this Portfolio.
Positive Return Bond Portfolio: The Portfolio seeks to produce a positive return
each calendar year regardless of general bond market performance. The Portfolio
invests in U.S. Government securities and corporate fixed-income investments.
The Portfolio's assets are divided into two components, short bonds with
maturities (or average life) of 2 years or less and long bonds with maturities
of 25 years or more. Shifts between short bonds and long bonds are made based on
movement in the prices of bonds rather than on the Advisor's forecast of
interest rates. During periods of falling prices (generally, increasing interest
rate environments) long bonds are sold to protect capital and limit losses.
Conversely, when bond prices rise, long bonds are purchased. The average
dollar-weighted maturity of the Portfolio will vary between 1 and 30 years.
Under normal circumstances, the Advisor invests at least 50% of the net assets
in U.S. Government securities, including U.S. Treasury securities. The Advisor
only purchases securities that are rated, at the time of purchase, within 1 of
the 2 highest long-term rating categories assigned by a nationally recognized
statistical rating organization ("NRSRO") or that are unrated and determined by
the Advisor to be of comparable quality. The Advisor may invest up to 25% of its
assets in securities rated in the second highest rating category. The Advisor
does not invest more than 25% of the Portfolio's total assets in zero-coupon
securities, securities with variable or floating rates of interest, or
asset-backed securities.
The principal risk factors associated with this Portfolio are credit risk,
market risk, interest rate risk, prepayment risk and leverage risk. See the
"Related Risks" section below for a discussion of these risks and other risks of
investing in this Portfolio.
Small Cap Index Portfolio: The Portfolio seeks to replicate the return of the
Standard & Poor's Small Cap 600 Composite Stock Price Index ("S&P 600 Small Cap
Index"). The Portfolio seeks to replicate this return with minimum tracking
error and to minimize transaction costs. Under normal circumstances, the
Portfolio will hold stocks representing 100% of the capitalization-weighted
market values of the S&P 600 Small Cap Index. The Advisor generally executes
portfolio transactions only to replicate the composition of the S&P 600 Small
Cap Index, to invest cash received from portfolio security dividends or
investments in the Portfolio, and to raise cash to fund redemptions. The
Portfolio may hold cash or cash equivalents to facilitate payment of the
Portfolio's expenses or redemptions and may invest in index futures contracts.
For these and other reasons, the Portfolio's performance can be expected to
approximate but not equal that of the S&P 600 Small Cap Index.
The principal risk factors associated with this Portfolio are leverage risk,
market risk, index risk and small company risk. See the "Related Risks" section
below for a discussion of these risks and other risks of investing in this
Portfolio.
Small Cap Value Portfolio: The Portfolio seeks capital appreciation by investing
in common stocks of smaller companies. The Advisor will normally invest
substantially all of the Portfolio's assets in securities of companies with
market capitalizations that reflect the market capitalization of companies
included in the Russell 2000 Index.
The Advisor seeks higher growth rates and greater long-term returns by investing
primarily in the common stock of smaller companies that the Advisor believes to
be undervalued and likely to report a level of corporate earnings exceeding the
level expected by investors. The Advisor values companies based upon both the
price-to-earnings ratio of the company and a comparison of the public market
value of the company to a proprietary model that values the company in the
private market. In seeking companies that will report a level of earnings
exceeding that expected by investors, the Advisor uses both quantitative and
fundamental analysis. Among other factors, the Advisor considers changes of
earnings estimates by investment analysts, the recent trend of company earnings
reports, and the fundamental business outlook for the company.
The principal risk factors associated with this Portfolio are market risk and
small company risk. See the "Related Risks" section below for a discussion of
these risks and other risks of investing in this Portfolio.
Small Company Growth Portfolio: The Portfolio seeks to provide long-term capital appreciation by investing in smaller domestic
companies.
The Portfolio invests primarily in the common stock of small and medium-sized
domestic companies that are either growing rapidly or completing a period of
significant change. Small companies are those companies whose market
capitalization is less than the largest stock in the Russell 2000 Index or
approximately $1.4 billion.
In selecting securities for the Portfolio, the Advisor seeks to identify
companies that are rapidly growing (usually with relatively short operating
histories) or that are emerging from a period of investor neglect by undergoing
a dramatic change. These changes may involve a sharp increase in earnings, the
hiring of new management or measures taken to close the gap between share price
and takeover/asset value.
The Portfolio may invest up to 10% of its total assets in securities of foreign
companies. The Portfolio will not invest more than 10% of its total assets in
the securities of a single issuer.
The principal risk factors associated with this Portfolio are currency risk,
small company risk, foreign risk and market risk. See the "Related Risks"
section below for a discussion of these risks and other risks of investing in
this Portfolio.
Small Company Value Portfolio: The Portfolio seeks to provide long-term capital
appreciation. The Portfolio primarily invests in smaller companies whose market
capitalization is less than the largest stock in the Russell 2000 Index. The
Advisor focuses on securities that are conservatively valued in the marketplace
relative to the stock of comparable companies, determined by price/earnings
ratios, cash flows, or other measures. Value investing provides investors with a
less aggressive way to take advantage of growth opportunities of small
companies. Value investing may reduce downside risk and offer potential for
capital appreciation as a stock gains favor among other investors and its stock
price rises.
The principal risk factors associated with this Portfolio are leverage risk,
market risk and small company risk. See the "Related Risks" section below for a
discussion of these risks and other risks of investing in this Portfolio.
Stable Income Portfolio: The Portfolio seeks to maintain stability of principal while providing low volatility total return.
The Portfolio invests primarily in short-term investment-grade securities. The
Advisor invests in a diversified portfolio of fixed and variable rate U.S.
dollar-denominated fixed-income securities of a broad spectrum of U.S. and
foreign issuers, including U.S. Government securities and the debt securities of
financial institutions, corporations, and others. Under normal market
conditions, the Portfolio will limit its investment: (i) in mortgage-backed
securities to not more than 65% of its total assets; (ii) other types of
asset-backed securities to not more than 25% of its total assets; (iii)
mortgage-backed securities that are not U.S. Government securities to not more
than 25% of its total assets; and (iv) U.S. Government securities to not more
than 50% of its total assets.
The Portfolio may not invest more than 30% of its total assets in the securities
issued or guaranteed by any single agency or instrumentality of the U.S.
Government, except the U.S. Treasury, and may not invest more than 10% of its
total assets in the securities of any other issuer.
The Portfolio only purchases investment grade securities. The Portfolio invests
in debt obligations with maturities (or average life in the case of
mortgage-backed and similar securities) ranging from overnight to 12 years and
seeks to maintain an average dollar weighted portfolio maturity of between 2 and
5 years.
The Portfolio may use options, swap agreements, interest rate caps, floors,
collars, and futures contracts to manage risk. The Portfolio also may use
options to enhance return.
The principal risk factors associated with this Portfolio are credit risk,
leverage risk, foreign risk, market risk, interest rate risk and prepayment
risk. See the "Related Risks" section below for a discussion of these risks and
other risks of investing in this Portfolio.
Strategic Value Bond Portfolio: The Portfolio seeks total return by investing
primarily in income producing securities. The Portfolio invests in a broad range
of fixed-income instruments in order to create a strategically diversified
portfolio of fixed-income investments. These investments include corporate
bonds, mortgage- and asset-backed securities, U.S. Government securities,
preferred stock, convertible bonds and foreign bonds.
The Advisor focuses on relative value as opposed to predicting the direction of
interest rates. In general, the Portfolio seeks higher current income
instruments, such as corporate bonds and mortgage- and asset backed securities,
in order to enhance returns. The Advisor believes that this exposure enhances
performance in varying economic and interest rate cycles and avoids excessive
risk concentrations. The Advisor's investment process involves rigorous
evaluation of each security, including identifying and valuing cash flows,
embedded options, credit quality, structure, liquidity, marketability, current
versus historical trading relationships, supply and demand for the instrument
and expected returns in varying economic/interest rate environments. The Advisor
uses this process to seek to identify securities which represent the best
relative economic value. The Advisor then evaluates the results of the
investment process against the Portfolio's objective and purchases those
securities that are consistent with the Portfolio's investment objective.
The Portfolio particularly seeks strategic diversification. The Portfolio will
not invest more than 75% of its total assets in corporate bonds, 65% of its
total assets in mortgage-backed securities, and 50% of its total assets in
asset-backed securities. The Portfolio may invest in U.S. Government Securities
without restriction.
The Portfolio will invest 65% of its total assets in fixed-income securities
rated, at the time of purchase, within the three highest rating categories by at
least one NRSRO, or which are unrated and determined by the Advisor to be of
comparable quality. The Portfolio may invest up to 20% of its total assets in
non-investment grade securities. The average dollar-weighted maturity of the
Portfolio will vary between 5 and 15 years. The Portfolio's duration normally
will vary between 3 and 8 years. Duration is a measure of a debt security's
average life that reflects the present value of the security's cash flow and is
an indication of the security's sensitivity to a change in interest rates. The
Portfolio may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Portfolio may also use
options to enhance returns.
The principal risk factors associated with this Portfolio are credit risk,
market risk, interest rate risk, prepayment risk and leverage risk. See the
"Related Risks" section below for a discussion of these risks and other risks of
investing in this Portfolio.
RELATED RISKS
While investing in equity securities and fixed-income securities can bring added
benefits, it may also involve additional risks. Investors could lose money on
their investment in the Portfolios, or the Portfolios may not perform as well as
other investments. The Portfolios have the following general risks:
o Unlike bank deposits, such as CDs or savings accounts, mutual funds are not
insured by the FDIC.
o There is no guarantee that the Portfolios will meet their investment
objectives.
o We do not guarantee the performance of a Portfolio, nor can we assure you
that the market value of your investment will not decline. We will not
"make good" any investment loss you may suffer, nor can anyone we contract
with to provide certain services, such as selling agents or investment
advisors, offer or promise to make good any such losses.
o Share prices-and therefore the value of your investment-will increase and
decrease with changes in the value of underlying securities and other
investments.
o Investing in any mutual fund, including those deemed conservative, involves
risk, including the possible loss of any money you invest.
o An investment in a single Portfolio, by itself, does not constitute a complete
investment plan.
o The Portfolios that invest in small companies, foreign companies (including
investments made through ADRs and similar instruments), and in emerging
markets are subject to additional risks, including less liquidity and
greater price volatility. A Portfolio'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.
o The Portfolios 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
Portfolios themselves.
o The Portfolios 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.
o The Portfolios may temporarily hold assets in cash or in money market
instruments, including U.S. Government obligations shares of other mutual
funds and repurchase agreements, or make other short-term investments,
either to maintain liquidity or for short-term defensive purposes. A
Portfolio may not achieve its investment objective while it is investing
defensively. This practice is expected to have limited, if any, effect on
the Portfolios' pursuit of their objectives over the long term.
o The Portfolios may invest a portion of their assets in U.S. Government
obligations, such as securities issued or guaranteed by the Government
National Mortgage Association ("GNMAs"), the Federal National Mortgage
Association ("FNMAs") and the Federal Home Loan Mortgage Corporation
("FHLMCs"). Each mortgage-backed securities representing partial ownership
of a pool of residential mortgage loans. A "pool" or group of such
mortgages is assembled and, after being approved by the issuing or
guaranteeing entity, which can alter the maturity of the securities and
also reduce the rate of return on the portfolio, is offered to investors.
Collateralized mortgage obligations ("CMOs") typically represent
principal-only and interest-only portions of such securities and are
subject to increased interest-rate and credit risk.
o The market value of lower-rated debt securities and unrated securities of
comparable quality tends to reflect individual developments affecting the
issuer to a greater extent than the market value of higher-rated
securities, which react primarily to fluctuations in the general level of
interest rates. Lower-rated securities also tend to be more sensitive to
economic conditions than higher-rated securities. These lower-rated debt
securities are considered by the rating agencies, on balance, to be
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal. These securities generally involve more
credit risk than securities in higher-rating categories. Even securities
rated "BBB" by S&P or by Moody's ratings which are considered
investment-grade, possess some speculative characteristics.
Investment practices and risk levels are carefully monitored. Every attempt is
made to ensure that the risk exposure for each Portfolio remains within the
parameters of its objective. The following is a list of the types of risks that
may apply to a given Portfolio. Additional information about these practices is
available in the Statement of Additional Information.
Counter-Party Risk - The risk that the other party in a repurchase agreement or
other transaction will not fulfill its contract obligation.
Credit Risk - The risk that the issuer of a debt security will be unable to make
interest payments or repay principal on schedule. If an issuer does default, the
affected security could lose all of its value, or be renegotiated at a lower
interest rate or principal amount. Affected securities might also lose
liquidity. Credit risk also includes the risk that a party in a transaction may
not be able to complete the transaction as agreed.
Currency Risk - The risk that a change in the exchange rate between U.S. dollars
and a foreign currency may reduce the value of an investment made in a security
denominated in that foreign currency.
Diplomatic Risk - The risk that an adverse change in the diplomatic relations
between the United States and another country might reduce the value or
liquidity of investments in either country.
Emerging Market Risk - The risk that the emerging market may be more sensitive
to certain economic changes. For example, emerging market countries are more
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 maybe 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.
Foreign Risk - The risk that foreign investments may be subject to political and
economic instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization, increased
taxation or confiscation of investors' assets. Also, the risk that the price of
a foreign issuer's securities may not reflect the issuer's condition because
there is not sufficient publicly available information about the issues. This
risk may be greater for investments in issuers in emerging or developing
markets.
Information Risk - The risk that information about a security is either
unavailable, incomplete or is inaccurate.
Index Risk - The risk that a portfolio designed to replicate the performance of
an index of securities will replicate the performance of the index during
adverse market conditions because the portfolio manager is not permitted to take
a temporary defensive position or otherwise vary the Portfolio's investments to
respond to the adverse market conditions.
Interest Rate Risk - The risk that changes in interest rates can reduce the
value of an existing security. Generally, when interest rates increase, the
value of a debt security decreases. The effect is usually more pronounced for
securities with longer dates to maturity.
Leverage Risk - The risk that an investment practice, such as lending portfolio
securities or engaging in forward commitment or when issued securities
transactions, may increase a Portfolio's exposure to market risk, interest rate
risk or other risks by, in effect, increasing assets available for investment.
Liquidity Risk - The risk that a security cannot be sold at the time desired, or
cannot be sold without adversely affecting the price.
Market Risk - The risk that the value of a stock, bond or other security will be
reduced by market activity. This is a basic risk associated with all securities.
Political Risk - The risk that political actions, events or instability may be
unfavorable for investments made in a particular nation's or region's industry,
government or markets.
Prepayment Risk - The risk that consumers will accelerate their prepayment of
mortgage loans or other receivable, which can shorten the maturity of a
mortgage-backed or other asset-backed security, and reduce a portfolio's return.
Regulatory Risk - The risk that changes in government regulations will adversely
affect the value of a security. Also the risk that an insufficiently regulated
market might permit inappropriate trading practices.
Small Company Risk - The risk that investments in smaller companies may be more
volatile than investments in larger companies. Smaller companies may have higher
failure rates than larger companies. A small company's securities may be hard to
sell because the trading volume of the securities of smaller companies is
normally lower than that of larger companies. Short term changes in the demand
for the securities of small companies may have a disproportionate effect on
their market price, tending to make prices of these securities fall more in
response to selling pressure.
Year 2000 Risk - The Portfolios' principal service providers have advised the
Portfolios 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 Portfolios invest also could be adversely
impacted by the Year 2000 issue, especially foreign entities, which may be less
prepared for Year 2000. The extent of such impact cannot be predicted.
ITEM 5: MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The response to Item 5 has been omitted pursuant to paragraph (B)(2)(b) of the
General Instructions to Form N-1A.
ITEM 6: MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
A number of different entities provide services to the Portfolios. This sections
shows how the Portfolios are organized, lists the entities that perform
different services, and explains how these service providers are compensated.
About Wells Fargo Core Trust
The Trust was organized as a Delaware business trust on March 10, 1999. The
Board of Trustees of the Trust supervises each Portfolio's activities, monitors
its contractual arrangements with various service providers and decides upon
matters of general policy.
The Trust was established to continue the operations of the existing Portfolios
of Core Trust (Delaware) ("CT") in newly established Portfolios. The Initial
Trustees established fourteen Portfolios for the Trust, each of which will have
a direct correlation to one corresponding CT Portfolio.
The Investment Advisor
Wells Fargo provides portfolio management and fundamental security analysis
services as the advisor for each of the Funds. Wells Fargo, founded in 1852, is
the oldest bank in the western United States and is one of largest banks in the
United States. Wells Fargo is a wholly owned subsidiary of Wells Fargo &
Company, a national bank holding company. As of June 30, 1999, Wells Fargo and
its affiliates provided advisory services for over $131 billion in assets. For
providing these services, Wells Fargo is entitled to receive fees as described
below:
- --------------------------------------------------------- ---------------------
Well Fargo
Core Trust Portfolios Advisory Fees
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Disciplined Growth Portfolio 0.75
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Index Portfolio 0.15
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Equity Income Portfolio 0.75
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
International Portfolio 1.00
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
International Equity Portfolio 1.00
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Large Company Growth Portfolio 0.75
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Managed Fixed Income Portfolio 0.50
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Positive Return Bond Portfolio 0.50
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Small Cap Index Portfolio 0.25
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Small Cap Value Portfolio 0.90
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Small Company Growth Portfolio 0.90
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Small Company Value Portfolio 0.90
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Stable Income Portfolio 0.50
- --------------------------------------------------------- ---------------------
- --------------------------------------------------------- ---------------------
Strategic Value Bond Portfolio 0.50
- --------------------------------------------------------- ---------------------
The Sub-Advisors
Wells Capital Management ("WCM"), a wholly owned subsidiary of Wells Fargo, is
the sub-advisor for the Equity Income, Index, International Equity, Small Cap
Index Portfolios. In this capacity, it is responsible for the day-to-day
investment management activities of the Funds. As of June 30, 1999, WCM provided
advisory services for over $42 billion in assets. WCM is located at 525 Market
Street, San Francisco, California 94163.
Galliard Capital Management, Inc. ("Galliard"), an investment advisor subsidiary
of Norwest Bank Minnesota, N.A., is the investment sub-advisor for the Managed
Fixed Income, Stable Income and Strategic Value Bond Portfolios. As of June 30,
1999, Galliard managed approximately $5.9 billion in assets. Galliard is located
at 800 LaSalle Avenue, Suite 2060, Minneapolis, Minnesota 55479.
Peregrine Capital Management, Inc. ("Peregrine"), a wholly owned subsidiary of
Norwest Bank Minnesota, N.A., is a sub-advisor for the Large Company Growth,
Positive Return Bond, Small Company Growth and Small Company Value Portfolios.
Peregrine, which is located at LaSalle Plaza, 800 LaSalle Avenue, Suite 1850,
Minneapolis, Minnesota 55402, is an investment adviser subsidiary of Norwest
Bank Minnesota, N.A. Peregrine provides investment advisory services to
corporate and public pension plans, profit sharing plans, savings investment
plans and 401(k) plans. As of June 30, 1999, Peregrine managed approximately
$6.9 billion in assets.
Smith Asset Management Group, LP ("Smith Group") is the sub-advisor for the
Disciplined Growth and the Small Cap Value Portfolios. Smith Group is a
registered investment adviser, whose principal business address is 500 Crescent
Court, Suite 250, Dallas, Texas 75201. Smith Group provides investment
management services to company retirement plans, foundations, endowments, trust
companies, and high net worth individual using a disciplined equity style. As of
June 30, 1999, the Smith Group managed over $818 million in assets.
Schroder Investment Management, North America Inc. ("Schroder") is the
investment adviser for the International Portfolio. Schroder is a wholly owned
subsidiary of Schroders Incorporated (doing business in New York as Schroders
Holdings) which is wholly owned subsidiary of Schroders plc. In this capacity,
Schroder makes investment decisions for and administers the Portfolio's
investment programs.
Schroder is located at 787 Seventh Avenue, New York, New York 10019.
The Administrator
Wells Fargo provides the Portfolios with administration services, including
general supervision of each Portfolio's operation, coordination of the other
services provided to each Portfolio, compilation of information for reports to
the SEC and the state securities commissions, preparation of proxy statements
and shareholder reports, and general supervision of data compilation in
connection with preparing periodic reports to the Trust's Trustees and officers.
Wells Fargo also furnishes office space and certain facilities to conduct each
Portfolio's business.
The Transfer Agent
Boston Financial Data Services, Inc. ("BFDS") provides transfer agency services
to the Portfolios. For providing these services, BFDS receives an annual fee,
certain transaction-related fees, and is reimbursed for out-of-pocket expenses
incurred on behalf of the Portfolios.
Portfolio Managers`
The following persons are primarily responsible for day-to-day management of the
Portfolios, and were responsible for the day-to-day management of their
predecessors since the date noted.
Disciplined Growth Portfolio/Small Cap Value Portfolio - Stephen S. Smith, CFA.
Mr. Smith is Principal and Chief Executive Officer of the Smith Asset Management
Group, L.P. Prior to 1995, Mr. Smith previously served as Senior Portfolio
Manager with NationsBank. Mr. Smith has a BS in Industrial Engineering and a MBA
from the University of Alabama.
Index Portfolio - David D. Sylvester (1996) and Laurie R. White (1996). Mr.
Sylvester has been with Wells Fargo & Company and its predecessors in an
investment management capacity for over 20 years. Mr. Sylvester joined WCM in
1998 as the Firm's Executive Vice President of Liquidity Investments. He
simultaneously held the position of Managing Director for Reserve Asset
Management at Norwest Investment Management, Inc. ("NIM") (since 1997) until WCM
and NIM combined investment advisory services under the WCM name in 1999. Mr.
Sylvester has nearly 25 years of investment experience. He specializes in
portfolio and securities analysis, fixed-income trading and the ability to add
stability and safety through maximizing fund diversification. He also manages
structured and derivative securities, and institutional and personal trust
assets. Mr. Sylvester attended the University of Detroit-Mercy. Ms. White joined
WCM in 1998 as a Principal for the Liquidity Investments Team and simultaneously
was a Director for Reserves Asset Management at NIM (since 1997) until WCM and
NIM combined investment advisory services under the WCM name in 1999. Ms. White
specializes in managing short-term securities, along with structured and
derivative securities, and institutional and personal trust assets. Ms. White
received a BA in Political Science from Carleton College and a MBA from the
University of Minnesota.
Equity Income Portfolio - David L. Roberts, CFA (1994) and Gary J. Dunn, CFA
(1994). Mr. Roberts joined WCM in 1998 as the Equity Income Managing Director
and simultaneously held this position at NIM until WCM and NIM combined
investment advisory services under the WCM name in 1999. Mr. Roberts joined
Norwest Corporation in 1972 as a Securities Analyst. He became Assistance Vice
President Portfolio Manager in 1980 and was promoted to Vice President in 1982.
He holds a BA in Mathematics from Carroll College. Mr. Dunn joined WCM in 1998
as Principal for its Equity Income Team. WCM and NIM combined investment
advisory services under the WCM name in 1999. Mr. Dunn formerly was the Director
of Institutional Investments of NIM. He has been associated with Norwest or its
affiliates as a Financial Analyst and Portfolio Manager since 1979. Mr. Dunn
received a BA in Economics from Carroll Collage.
International Equity Portfolio - Katherine Schapiro, CFA (1999) and Stacey Ho,
CFA (1999). Ms. Schapiro jointed WCM in 1997 as International Equity Managing
Director. She manages international equity funds and portfolios for WCM's
institutional clients. She joined WCM in 1997 from Wells Fargo Bank where she
was a Portfolio Manager from 1992 to 1997. Ms. Schapiro's 18 years of investment
experience includes investment management from 1988 to 1992 at Newport Pacific
Management, an international advisory firm. Ms. Schapiro received her BA in
Spanish Literature from Stanford University. She was the past President of the
Security Analysts of San Francisco. Ms. Ho joined WCM in 197 as an International
Equity Portfolio Manager Portfolio Manager. She manages international equity
funds and portfolios for WCM's institutional clients. In 1995 and 1996 she was
an International Equity Portfolio Manager at Clemente Capital Management, and
from 1990 to 1995 she managed Japanese and U.S. equity portfolios for Edison
International. Ms. Ho has over 10 years of international equity investment
management experience. Ms. Ho received BS in Civil Engineering from San Diego
State University, a MS in Environmental Engineering from Stanford University and
a MBA form the University of California at Los Angeles.
International Portfolio - Michael Perelstein (1997). Mr. Perelstein joined
Schroder in 1997 as a Senior Vice President. Mr. Perelstein currently manages
international portfolios and has more than 22 years of investment experience
that includes more than 15 years specializing in overseas investing. Mr.
Perelstein, along with the Schroder EAFE (Europe, Asia, Far East) Team, manages
more than $7 billion in assets. Prior to 1997, Mr. Perelstein was a Director and
a Managing Director at MacKay-Shields. Mr. Perelstein has a BA in Economics from
Brandies University and a MBA from the University of Chicago.
Large Company Growth Portfolio - John S. Dale, CFA (1994) and Gary E. Nussbaum,
CFA (1998). Mr. Dale joined Peregrine in 1988 as a Senior Vice President and has
managed large company growth portfolios since 1983, currently totaling assets in
excess of $3 billion. Prior to joining Peregrine, Mr. Dale has been associated
with Norwest Bank and its affiliates since 1968. Mr. Dale received his BA in
Marketing from the University of Minnesota. Mr. Nussbaum joined Peregrine in
1990 as a Vice President and Portfolio Manager where he has managed large
company growth portfolios, currently totaling assets in excess of $3 billion.
Mr. Nussbaum received a BBA in Finance and a MBA from the University of
Wisconsin.
Managed Fixed Income Portfolio - Richard Merriam, CFA (1995) and Ajay Mirza
(1998). Mr. Merriam joined Galliard at the firm's inception in 1995. Currently,
Mr. Merriam is a Managing Partner at Galliard. He is responsible for investment
process and strategy. Prior to joining Galliard, Mr. Merriam was Chief
Investment Officer for Insight Management. Mr. Merriam received a BA in
Economics and English from the University of Michigan and a MBA from the
University of Minnesota. Mr. Mirza joined Galliard at the firm's inception in
1995 as a Portfolio Manager and Mortgage Specialist. Prior to joining Peregrine,
Mr. Mirza was a research analyst at Insight Investment Management and at Lehman
Brothers. Mr. Mirza holds a BE in Instrumentation from the Birla Institute of
Technology (India), a MA in Economics from Tulane University, and a MBA from the
University of Minnesota.
Positive Return Bond Portfolio - William D. Giese, CFA (1994) and Patricia
Burns, CFA (1998). Mr. Giese joined Peregrine more than 10 years ago as a Senior
Vice President and Portfolio Manager. His responsibilities include overseeing
the Positive Return Bond Portfolio. Mr. Giese has more than 20 years of
experience in fixed-income securities management. Mr. Giese received his BS in
Civil Engineering from the Illinois Institute of Technology and a MBA form the
University of Michigan. Ms. Burns joined Peregrine over ten years ago and is a
Senior Vice President and Portfolio Manager for taxable fixed-income portfolios.
She has been associated with Norwest Bank and its affiliates since 1983. Ms.
Burns has a BA in Child Psychology/Sociology and a MBA from the University of
Minnesota.
Small Cap Index Portfolio-- David D. Sylvester (1998) and Laurie R. White
(1998). For a description of Mr. Sylvester and Ms. White, see "Index Portfolio."
Small Company Growth Portfolio - Robert B. Mersky, CFA (1994) and Paul E. von
Kuster, CFA(1998). Mr. Mersky is founder, President and a Portfolio Manager at
Peregrine. In 1984, Mr. Mersky and five other Senior Portfolio Managers founded
Peregrine. Mr. Mersky is responsible for Peregrine Small Cap Equity style and
oversees the Small Company Growth Portfolio. Mr. Mersky has actively managed
small cap stocks since 1973. Prior to joining Peregrine, Mr. Mersky has been
associated with Norwest Bank since 1968; and his responsibilities include Senior
Research Analyst, Portfolio Manager, Director of Research and Chief Investment
Officer. Mr. Mersky received his BS in Accounting from the University of
Minnesota. Mr. von Kuster joined Peregrine in 1984 as a Senior Vice President
and Portfolio Manager. Mr. von Kuster has a BA in Philosophy form Princeton
University.
Small Company Value Portfolio - Tasso H. Coin, Jr., CFA (1995) and Douglas G.
Pugh, CFA (1997). Mr. Coin joined Peregrine in 1995 as a Senior Vice President.
Prior to 1995, Mr. Coin was a research officer at Lord Asset Management. Mr.
Coin received his BBA in Economics from Loyola University of Chicago. Mr. Pugh
joined Peregrine in 1997 as a Senior Vice President. Prior to 1997, Mr. Pugh was
a Senior Equity Analyst and Portfolio Manager for Advantus Capital Management,
an investment advisor firm. Mr. Pugh has a BS in Finance and Business
Administration from Drake University and a MBA from the University of Minnesota.
Stable Income Portfolio - John Huber (1998). Mr. Huber joined Galliard at the
firm's inception in 1995 as a Portfolio Manager. Currently, Mr. Huber is highly
involved with portfolio management, strategy, issue selection and trading. Mr.
Huber specializes in corporate and asset/mortgage-backed securities. Prior to
joining Galliard, Mr. Huber was an Assistant Portfolio Manager with NIM. In
addition, he previously served as a Senior Analyst in Norwest's Capital Market
Credit Group. Mr. Huber received a BA in Communications form the University of
Iowa and a MBA from the University of Minnesota.
Strategic Value Bond Portfolio - Richard Merriam, CFA, John Huber (1998), and
David Yim (1998). For a description of Mr. Merriam, see "Managed Fixed Income
Portfolio." For a description of Mr. Huber, see "Stable Income Portfolio". Mr.
Yim joined Galliard in 1995 as a Portfolio Manager/Research Analyst. Mr. Yim is
Head of Credit Research. Prior to 1995, Mr. Yim served as a Research Analyst
with American Express Financial Advisors. Mr. Yim has a BA in International
Relations from Middlebury College and a MBA from the University of Minnesota.
ITEM 7: SHAREHOLDER INFORMATION
PURCHASE OF INTERESTS
Interests in the Portfolios are issued solely in private placement transactions
that do not involve any "public offering" within the meaning of Section 4(2) of
the Securities Act of 1933, as amended ("1933 Act"). All investments in the
Portfolios are made without a sales load, at the NAV next determined after an
order is received by the Portfolio. Investments in the Portfolios may only be
made by certain institutional investors, whether organized within or outside the
United States (excluding individuals, S corporations, partnerships, and grantor
trusts beneficially owned by any individuals, S corporations, or partnerships).
An investor in a Portfolio must also be an "accredited investor," as that term
is defined under Rule 501(a) of Regulation D under the 1933 Act.
The NAV of each Portfolio is determined as of 4:00 P.M., Eastern Time
("Valuation Time"), on all weekdays that the New York Stock Exchange is open
("Business Day"). Net asset value per Interest is calculated by dividing the
aggregate value of the Portfolio's assets less all liabilities by the number of
units of Interests outstanding. All Portfolios value portfolio securities at
current market value if market quotations are readily available. If market
quotations are not readily available, the Portfolios value those securities at
fair value as determined by or pursuant to procedures adopted by the Board.
Each investor in a Portfolio may add to or reduce its investment in the
Portfolio. At the Valuation Time on each Business Day, the value of each
investor's Interest in a Portfolio will be determined by multiplying the
Portfolio's NAV by the percentage, effective for that day, that represents that
investor's share of the aggregate Interests in the Portfolio. Any additions to
or withdrawals of those interests which are to be effected on that day will then
be effected. Each investor's share of the aggregate Interests in the Portfolio
then will be recomputed using the percentage equal to the fraction (1) the
numerator of which is the value of the investor's investment in the Portfolio as
of the Valuation Time on that day plus or minus, as the case may be, the amount
of any additions to or withdrawals from such investment effected on that day and
(2) the denominator of which is the Portfolio's aggregate NAV as of the
Valuation Time on that day plus or minus, as the case may be, the amount of the
net additions to or withdrawals from the aggregate investments in the Portfolio
by all investors. The percentages so determined then will be applied to
determine the value of each investor's respective interest in the Portfolio as
of the Valuation Time on the following Business Day.
Trading in securities on European, Far Eastern and other international
securities exchanges and over-the-counter markets is normally completed well
before the close of business of each Business Day. Trading in foreign
securities, however, may not take place on all Business Days or may take place
on days other than Business Days. The determination of the prices of foreign
securities may be based on the latest market quotations for the securities
markets. If events occur that affect the securities' value after the close of
the markets on which they trade, the Portfolios may make adjustments to the
value of the securities for purposes of determining net asset value.
For purposes of determining NAV, the Portfolios convert all assets and
liabilities denominated in foreign currencies into U.S. dollars at the mean of
the bid and asked prices of such currencies against the U.S. dollar last quoted
by a major bank prior to the time of conversion.
There is no minimum initial or subsequent investment amount in a Portfolio.
However, since each Portfolio intends to be as fully invested at all times as is
reasonably practicable in order to enhance the return on its assets, investments
must be made in federal funds (i.e., monies credited to the account of the
Trust's custodian by a Federal Reserve Bank).
Stephens Inc. ("Stephens" or "Distributor") with principal offices at 111 Center Street, Little Rock, Arkansas 72201, serves as the
distributor of the Trust. The Trust reserves the right to reject any purchase order for any reason.
REDEMPTION OR REPURCHASE OF INTERESTS
An investor in a Portfolio may withdraw all or any portion of its investment in
the Portfolio at the NAV next determined after a withdrawal request in proper
form is furnished by the investor to the Trust. The proceeds of a withdrawal
will be paid by the Portfolio in federal funds normally on the business day
after the withdrawal is effected, but in any event within seven days.
Investments in a Portfolio may not be transferred. The right of redemption may
not be suspended nor the payment dates postponed for more than seven days except
when the New York Stock Exchange is closed (or when trading thereon is
restricted) for any reason other than its customary weekend or holiday closings
or under any emergency or other circumstances as determined by the SEC.
Redemptions from a Portfolio may be made wholly or partially in portfolio
securities. The Trust has filed an election with the SEC pursuant to which each
Portfolio will only consider effecting a redemption in portfolio securities if
the particular interestholder is redeeming more than $250,000 or 1% of the
Portfolio's NAV, whichever is less, during any 90-day period.
DISTRIBUTIONS
A Portfolio's net income consists of (1) all dividends, accrued interest
(including earned discount, both original issue and market discount), and other
income, including any net realized gains on the Portfolio's assets, less (2) all
actual and accrued expenses of the Portfolio, amortization of any premium, and
net realized losses on the Portfolio's assets, all as determined in accordance
with generally accepted accounting principles. All of a Portfolio's net income
is allocated pro rata among the investors in the Portfolio. A Portfolio's net
income generally is not distributed to the investors in the Portfolio, except as
determined by the Trustees from time to time, but instead is included in the NAV
of the investors' respective Interests in the Portfolio.
TAXES
Each Portfolio has been and will continue to be operated in a manner so as to
qualify it as a non-publicly traded partnership for federal income tax purposes.
Provided that a Portfolio so qualifies, it will not be subject to any federal
income tax on its income and gain (if any). However, each investor in the
Portfolio will be taxable on its distributive share of the Portfolio's taxable
income in determining its federal income tax liability. As a non-publicly traded
partnership, the Portfolio will be deemed to have "passed through" to
interestholders any interests, dividends, gains or losses. The determination of
such share will be made in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations promulgated thereunder. All Portfolios
will have less than 100 investors.
It is intended that each Portfolio's assets, income and distribution will be
managed in such a way that an entity electing and qualifying as a "regulated
investment company" under the Code can continue to so qualify by investing
substantially all of its assets through a Portfolio, provided that the regulated
investment company meets other requirements for such qualification not within
the control of the Portfolio (e.g., distributing at least 90% of the regulated
investment company's "investment company taxable income" annually).
Investor inquiries should be directed to Stephens.
ITEM 8: DISTRIBUTION ARRANGEMENTS.
The Trust is registered as an open-end management investment company under the
1940 Act. The Trust was organized as a Delaware business trust. Investors in the
Trust will each be liable for all obligations of the Trust. However, the risk of
an investor incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Trust itself
was unable to meet its obligations. The Trust's Declaration of Trust authorizes
the Board of Trustees to issue Interests and to establish and designate such
Interests into one or more Portfolios. Interests may be purchased only by
institutional investors which are "accredited investors" within the meaning of
Regulation D under the 1933 Act, and may not be purchased by individuals, S
corporations, partnerships or grantor trusts.
A discussion of the risk factors, objectives and other investment aspects in a
Private Fund will include all aspects of an investment in the corresponding
Portfolio. In this registration statement, the discussion of risk factors which
apply to an investment by a Portfolio shall include the risk factors which apply
to an investment by a Private Fund.
The business and affairs of the Trust are managed under the direction of its
Board of Trustees. The office of the Trust is located at 111 Center Street,
Little Rock, Arkansas 72201.
ITEM 9: FINANCIAL HIGHLIGHTS INFORMATION
The response to Item 9 has been omitted pursuant to paragraph (B)(2)(b) of the
General Instructions to Form N-1A.
<PAGE>
Part B
WELLS FARGO CORE TRUST
PRIVATE PLACEMENT MEMORANDUM
Disciplined Growth Portfolio
Index Portfolio
Equity Income Portfolio
International Equity Portfolio
International Portfolio
Large Company Growth Portfolio
Managed Fixed Income Portfolio
Positive Return Bond Portfolio
Small Cap Index Portfolio
Small Cap Value Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Stable Income Portfolio
Strategic Value Bond Portfolio
November 5, 1999
ITEM 10. COVER PAGE AND TABLE OF CONTENTS.
This Part B is not a prospectus. It is intended to provide additional
information regarding the fourteen Portfolios of Wells Fargo Core Trust (the
"Trust") and should be read in conjunction with the Trust's Part A dated
November 5, 1999. All terms used in Part B that are defined in Part A will have
the same meanings assigned in Part A. Copies of Part A may be obtained without
charge by calling 1-800-222-8222 or writing to Wells Fargo Funds, P.O. Box 8266,
Boston, MA 02266-8266.
TABLE OF CONTENTS
THE TRUST HISTORY........................................................................................2
DESCRIPTION OF THE TRUST, PORTFOLIOS, INVESTMENTS AND RISKS..............................................2
FUNDAMENTAL INVESTMENT POLICIES..........................................................................2
NON-FUNDAMENTAL INVESTMENT POLICIES......................................................................3
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS..........................................................4
MANAGEMENT OF THE TRUST.................................................................................19
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.....................................................20
INVESTMENT ADVISORY AND OTHER SERVICES..................................................................22
BROKERAGE ALLOCATION AND OTHER PRACTICES................................................................28
CAPITAL STOCK AND OTHER SECURITIES......................................................................29
Description of Interests.........................................................................29
PURCHASE, REDEMPTION AND PRICING OF SHARES..............................................................30
DETERMINATION OF NET ASSET VALUE........................................................................31
TAXATION................................................................................................31
UNDERWRITERS............................................................................................32
CALCULATION OF PERFORMANCE DATA.........................................................................32
FINANCIAL STATEMENTS....................................................................................32
SCHEDULE A - DESCRIPTION OF RATINGS....................................................................A-1
<PAGE>
ITEM 11. TRUST HISTORY
In November 1998 the parent holding company of Wells Fargo Bank, N.A.
("Wells Fargo" or "Advisor"), advisor to the Stagecoach funds merged with the
parent holding company of Norwest Investment Management, Inc., the advisor to
the Norwest funds. Management and shareholders of both the Stagecoach Funds
Family and the Norwest Funds Family approved a merger of the existing funds from
both fund families into successor funds that are series of three newly formed
investment companies registered under the 1940 Act. Core Trust was established
to continue the operations of the existing Portfolios of Core Trust (Delaware)
("CT") in newly established Portfolios. The Initial Trustees established
fourteen Portfolios for the Trust, each of which will have a direct correlation
to one corresponding CT Portfolio.
ITEM 12. DESCRIPTION OF THE TRUST, PORTFOLIOS, INVESTMENTS AND RISKS
The Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust
was organized as a Delaware business trust on March 10, 1999. The Trust's
Declaration of Trust authorizes the Board of Trustees to issue an unlimited
number of beneficial interests ("Interests") and to establish and designate such
Interests into one or more portfolios ("Portfolios"). Interests may be purchased
only by institutional investors which are "accredited investors" within the
meaning of Regulation D under the Securities Act of 1933, as amended (the "1933
Act"), and may not be purchased by individuals, S corporations, partnerships or
grantor trusts. The number of investors for each Portfolio may not exceed 100.
The Trust is currently comprised of fourteen separate series of
Portfolios: Disciplined Growth Portfolio, Index Portfolio, Equity Income
Portfolio, International Equity Portfolio, International Portfolio, Large
Company Growth Portfolio, Managed Fixed Income Portfolio, Positive Return Bond
Portfolio, Small Cap Index Portfolio, Small Cap Value Portfolio, Small Company
Growth Portfolio, Small Company Value Portfolio, Stable Income Portfolio and
Strategic Value Bond Portfolio. Each Portfolio is "diversified" as defined in
the 1940 Act.
FUNDAMENTAL INVESTMENT POLICIES:
Each Portfolio has adopted the following investment policies, all
of which are fundamental policies; that is, they may not be
changed, without approval by the holders of a majority (as
defined in the 1940 Act) of the outstanding voting securities
of such Portfolio.
The Portfolios 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 Portfolio's investments in that industry would
equal or exceed 25% of the current value of the Portfolio's total assets,
provided that this restriction does not limit a Portfolio's investments in (i)
securities issued or guaranteed by the United States Government, its agencies or
instrumentalities, (ii) securities of other investment companies, (iii)
municipal securities, or (iv) repurchase agreements, and provided further that
(y) the Index Portfolio reserves the right to concentrate in any industry in
which the S&P 500 Index becomes concentrated to the same degree during the same
period and (z) the Small Cap Index Portfolio reserves the right to concentrate
in any industry in which the S&P 600 Small Cap Index becomes concentrated to the
same degree during the same period;
(2) purchase securities of any issuer if, as a result, with respect to
75% of a Portfolio's total assets, more than 5% of the value of its total assets
would be invested in the securities of any one issuer or the Portfolio's
ownership would be more than 10% of the outstanding voting securities of such
issuer, provided that this restriction does not limit a Portfolio's investments
in securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities, or investments in securities of other investment companies;
(3) borrow money, except to the extent permitted under the 1940 Act, including the rules, regulations and exemptions
thereunder;
(4) issue senior securities, except to the extent permitted under the
1940 Act, including 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 Portfolio'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 Portfolio'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
Portfolio from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business); nor
(8) purchase or sell commodities, provided that (i) currency will not
be deemed to be a commodity for purposes of this restriction, (ii) this
restriction does not limit the purchase or sale of futures contracts, forward
contracts or options, and (iii) this restriction does not limit the purchase or
sale of securities or other instruments backed by commodities or the purchase or
sale of commodities acquired as a result of ownership of securities or other
instruments.
NON-FUNDAMENTAL INVESTMENT POLICIES
Each Portfolio 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 Portfolio's Interest holders; (1) Each Portfolio
may invest in shares of other investment companies to the extent permitted under
the 1940 Act, including the rules, regulations and exemptions thereunder,
provided however, that no Portfolio that has knowledge that its Interests are
purchased by another investment company investor pursuant to Section 12(d)(1)(G)
of the 1940 Act will acquire any securities of registered open-end management
investment companies or registered unit investment trusts in reliance on Section
12(d)(1)(F) or 12(d(1)(G) of the 1940 Act, and provided further that any
Portfolio that has knowledge that its Interests are purchased by another
investment company pursuant to an exemptive order relating to Section 12(d)(1)
of the 1940 Act that precludes underlying portfolios from acquiring any
securities of any other investment company in excess of the limits contained in
Section 12(d)(1)(A) of the 1940 Act, except for securities received as a
dividend or as a result of a plan of reorganization of any company will limit
its acquisition of securities of other investment companies accordingly.
(2) Each Portfolio may not invest or hold more than 15% of the Portfolio'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 Portfolio may invest in futures or options contracts regulated by the
U.S. Commodity Futures Trading Commission ("CFTC") for (i) bona fide hedging
purposes within the meaning of the rules of the CFTC and (ii) for other purposes
if, as a result, no more than 5% of the Portfolio's net assets would be invested
in initial margin and premiums (excluding amounts "in-the-money") required to
establish the contracts;
(4) Each Portfolio may lend securities from its portfolio to approved brokers,
dealers and financial institutions, to the extent permitted under the 1940 Act,
including the rules, regulations and exemptions thereunder, which currently
limit such activities to one-third of the value of a Portfolio's total assets
(including the value of the collateral received). Any such loans of portfolio
securities will be fully collateralized based on values that are
marked-to-market daily;
(5) Each Portfolio may not make investments for the purpose of exercising
control or management, provided that this restriction does not limit a
Portfolio's investment in securities of other investment companies or
investments in entities created under the laws of foreign countries to
facilitate investment in securities of that country;
(6) Each Portfolio may not purchase securities on margin (except for short-term
credits necessary for the clearance of transactions); and
(7) Each Portfolio 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.
General
Notwithstanding the foregoing policies, any other investment companies
in which the Portfolios may invest have adopted their own investment policies,
which may be more or less restrictive than those listed above, thereby allowing
a Portfolio to participate in certain investment strategies indirectly that are
prohibited under the fundamental and non-fundamental investment policies listed
above.
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS
Additional information on the particular types of securities in which certain
Portfolios may invest in is set forth below.
Asset-Backed Securities
The Portfolios may invest in various types of asset-backed securities.
Asset-backed securities are securities that represent an interest in an
underlying security. The asset-backed securities in which the Portfolios invest
may consist of undivided fractional interests in pools of consumer loans or
receivables held in trust. Examples include certificates for automobile
receivables (CARS) and credit card receivables (CARDS). Payments of principal
and interest on these asset-backed securities are "passed through" on a monthly
or other periodic basis to certificate holders and are typically supported by
some form of credit enhancement, such as a surety bond, limited guaranty, or
subordination. The extent of credit enhancement varies, but usually amounts to
only a fraction of the asset-backed security's par value until exhausted.
Ultimately, asset-backed securities are dependent upon payment of the consumer
loans or receivables by individuals, and the certificate holder frequently has
no recourse to the entity that originated the loans or receivables. The actual
maturity and realized yield will vary based upon the prepayment experience of
the underlying asset pool and prevailing interest rates at the time of
prepayment. Asset-backed securities are relatively new instruments and may be
subject to greater risk of default during periods of economic downturn than
other instruments. Also, the secondary market for certain asset-backed
securities may not be as liquid as the market for other types of securities,
which could result in a Portfolio experiencing difficulty in valuing or
liquidating such securities.
Bank Obligations
The Portfolios 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 Portfolio may be subject to additional investment risks that are
different in some respects from those incurred by a Portfolio 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 Portfolio will not benefit from insurance from
the Bank Insurance Fund or the Savings Association Insurance Fund administered
by the Federal Deposit Insurance Corporation ("FDIC"). Bankers' acceptances are
credit instruments evidencing the obligation of a bank to pay a draft drawn on
it by a customer. These instruments reflect the obligation both of the bank and
of the drawer to pay the face amount of the instrument upon maturity. The other
short-term obligations may include uninsured, direct obligations, bearing fixed,
floating- or variable-interest rates.
Below Investment Grade Investments
A Portfolio may invest in debt securities that are in low or below
investment grade categories, or are unrated or in default at the time of
purchase (also known as high yield securities or "junk bonds"). Such debt
securities have a much greater risk of default (or in the case of bonds
currently in default, of not returning principal) and are more volatile than
higher-rated securities of similar maturity. The value of such debt securities
will be affected by overall economic conditions, interest rates, and the
creditworthiness of the individual issuers. Additionally, these lower rated debt
securities may be less liquid and more difficult to value than higher rated
securities.
Stocks of the smaller and medium-sized companies in which the Fund may
invest may be more volatile than larger company stocks. Investments in foreign
markets may also present special risks, including currency, political,
diplomatic, regulatory and liquidity risks.
Bonds
The Portfolios may invest in bonds. 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).
Borrowing
The Portfolios may borrow money for temporary or emergency purposes,
including the meeting of redemption requests. Borrowing involves special risk
considerations. Interest costs on borrowings may fluctuate with changing market
rates of interest and may partially offset or exceed the return earned on
borrowed funds (or on the assets that were retained rather than sold to meet the
needs for which funds were borrowed). Under adverse market conditions, a
Portfolio might have to sell portfolio securities to meet interest or principal
payments at a time when investment considerations would not favor such sales.
Reverse repurchase agreements, short sales not against the box, dollar roll
transactions and other similar investments that involve a form of leverage have
characteristics similar to borrowings but are not considered borrowings if the
Portfolio maintains a segregated account.
Commercial Paper
The Portfolios 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 Portfolios 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 ("NRSRO"). Commercial
paper may include variable- and floating-rate instruments.
Closed-End Investment Companies
The Portfolios may invest in the securities of closed-end investment
companies that invest primarily in foreign securities. Because of restrictions
on direct investment by U.S. entities in certain countries, other investment
companies may provide the most practical or only way for the Portfolio to invest
in certain markets. The Portfolios will invest in such companies when, in the
Advisor's judgment, the potential benefits of the investment justify the payment
of any applicable premium or sales charge. Other investment companies incur
their own fees and expenses.
Convertible Securities
The Portfolios may invest in convertible securities that provide
current income and are issued by companies with the
characteristics described above for each Portfolio and that
have a strong earnings and credit record. The Portfolios may
purchase convertible securities that are fixed-income debt
securities or preferred stocks, and which may be converted at
a stated price within a specified period of time into a
certain quantity of the common stock of the same issuer.
Convertible securities, while usually subordinate to similar
nonconvertible securities, are senior to common stocks in an
issuer's capital structure. Convertible securities offer
flexibility by providing the investor with a steady income
stream (which generally yield a lower amount than similar
nonconvertible securities and a higher amount than common
stocks) as well as the opportunity to take advantage of
increases in the price of the issuer's common stock through
the conversion feature. Fluctuations in the convertible
security's price can reflect changes in the market value of
the common stock or changes in market interest rates.
Custodial Receipts for Treasury Securities
The Portfolios may purchase participations in trusts that hold U.S.
Treasury securities (such as TIGRs and CATS) or other obligations where the
trust participations evidence ownership in either the future interest payments
or the future principal payments on the obligations. These participations are
normally issued at a discount to their "face value," and can exhibit greater
price volatility than ordinary debt securities because of the way in which their
principal and interest are returned to investors.
Derivative Securities
The Portfolios may invest in various instruments that may be considered
"derivatives," including structured notes, bonds or other instruments with
interest rates that are determined by reference to changes in the value of other
interest rates, indices or financial indicators ("References") or the relative
change in two or more References. Some derivative securities represent
relatively recent innovations in the bond markets, and the trading market for
these instruments is less developed than the markets for traditional types of
debt instruments. It is uncertain how these instruments will perform under
different economic and interest rate scenarios. Because certain of these
instruments are leveraged, their market values may be more volatile than other
types of bonds and may present greater potential for capital gain or loss.
Derivative securities and their underlying instruments may experience periods of
illiquidity, which could cause a Fund to hold a security it might otherwise sell
or could force the sale of a security at inopportune times or for prices that do
not reflect current market value. The possibility of default by the issuer or
the issuer's credit provider may be greater for these structured and derivative
instruments than for other types of instruments. As new types of derivative
securities are developed and offered to investors, the advisor will, consistent
with the Funds' investment objective, policies and quality standards, consider
making investments in such new types of derivative securities.
Derivative Securities: Futures and Options Contracts
The Portfolios may invest in futures and options contracts. Futures and
options contracts are types of "derivative securities," securities which derive
their value, at least in part, from the price of another security or asset, or
the level of an index or a rate. As is described in more detail below, a
Portfolio often invests in these securities as a "hedge" against fluctuations in
the value of the other securities that the Portfolio holds, although a Portfolio
may also invest in certain derivative securities for investment purposes only.
While derivative securities are useful for hedging and investment, they
also carry additional risks. A hedging policy may fail if the correlation
between the value of the derivative securities and the Portfolio's other
investments does not follow the Advisor's expectations. If the Advisor's
expectations are not met, it is possible that the hedging strategy will not only
fail to protect the value of the Portfolio's investments, but the Portfolio may
also lose money on the derivative security itself. Also, derivative securities
are more likely to experience periods when they will not be readily tradable.
If, as a result of such illiquidity, a Portfolio cannot settle a future or
option contract at the time the Advisor determines is optimal, the Portfolio may
lose money on the investment. Additional risks of derivative securities include:
the risk of the disruption of the Portfolios' ability to trade in derivative
securities because of regulatory compliance problems or regulatory changes;
credit risk of counterparties to derivative contracts; and market risk (i.e.,
exposure to adverse price changes).
<PAGE>
The Advisor uses a variety of internal risk management procedures to ensure that
derivatives use is consistent with a Portfolio's investment objectives, does not
expose a Portfolio to undue risk and is closely monitored. These procedures
include providing periodic reports to the Board of Trustees concerning the use
of derivatives.
<PAGE>
The use of derivatives by a Portfolio also is subject to broadly applicable
investment policies. For example, a Portfolio may not invest more than a
specified percentage of its assets in "illiquid securities," including those
derivatives that do not have active secondary markets. Nor may a Portfolio use
certain derivatives without establishing adequate "cover" in compliance with the
U.S.
Securities and Exchange Commission ("SEC") rules limiting the use of leverage.
<PAGE>
Futures Contracts. The Portfolios may trade futures contracts and options on
futures contracts. A futures transaction involves a firm agreement to buy or
sell a commodity or financial instrument at a particular price on a specified
future date. Futures contracts are standardized and exchange-traded, where the
exchange serves as the ultimate counterparty for all contracts. Consequently,
the only credit risk on futures contracts is the creditworthiness of the
exchange.
<PAGE>
The purchaser or seller of a futures contract is not required to deliver or pay
for the underlying instrument unless the contract is held until the delivery
date. However, both the purchaser and seller are required to deposit "initial
margin" with a futures broker when the parties enter into the contract. Initial
margin deposits are typically equal to a percentage of the contract's value. If
the value of either party's position declines, that party will be required to
make additional "variation margin" payments to settle the change in value on a
daily basis. The party that has a gain may be entitled to receive all or a
portion of this amount. Initial and variation margin payments do not constitute
purchasing securities on margin for purposes of a Portfolio's investment
limitations. In the event of the bankruptcy of the broker that holds the margin
on behalf of a Portfolio, the Portfolio may not receive a full refund of its
margin.
<PAGE>
Although the Portfolios intend to purchase or sell futures contracts only if
there is an active market for such contracts, a liquid market may not exist for
a particular contract at a particular time. Many futures exchanges and boards of
trade limit the amount of fluctuation permitted in futures contract prices
during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that limit
or trading may be suspended for specified periods during the trading day.
Futures contracts prices could move to the limit for several consecutive trading
days with little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subject a Portfolio to substantial losses. If it is
not possible, or a Portfolio determines not to close a futures position in
anticipation of adverse price movements, the Portfolio may be required to pay
additional variation margin until the position is closed.
The Portfolios may also purchase options on futures contracts. See
"Options Trading" below.
Foreign Currency Futures Contracts and Foreign Currency Transactions.
The Portfolios can invest in foreign currency futures contracts and foreign
currency transactions which entail the same risks as other futures contracts as
described above, but have the additional risks associated with international
investing. Similar to other futures contracts, a foreign currency futures
contract is an agreement for the future delivery of a specified currency at a
specified time and at a specified price, will be secured by margin deposits, are
regulated by the CFTC and are traded on designated exchanges. A Portfolio will
incur brokerage fees when it purchases and sells futures contracts.
Foreign currency transactions, such as forward foreign currency
exchange contracts, are also contracts for the future delivery of a specified
currency at a specified time and at a specified price. These transactions differ
from futures contracts in that they are usually conducted on a principal basis
instead of through an exchange, and therefore there are no brokerage fees,
margin deposits are negotiated between the parties, and the contracts are
settled through different procedures. The Advisor, considers on an ongoing basis
the creditworthiness of the institutions with which the Portfolio enters into
foreign currency transactions. Despite these differences, however, foreign
currency futures contracts and foreign currency transactions (together,
"Currency Futures") entail largely the same risks, and therefore the remainder
of this section will describe the two types of securities together.
Because the Portfolios may invest in securities denominated in
currencies other than the U.S. dollar and may temporarily hold Portfolios in
bank deposits or other money market investments denominated in foreign
currencies, they may be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rate between such currencies and the
dollar. Changes in foreign currency exchange rates influence values within the
Portfolio from the perspective of U.S. investors. The rate of exchange between
the U.S. dollar and other currencies is determined by the forces of supply and
demand in the foreign exchange markets. The international balance of payments
and other economic and financial conditions, government intervention,
speculation and other factors affect these forces.
A Portfolio will purchase and sell Currency Futures in order to hedge
its portfolio and to protect it against possible variations in foreign exchange
rates pending the settlement of securities transactions. If a fall in exchange
rates for a particular currency is anticipated, a Portfolio may sell a Currency
Future as a hedge. If it is anticipated that exchange rates will rise, a
Portfolio may purchase a Currency Future to protect against an increase in the
price of securities denominated in a particular currency the Portfolio intends
to purchase. These Currency Futures will be used only as a hedge against
anticipated currency rate changes. Although such contracts are intended to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time, they tend to limit any potential gain which might result
should the value of such currency increase.
The use of Currency Futures involves the risk of imperfect correlation
between movements in futures prices and movements in the price of currencies
which are the subject of the hedge. The successful use of Currency Futures
strategies also depends on the ability of the Advisor to correctly forecast
interest rate movements, currency rate movements and general stock market price
movements. There can be no assurance that the Advisor's judgment will be
accurate. The use of Currency Futures also exposes a Portfolio to the general
risks of investing in futures contracts: the risk of an illiquid market for the
Currency Futures, the risk of exchange-imposed trading limits, and the risk of
adverse regulatory actions. Any of these events may cause a Portfolio to be
unable to hedge its securities, and may cause a Portfolio to lose money on its
Currency Futures investments.
The Portfolios may also purchase options on Currency Futures. See
"Options Trading" below.
Options Trading. The Portfolios, except the Equity Income, Large
Company Growth and Small Company Growth Portfolios, may purchase or sell options
on individual securities or options on indices of securities. The purchaser of
an option risks a total loss of the premium paid for the option if the price of
the underlying security does not increase or decrease sufficiently to justify
the exercise of such option. The seller of an option, on the other hand, will
recognize the premium as income if the option expires unrecognized but foregoes
any capital appreciation in excess of the exercise price in the case of a call
option and may be required to pay a price in excess of current market value in
the case of a put option.
A call option for a particular security gives the purchaser of the
option the right to buy, and a writer the obligation to sell, the underlying
security at the stated exercise price at any time prior to the expiration of the
option, regardless of the market price of the security. The premium paid to the
writer is in consideration for undertaking the obligation under the option
contract. A put option for a particular security gives the purchaser the right
to sell, and the writer the option to buy, the security at the stated exercise
price at any time prior to the expiration date of the option, regardless of the
market price of the security.
The Portfolios 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 Portfolio 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 Portfolio'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 Portfolio 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 Portfolio holds an offsetting
call on the same instrument or index as the call written. The Portfolios will
write put options only if they are "secured" by liquid assets maintained in a
segregated account by the Portfolios' custodian in an amount not less than the
exercise price of the option at all times during the option period.
Each Portfolio 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 Portfolio would be in a worse position than it would have been had if it had
not written the option. If a Portfolio 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 Portfolio 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 a
Portfolio may invest.
A stock index option is an option contract whose value is based on the
value of a stock index at some future point in time. Stock indexes fluctuate
with changes in the market values of the stocks included in the index. The
effectiveness of purchasing or writing stock index options will depend upon the
extent to which price movements in a Portfolio's investment portfolio correlate
with price movements of the stock index selected. Accordingly, successful use by
a Portfolio 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 Portfolio writes an option on
a stock index, the Portfolio will place in a segregated account with the
Portfolio'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 Portfolios 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 Portfolio against an increase in the prices of stocks
that a Portfolio intends to purchase. The purchase of options on stock index
futures contracts are similar to other options contracts as described above,
where a Portfolio 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 Portfolio risks the loss of the premium paid
for the option. The Portfolios 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.
<PAGE>
Interest-rate and index swaps involve the exchange by a Portfolio 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 Portfolio with another party of cash flows based upon
the performance of an index of securities. Interest-rate swaps involve the
exchange by a Portfolio 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 Portfolios will usually enter into swaps on a net basis. In so doing, the
two payment streams are netted out, with a Portfolio receiving or paying, as the
case may be, only the net amount of the two payments. If a Portfolio 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
Portfolio is contractually obligated to make. There is also a risk of a default
by the other party to a swap, in which case a Portfolio may not receive net
amount of payments that the Portfolio contractually is entitled to receive.
<PAGE>
Future Developments. The Portfolios may take advantage of opportunities in the
areas of options and futures contracts and options on futures contracts and any
other derivative investments which are not presently contemplated for use by the
Portfolios or which are not currently available but which may be developed, to
the extent such opportunities are both consistent with the Portfolios'
investment objective and legally permissible for a Portfolio. Before entering
into such transactions or making any such investment, a Portfolio would provide
appropriate disclosure in its Part A or this Part B.
Dollar Roll Transactions
A Portfolio may enter into "dollar roll" transactions wherein a
Portfolio sells fixed income securities, typically mortgage-backed securities,
and makes a commitment to purchase similar, but not identical, securities at a
later date from the same party. Like a forward commitment, during the roll
period no payment is made for the securities purchased and no interest or
principal payments on the security accrue to the purchaser, but a Portfolio
assumes the risk of ownership. A Portfolio is compensated for entering to dollar
roll transactions by the difference between the current sales price and the
forward price for the future purchase, as well as by the interest earned on the
cash proceeds of the initial sale. Like other when-issued securities or firm
commitment agreements, dollar roll transaction involve the risk that the market
value of the securities sold by a Portfolio may decline below the price at which
a Portfolio is committed to purchase similar securities. In the event the buyer
of securities under a dollar roll transaction becomes insolvent, the Portfolio's
use of the proceeds of the transaction may be restricted pending a determination
by the other party, or its trustee or receiver, whether to enforce the
Portfolio's obligation to repurchase the securities.
Emerging Market Securities
The Portfolios, except for the Index Portfolio, may invest in equity
securities of companies in "emerging markets." The Portfolios consider countries
with emerging markets to include the following: (i) countries with an emerging
stock market as defined by the International Finance Corporation; (ii) countries
with low- to middle-income economies according to the International Bank for
Reconstruction and Development (more commonly referred to as the World Bank);
and (iii) countries listed in World Bank publications as developing. The Advisor
may invest in those emerging markets that have a relatively low gross national
product per capita, compared to the world's major economies, and which exhibit
potential for rapid economic growth. The Advisor believes that investment in
equity securities of emerging market issuers offers significant potential for
long-term capital appreciation.
Equity securities of emerging market issuers may include common
stock, preferred stocks (including convertible preferred
stocks) and warrants; bonds, notes and debentures convertible
into common or preferred stock; equity interests in foreign
investment funds or trusts and real estate investment trust
securities. The Portfolios may invest in American Depositary
Receipts ("ADRs"), Canadian Depositary Receipts ("CDRs"),
European Depositary Receipts ("EDRs"), Global Depositary
Receipts ("GDRs") and International Depositary Receipts
("IDRs") of such issuers.
Emerging market countries include, but are not limited to: Argentina,
Brazil, Chile, China, the Czech Republic, Columbia, Ecuador, Greece, Hong Kong,
Indonesia, India, Malaysia, Mexico, the Philippines, Poland, Portugal, Peru,
Russia, Singapore, South Africa, Thailand, Taiwan and Turkey. A company is
considered in a country, market or region if it conducts its principal business
activities there, namely, if it derives a significant portion (at least 50%) of
its revenues or profits from goods produced or sold, investments made, or
services performed therein or has at least 50% of its assets situated in such
country, market or region.
There are special risks involved in investing in emerging-market
countries. Many investments in emerging markets can be considered speculative,
and their prices can be much more volatile than in the more developed nations of
the world. This difference reflects the greater uncertainties of investing in
less established markets and economies. The financial markets of emerging
markets countries are generally less well capitalized and thus securities of
issuers based in such countries may be less liquid. Most are heavily dependent
on international trade, and some are especially vulnerable to recessions in
other countries. Many of these countries are also sensitive to world commodity
prices. Some countries may still have obsolete financial systems, economic
problems or archaic legal systems. The currencies of certain emerging market
countries, and therefore the value of securities denominated in such currencies,
may be more volatile than currencies of developed countries. In addition, many
of these nations are experiencing political and social uncertainties.
Floating- and Variable-Rate Obligations
The Portfolios 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 Portfolio to invest fluctuating
amounts, which may change daily without penalty, pursuant to direct arrangements
between the Portfolio, 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 Portfolio'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 Portfolio 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 Portfolio may invest.
The Advisor, on behalf of each Portfolio, considers on an ongoing basis the
creditworthiness of the issuers of the floating- and variable-rate demand
obligations in such Portfolio's investment portfolio. Floating- and
variable-rate instruments are subject to interest-rate risk and credit risk.
The floating- and variable-rate instruments that the Portfolios may
purchase include certificates of participation in such instruments.
Foreign Obligations and Securities
The Portfolios may invest in foreign securities through ADRs, CDRs,
EDRs, IDRs and 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.
The Portfolios may invest in fixed income securities of non-U.S.
governmental and private issuers. Such investments may include bonds, notes,
debentures and other similar debt securities, including convertible securities.
Investments in foreign obligations involve certain considerations that
are not typically associated with investing in domestic securities. There may be
less publicly available information about a foreign issuer than about a domestic
issuer. Foreign issuers also are not generally subject to the same accounting,
auditing and financial reporting standards or governmental supervision as
domestic issuers. In addition, with respect to certain foreign countries, taxes
may be withheld at the source under foreign tax laws, and there is a possibility
of expropriation or confiscatory taxation, political, social and monetary
instability or diplomatic developments that could adversely affect investments
in, the liquidity of, and the ability to enforce contractual obligations with
respect to, securities of issuers located in those countries.
Investment income on certain foreign securities in which a Portfolio
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 Portfolio would be subject.
Forward Commitments, When-Issued Purchases and Delayed-Delivery Transactions
Each Portfolio 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 Portfolio will segregate cash, U.S. Government obligations or
other high-quality debt instruments in an amount at least equal in value to the
Portfolio's commitments to purchase when-issued securities. If the value of
these assets declines, the Portfolio 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.
Guaranteed Investment Contracts
The Portfolios may invest in guaranteed investment contracts ("GICs")
issued by insurance companies. Pursuant to such contracts, a Portfolio makes
cash contributions to a deposit fund of the insurance company's general account.
The insurance company then credits to the deposit fund on a monthly basis
guaranteed interest at a rate based on an index. The GICs provide that this
guaranteed interest will not be less than a certain minimum rate. The insurance
company may assess periodic charges against a GIC for expense and service costs
allocable to it, and these charges will be deducted from the value of the
deposit fund. A Portfolio will purchase a GIC only when the Advisor has
determined that the GIC presents minimal credit risks to the Portfolio and is of
comparable quality to instruments in which the Portfolio may otherwise invest.
Because a Portfolio may not receive the principal amount of a GIC from the
insurance company on seven days' notice or less, a GIC may be considered an
illiquid investment. The term of a GIC will be one year or less.
Illiquid Securities
The Portfolios may invest in securities not registered under the
Securities Act of 1933, as amended ("1933 Act") and other securities subject to
legal or other restrictions on resale. Illiquid securities may be difficult to
sell promptly at an acceptable price. Delay or difficulty in selling securities
may result in a loss or be costly to a Portfolio.
Interest Rate Protection Transactions
To manage its exposure to different types of investments, the
Portfolios may enter into interest rate, currency and mortgage (or other asset)
swap agreements and may purchase and sell interest rate "caps," "floors" and
"collars." In a typical interest rate swap agreement, one party agrees to make
regular payments equal to a floating interest rate on a specific amount in
return for payments equal to a fixed interest rate on the same amount for a
specified period. In a cap or floor, one party agrees, usually in return for a
fee, to make payments under particular circumstances. A collar entitles the
purchaser to receive payments to the extent a specified interest rate falls
outside an agreed upon range.
A Portfolio expects to enter into interest rate protection transactions
to preserve a return or spread on a particular investment or portion of its
portfolio or to protect against any increase in the price of securities it
anticipates purchasing at a later date. The Portfolios intend to use these
transactions as a hedge and not as a speculative investment.
Letters of Credit.
Certain of the debt obligations (including certificates of
participation, commercial paper and other short-term obligations) which the
Portfolios may purchase may be backed by an unconditional and irrevocable letter
of credit of a bank, savings and loan association or insurance company which
assumes the obligation for payment of principal and interest in the event of
default by the issuer. Only banks, savings and loan associations and insurance
companies which, in the opinion of the Advisor, are of comparable quality to
issuers of other permitted investments of the Portfolio may be used for letter
of credit-backed investments.
Loans of Portfolio Securities
Each Portfolio may lend its portfolio securities pursuant to guidelines
approved by the Board of Trustees of the Trust to brokers, dealers and financial
institutions, provided: (1) the loan is secured continuously by collateral
consisting of cash, securities of the U.S. Government, its agencies or
instrumentalities, or an irrevocable letter of credit issued by a bank organized
under the laws of the United States, organized under the laws of a State, or a
foreign bank that has filed an agreement with the Federal Reserve Board to
comply with the same rules and regulations applicable to U.S. banks in
securities credit transactions, and such collateral being maintained on a daily
marked-to-market basis in an amount at least equal to the current market value
of the securities loaned plus any accrued interest or dividends; (2) the
Portfolio may at any time call the loan and obtain the return of the securities
loaned upon sufficient prior notification; (3) the Portfolio will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities loaned will not at any time exceed the limits
established by the 1940 Act.
A Portfolio will earn income for lending its securities because cash
collateral pursuant to these loans will be invested subject to the investment
objectives, principal investment strategies and policies of the Portfolio. In
connection with lending securities, a Portfolio may pay reasonable finders,
administrative and custodial fees. Loans of securities involve a risk that the
borrower may fail to return the securities or may fail to provide additional
collateral. In either case, a Portfolio 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 Portfolio if a
material event affecting the investment is to occur. A Portfolio may pay a
portion of the interest or fees earned from securities lending to a borrower or
securities lending agent. Borrowing and placing brokers may not be affiliated,
directly or indirectly, with the Trust, the Advisor or the Distributor.
Money Market Instruments and Temporary Investments
The Portfolios may invest in the following types of high quality money
market instruments that have remaining maturities not exceeding one year: (i)
U.S. Government obligations; (ii) negotiable certificates of deposit, bankers'
acceptances and fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by the
FDIC; (iii) commercial paper rated at the date of purchase "Prime-1" by Moodys
or "A-1" or "A-1--" by S&P, or, if unrated, of comparable quality as determined
by the Advisor; and (iv) repurchase agreements. The Portfolios also may invest
in short-term U.S. dollar-denominated obligations of foreign banks (including
U.S. branches) that at the time of investment: (i) have more than $10 billion,
or the equivalent in other currencies, in total assets; (ii) are among the 75
largest foreign banks in the world as determined on the basis of assets; (iii)
have branches or agencies in the United States; and (iv) in the opinion of the
Advisor, are of comparable quality to obligations of U.S. banks which may be
purchased by the Portfolios.
Repurchase Agreements. A Portfolio may enter into repurchase
agreements, wherein the seller of a security to the Portfolio agrees to
repurchase that security from the Portfolio at a mutually agreed upon time and
price. A Portfolio may enter into repurchase agreements only with respect to
securities that could otherwise be purchased by the Portfolio. 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
Portfolio may incur a loss. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the security, the Portfolio's disposition of the
security may be delayed or limited.
The Portfolios may not enter into a repurchase agreement with a
maturity of more than seven days, if, as a result, more than 15% of a
Portfolio's total net assets would be invested in repurchase agreements with
maturities of more than seven days and illiquid securities. A Portfolio 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 Portfolios may participate in pooled
repurchase agreement transactions with other funds advised by the Advisor.
Mortgage-Related and Other Asset-Backed Securities
The Portfolios, except the Index and International Equity Portfolios,
may invest in mortgage-related securities. Mortgage pass-through securities are
securities representing interests in "pools" of mortgages in which payments of
both interest and principal on the securities are made monthly, in effect
"passing through" monthly payments made by the individual borrowers on the
residential mortgage loans which underlie the securities (net of fees paid to
the issuer or guarantor of the securities). Early repayment of principal on
mortgage pass-through securities may expose a Portfolio to a lower rate of
return upon reinvestment of principal. Also, if a security subject to prepayment
has been purchased at a premium, in the event of prepayment the value of the
premium would be lost. Like other fixed-income securities, when interest rates
rise, the value of a mortgage-related security generally will decline; however,
when interest rates decline, the value of mortgage-related securities with
prepayment features may not increase as much as other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities (but
not the market value of the securities themselves) may be guaranteed by the full
faith and credit of the U.S. Government or its agencies or instrumentalities.
Mortgage pass-through securities created by non-government issuers (such as
commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers) may be supported
by various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance, and letters of credit, which may be issued by
governmental entities, private insurers or the mortgage poolers.
The Portfolios may also invest in investment grade Collateralized
Mortgage Obligations ("CMOs"). CMOs may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by the Government National Mortgage
Association ("GNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") or
the Federal National Mortgage Association (" FNMA"). CMOs are structured into
multiple classes, with each class bearing a different stated maturity. Payments
of principal, including prepayments, are first returned to investors holding the
shortest maturity class; investors holding the longer maturity classes receive
principal only after the first class has been retired. As new types of
mortgage-related securities are developed and offered to investors, the Advisor
will, consistent with a Portfolio's investment objective, policies and quality
standards, consider making investments in such new types of mortgage-related
securities.
The Portfolios may also 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 Portfolio may invest generally are readjusted at periodic
intervals ranging from one year or less to several years in response to changes
in a predetermined commonly-recognized interest rate index. The adjustable rate
feature should reduce, but will not eliminate, price fluctuations in such
securities, particularly when market interest rates fluctuate. The net asset
value of a Portfolio'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 Portfolio or if the
Portfolio sells these 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.
There are risks inherent in the purchase of mortgage-related
securities. For example, these securities are subject to a risk that default in
payment will occur on the underlying mortgages. In addition to default risk,
these securities are subject to the risk that prepayment on the underlying
mortgages will occur earlier or later or at a lessor or greater rate than
expected. To the extent that the Advisor's assumptions about prepayments are
inaccurate, these securities may expose the Portfolios to significantly greater
market risks than expected.
The Portfolios also may invest in the following types of FHLMC mortgage
pass-through securities. FHLMC issues two types of mortgage pass-through
securities: mortgage participation certificates ("PCs") and guaranteed mortgage
certificates ("GMCs"). PCs resemble GNMA certificates in that each PC represents
a pro rata share of all interest and principal payments made and owed on the
underlying pool of mortgages. GMCs also represent a pro rata interest in a pool
of mortgages. These instruments, however, pay interest semiannually and return
principal once a year in guaranteed minimum payments. These mortgage
pass-through securities differ from bonds in that principal is paid back by the
borrower over the length of the loan rather than returned in a lump sum at
maturity. They are called "pass-through" securities because both interest and
principal payments, including prepayments, are passed through to the holder of
the security. PCs and GMCs are both subject to prepayment risk.
Municipal Bonds
The Portfolios may invest in municipal bonds. The two principal
classifications of municipal bonds are "general obligation" and "revenue" bonds.
Municipal bonds are debt obligations issued to obtain funds for various public
purposes. Industrial development bonds are a specific type of revenue bond
backed by the credit and security of a private user. Certain types of industrial
development bonds are issued by or on behalf of public authorities to obtain
funds to provide privately-operated facilities.
From time to time, proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax exemption for
interest on municipal obligations. For example, under federal tax legislation
enacted in 1986, interest on certain private activity bonds must be included in
an investor's alternative minimum taxable income, and corporate investors must
treat all tax-exempt interest as an item of tax preference. Moreover a Portfolio
cannot predict what legislation, if any, may be proposed in the state
legislature regarding the state income tax status of interest on such
obligations, or which proposals, if any, might be enacted. Such proposals, while
pending or if enacted, might materially and adversely affect the availability of
municipal obligations generally for investment by the Portfolio and the
liquidity and value of the Portfolio's assets. In such an event, a Portfolio
would re-evaluate its investment objective and policies and consider possible
changes in its structure or possible dissolution.
Certain of the municipal obligations held by a Portfolio may be insured
as to the timely payment of principal and interest. The insurance policies
usually are obtained by the issuer of the municipal obligation at the time of
its original issuance. In the event that the issuer defaults on interest or
principal payment, the insurer will be notified and will be required to make
payment to the bondholders. There is, however, no guarantee that the insurer
will meet its obligations. In addition, such insurance does not protect against
market fluctuations caused by changes in interest rates and other factors.
Other Investment Companies
The Portfolios may invest in shares of other investment companies to
the extent permitted under the 1940 Act. However, no Portfolio that has
knowledge that its Interests are purchased by another investment company
investor pursuant to Section 12(d)(1)(G) of the 1940 Act may acquire any
securities of registered open-end management investment companies or registered
unit investment trusts in reliance on Section 12(d)(1)(F) or 12(d(1)(G) of the
1940 Act. In addition, any Portfolio that has knowledge that its Interests are
purchased by another investment company pursuant to an exemptive order relating
to Section 12(d)(1) of the 1940 Act that precludes underlying portfolios from
acquiring any securities of any other investment company in excess of the limits
contained in Section 12(d)(1)(A) of the 1940 Act, except for securities received
as a dividend or as a result of a plan of reorganization of any company, will
limit its acquisition of securities of other investment companies accordingly.
Participation Interests
The Portfolios may purchase participation interests in loans or
instruments in which the Portfolio may invest directly that are owned by banks
or other institutions. A participation interest gives a Portfolio an undivided
proportionate interest in a loan or instrument. Participation interests may
carry a demand feature permitting the holder to tender the interests back to the
bank or other institution. Participation interests, however, do not provide the
Portfolio with any right to enforce compliance by the borrower, nor any rights
of set-off against the borrower and the Portfolio may not directly benefit from
any collateral supporting the loan in which it purchased a participation
interest. As a result, the Portfolio will assume the credit risk of both the
borrower and the lender that is selling the participation interest.
Privately Issued Securities
The Portfolios, except the Disciplined Growth, Small Cap Value and
Small Company Growth Portfolios, 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 Portfolio. Privately issued or
Rule 144A securities that are determined by the investment Advisor to be
"illiquid" are subject to the Portfolios' 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
Portfolio on a case-by-case basis and will consider the following factors, among
others, in their evaluation: (1) the frequency of trades and quotes for the Rule
144A Security; (2) the number of dealers willing to purchase or sell the Rule
144A Security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the Rule 144A Security; and (4) the nature of
the Rule 144A Security and the nature of the marketplace trades (e.g., the time
needed to dispose of the Rule 144A Security, the method of soliciting offers and
the mechanics of transfer).
Reverse Repurchase Agreements
The Portfolios may enter into reverse repurchase agreements (an
agreement under which a Portfolio sells their portfolio securities and agrees to
repurchase them at an agreed-upon date and price). At the time a Portfolio
enters into a reverse repurchase agreement it will place in a segregated
custodial account liquid assets such as U.S. Government securities or other
liquid high-grade debt securities having a value equal to or greater than the
repurchase price (including accrued interest) and will subsequently monitor the
account to ensure that such value is maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by the Portfolios
may decline below the price at which the Portfolios are obligated to repurchase
the securities.
Reverse repurchase agreements may be viewed as a form of borrowing.
Small Company Securities
Investments in small capitalization companies carry greater risk than
investments in larger capitalization companies. Smaller capitalization companies
generally experience higher growth rates and higher failure rates than do larger
capitalization companies; and the trading volume of smaller capitalization
companies' securities is normally lower than that of larger capitalization
companies and, consequently, generally has a disproportionate effect on market
price (tending to make prices rise more in response to buying demand and fall
more in response to selling pressure).
Securities owned by a Portfolio that are traded in the over-the-counter
market or on a regional securities exchange may not be traded every day or in
the volume typical of securities trading on a national securities exchange. As a
result, disposition by a Portfolio of a security, to meet redemption requests by
other investors or otherwise, may require the Portfolio to sell these securities
at a discount from market prices, to sell during periods when disposition is not
desirable, or to make many small sales over a lengthy period of time.
Investment in small, unseasoned issuers generally carry greater risk
than is customarily associated with larger, more seasoned companies. Such
issuers often have products and management personnel that have not been tested
by time or the marketplace and their financial resources may not be as
substantial as those of more established companies. Their securities (which a
Portfolio may purchase when they are offered to the public for the first time)
may have a limited trading market that can adversely affect their sale by the
Portfolio and can result in such securities being priced lower than otherwise
might be the case. If other institutional investors engaged in trading this type
of security, a Fund may be forced to dispose of its holdings at prices lower
than might otherwise be obtained.
Stripped Securities
The Portfolios may purchase Treasury receipts, securities of
government-sponsored enterprises (GSEs), and other "stripped" securities that
evidence ownership in either the future interest payments or the future
principal payments on U.S. Government and other obligations. The stripped
securities the Portfolios 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
Portfolios will not purchase stripped mortgage-backed securities ("SMBS"). The
stripped securities purchased by the Portfolios 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 Portfolios are not subject to prepayment or extension risk.
The Portfolios may purchase participations in trusts that hold U.S.
Treasury securities (such as TIGRs and CATS) or other obligations where the
trust participations evidence ownership in either the future interest payments
or the future principal payments on the obligations. These participations are
normally issued at a discount to their "face value," and can exhibit greater
price volatility than ordinary debt securities because of the way in which their
principal and interest are returned to investors.
Unrated Investments
The Portfolios may purchase instruments that are not rated if, in the
opinion of the Advisor, such obligations are of investment quality comparable to
other rated investments that are permitted to be purchased by such Portfolio.
After purchase by a Portfolio, a security may cease to be rated or its rating
may be reduced below the minimum required for purchase by the Portfolio. Neither
event will require a sale of such security by the Portfolio. To the extent the
ratings given by Moodys or S&P may change as a result of changes in such
organizations or their rating systems, a Portfolio will attempt to use
comparable ratings as standards for investments in accordance with the
investment policies contained in its Part A and in this Part B. The ratings of
Moodys and S&P are more fully described in the Appendix to this Part B.
U.S. Government Obligations
The Portfolios may invest in obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities ("U.S. Government
obligations"). Payment of principal and interest on U.S. Government obligations
(i) may be backed by the full faith and credit of the United States (as with
U.S. Treasury bills and GNMA certificates) or (ii) may be backed solely by the
issuing or guaranteeing agency or instrumentality itself (as with FNMA notes).
In the latter case investors must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment,
which agency or instrumentality may be privately owned. There can be no
assurance that the U.S. Government will provide financial support to its
agencies or instrumentalities where it is not obligated to do so. In addition,
U.S. Government obligations are subject to fluctuations in market value due to
fluctuations in market interest rates. As a general matter, the value of debt
instruments, including U.S. Government obligations, declines when market
interest rates increase and rises when market interest rates decrease. Certain
types of U.S. Government obligations are subject to fluctuations in yield or
value due to their structure or contract terms.
Warrants
The Portfolios may invest in warrants. Warrants represent rights to
purchase securities at a specific price valid for a specific period of time. The
prices of warrants do not necessarily correlate with the prices of the
underlying securities. A Portfolio may only purchase warrants on securities in
which the Fund may invest directly.
Zero Coupon Bonds
The Portfolios 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 Statistical Ratings Organization
The ratings of Moodys Investors Service, Inc.; Standard & Poor's
Ratings Group, Division of McGraw Hill; Duff & Phelps Credit Rating Co.; Fitch
Investors Service, Inc.; Thomson Bank Watch; and IBCA Inc. represent their
opinions as to the quality of debt securities. It should be emphasized, however,
that ratings are general and not absolute standards of quality, and debt
securities with the same maturity, interest rate and rating may have different
yields while debt securities of the same maturity and interest rate with
different ratings may have the same yield. Subsequent to purchase by a
Portfolio, 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 Portfolio. The
Advisor will consider such an event in determining whether the Portfolio
involved should continue to hold the obligation.
Portfolio Turnover
Generally, the Portfolios will purchase portfolio securities for
capital appreciation or investment income, or both, and not for short-term
trading profits. If a Portfolio's annual portfolio turnover rate exceeds 100%,
it may result in higher brokerage costs and possible tax consequences for the
Interest holders.
ITEM 13. MANAGEMENT OF THE TRUST
The principal occupations during the past five years of the Trustees
and the principal executive officer of the Trust are listed below. The address
of each, unless otherwise indicated is 111 Center Street, Little Rock, Arkansas
72201. Trustees deemed to be "interested persons" of the Trust for purposes of
the 1940 Act are indicated by an asterisk.
<PAGE>
Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- -------------------
*Robert C. Brown, 65 Trustee, Director, Federal Farm Credit Banks Funding
1431 Landings Place Secretary and Corporation and Farm Credit System Financial
Sarasota, FL 34231 Treasurer 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 Water
Crystal Geyser Water Co. Company and President of Crystal Geyser Roxane
55 Francisco Street, Suite 410 Water Company since 1977.
San Francisco, CA 94133
*W. Rodney Hughes, 72 Trustee and Private Investor.
31 Dellwood Court President
San Rafael, CA 94901
Richard M. Leach, 63 Trustee President of Richard M. Leach Associates (a
P.O. Box 1888 financial consulting firm) since 1992.
New London, NH 03257
*J. Tucker Morse, 54 Trustee Private Investor/Real Estate Developer; Chairman
Four Beaufain Street of Vault Holdings, LLC.
Charleston, SC 29401
Timothy J. Penny, 45 Trustee Senior Counselor to the public relations firm of
500 North State Street Himle-Horner since January 1995 and Senior Fellow
Waseca, MN 56095 at the Humphrey Institute, Minneapolis, Minnesota
(a public policy organization) since January 1995.
Donald C. Willeke 58 Trustee Principal, Willeke & Daniels
201 Ridgewood Avenue
Minneapolis, MN 55403
Each of the Trustees and Officers listed above act in the identical
capacities for Wells Fargo Funds Trust and Wells Fargo Variable Trust
(collectively the "Fund Complex"). Each Trustee receives an annual retainer
(payable quarterly) of $40,000 from the Fund Complex, and also receives a
combined fee of $1,000 for attendance at Fund Complex Board meetings, and a
combined fee of $250 for attendance at committee meetings. If a committee
meeting is held absent a full Board meeting, each attending Trustee will receive
a $1,000 combined fee. These fees apply equally for in-person or telephonic
meetings, and Trustees are reimbursed for all out-of-pocket expenses related to
attending meetings. For 1999, the Trustees will receive a pro rata share of the
annual retainer, calculated from the closing date of the Reorganization. The
Trustees do not receive any retirement benefits or deferred compensation from
the Trust or any other member of the 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.
ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Set forth below, as of November 2, 1999, is the name and share
ownership of each person known by the Trust to have beneficial or record
ownership of 5% or more of a class of a Portfolio or 5% or more of the voting
securities as a whole. The address for each of the funds listed below is 111
Center Street, Little Rock Arkansas 72201.
5% Ownership as of NOVEMBER 2, 1999
Percentage
Portfolio Name and Address of Portfolio
Disciplined Growth Performa Disciplined 23.50%
Portfolio Diversified Equity 52.80%
Strategic Income 1.33%
Moderate Balanced 5.21%
Growth Balanced 15.82%
Aggressive Balance E 1.34%
Equity Income Portfolio Equity Income 68.87%
Diversified Equity Str 21.29%
Strategic Income 0.53%
Moderate Balanced 2.11%
Growth Balance 6.40%
Aggressive Balance E 0.54%
WBII Growh 0.09%
WBII Growth & Income 0.06%
WBII Growth Balance 0.10%
Index Portfolio Index 52.13%
Diversified Equity 32.41%
Strategic Income 0.82%
Moderate Balanced 3.25%
Growth Balanced 9.80%
Aggressive Balance E 0.82%
Forum Equity Index 0.78%
International Portfolio International 35.48%
Growth Equity 19.72%
Diversified Equity 30.69%
Strategic Income 0.72%
Moderate Balanced 2.92%
Growth Balanced 9.28%
Aggressive Balance E 0.76%
WBII Growth 0.09%
WBII Growth & Income 0.14%
WBII Growth Balance 0.22%
Large Company Growth Large Company Growth 59.66%
Portfolio Growth Equity 11.19%
Diversified Equity 19.70%
Strategic Income 0.50%
Moderate Balanced 2.01%
Growth Balanced 5.97%
Aggressive Balanced 0.51%
WBII Growth 0.27%
WBII Growth & Income 0.08%
WBII Growth Balance 0.11%
Managed Fixed Income Diversified Bond 20.78%
Portfolio Strategic Income 16.57%
Moderate Balanced 26.77%
Growth Balanced 34.36%
Aggressive Balanced 1.52%
Positive Return Bond Diversified Bond 20.80%
Portfolio Strategic Income 16.55%
Moderate Balanced 26.78%
Growth Balanced 34.34%
Aggressive Balanced 1.52%
Small Cap Value Portfolio Performa Small Cap 10.01%
Growth Equity 35.14%
Diversified Equity 30.95%
Strategic Income 0.78%
Moderate Balanced 3.03%
Growth Balanced 9.24%
Aggressive Balanced 0.79%
Diversified Small Cp 10.08%
Stable Income Portfolio Strategic Income 19.85%
Moderate Balanced 23.61%
Stable Income 56.54%
Strategic Value Bond Performa Strategic V 3.60%
Portfolio Diversified Bond 12.72%
Strategic Income 10.14%
Moderate Balanced 16.37%
Growth Balanced 21.05%
Aggressive Balanced 0.93%
Total Return 35.19%
Small Company Growth Small Company Growth 76.70%
Portfolio Growth Equity 9.07%
Diversified Equity 8.01%
Strategic Income 0.20%
Moderate Balanced 0.79%
Growth Balanced 2.41%
Aggressive Balanced 0.20%
Diversified Small Cap 2.61%
Small Company Index Growth Equity 38.90%
Portfolio Diversified Equity 34.45%
Strategic Income 0.87%
Moderate Balanced 3.39%
Growth Balanced 10.30%
Aggressive Balanced 0.88%
Diversified Small Cap 11.22%
Small Company Value Growth Equity 38.88%
Diversified Equity 34.43%
Strategic Income 0.87%
Moderate Balanced 3.38%
Growth Balanced 10.29%
Aggressive Balanced 0.88%
Diversified Small Cap 11.27%
International Equity Growth Equity 30.80%
Portfolio Diversified Equity 46.66%
Strategic Income 1.49%
Moderate Balanced 5.33%
Growth Balanced 14.43%
Aggressive Balanced 1.29%
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.
<PAGE>
Investment Advisor. Subject to the general supervision of the Board, Wells Fargo
provides investment advisory services to the Portfolios. As investment advisor,
Wells Fargo furnishes investment guidance and policy direction in connection
with the daily portfolio management of the Portfolios. Wells Fargo furnishes to
the Trust's Board of Trustees periodic reports on the investment strategies and
performance of each Portfolio. Wells Fargo provides the Portfolios with, among
other things, money market and fixed-income research, analysis and statistical
and economic data and information concerning interest rate and securities
markets trends, portfolio composition, and credit conditions.
The investment advisory agreement for each Portfolio ("Advisory
Agreement") will remain in effect for a period of two years from the date of its
effectiveness and thereafter shall continue for successive one-year periods
provided such continuance is specifically approved at least annually by the
Board or by vote of the Interest holders of the Portfolio, and, in either case,
by a majority of the Trustees who are not parties to the Advisory Agreement or
interested persons of any such party (other than as trustees of the Trust).
The Advisory Agreement with respect to a Portfolio is terminable
without the payment of penalty, (i) by the Board or by a vote of a majority of
the Portfolio's outstanding voting securities (as defined in the 1940 Act) on 60
days' written notice by either party and will terminate automatically upon its
assignment.
The advisory fees, as described in Part A, are accrued daily and paid
monthly. The adviser in its sole discretion, may waive all or any portion of its
advisory fee with respect to each Portfolio. Each Advisory Agreement provides
that the Advisers may render service to others.
The table below shows the dollar amount of advisory fees payable as a
percentage of daily net assets by each Portfolio to the predecessor advisors
over the past three years. As discussed in the "Trust History" section, the
Portfolios were created as part of the reorganization of the Stagecoach and
Norwest Funds. Therefore, the information shown below concerning the dollar
amounts of advisory fees paid shows the dollar amount of fees paid to advisors
by the predecessor portfolio that is considered the surviving entity for
accounting purposes. Specifically, the table details the dollar amount of fees
that would have been payable had certain waivers not been in place, together
with the dollar amount of fees waived and the dollar amount of net fees paid.
The advisory fee rates are set forth in Part A. This information is provided for
the past three years or such shorter terms as a Portfolio has been operational.
<PAGE>
ADVISORY FEES
Fee Waived or Fee
Fee Reimbursed Retained by
Payable by Norwest Adviser
Index Portfolio
Year ended May 31, 1999 $2,351,029 $0 $2,351,029
Year ended May 31, 1998 $1,709,358 $0 $1,709,358
Year ended May 31, 1997 $ 592,067 $592,067 $0
Small Company Growth Portfolio
Year ended May 31, 1999 $6,579,692 $0 $6,579,692
Year ended May 31, 1998 $7,752,366 $0 $7,752,366
Small Company Value Portfolio
Year ended May 31, 1999 $1,297,868 $0 $1,297,868
Year ended May 31, 1998 $1,558,410 $0 $1,558,410
Large Company Growth
Year ended May 31, 1999 $9,043,943 $0 $9,043,943
Year ended May 31, 1998 $6,448,644 $0 $6,448,644
Equity Income Portfolio
Year ended May 31, 1999 $10,582,022 $0 $10,582,022
Year ended May 31, 1998 $ 7,756,155 $0 $ 7,756,155
Small Cap Index Portfolio
Year ended May 31, 1999 $303,388 $0 $303,388
Year ended May 31, 1998 $ 45,748 $0 $ 45,748
Managed Fixed Income Portfolio
Year ended May 31, 1999 $1,307,275 $0 $1,307,275
Year ended May 31, 1998 $ 975,529 $0 $ 975,529
Positive Return Bond Fund
Year ended May 31, 1999 $871,345 $0 $871,345
Year ended May 31, 1998 $727,322 $0 $727,322
Stable Income Portfolio
Year ended May 31, 1999 $864,254 $0 $864,254
Year ended May 31, 1998 $682,043 $0 $682,043
Disciplined Growth Portfolio
Year ended May 31, 1999 $1,481,103 $0 $1,481,103
Year ended May 31, 1998 $ 679,865 $0 $ 679,865
Small Cap Value Portfolio
Year ended May 31, 1999 $1,021,928 $0 $1,021,928
Year ended May 31, 1998 $ 580,454 $0 $ 580,454
Strategic Value Bond Portfolio
Year ended May 31, 1999 $1,203,467 $0 $1,203,467
Year ended May 31, 1998 $ 601,240 $0 $ 601,240
Fee Waived or Fee
Fee Reimbursed Retained by
Payable by Schroder Schroder
International Portfolio
Year ended May 31, 1999 $3,937,758 $717,860 $3,219,898
Year ended May 31, 1998 $3,832,528 $117,141 $3,715,387
Year ended May 31, 1997 $ 812,485 N/A $ 812,485
International Portfolio Equity Portfolio
Year ended May 31, 1999 $536,814 $0 $536,814
<PAGE>
Investment Sub-Advisors. Wells Fargo has engaged Wells Capital Management
Incorporated ("WCM"), Galliard Capital Management, Inc. ("Galliard"), Peregrine
Capital Management, Inc. ("Peregrine"), Smith Asset Management Group, LP ("Smith
Group") and Schroder Investment Management North America Inc. ("Schroder")
(collectively, the "Sub-Advisors") to serve as investment sub-advisors to the
Portfolios. Subject to the direction of the Trust's Board of Trustees and the
overall supervision and control of Wells Fargo and the Trust, the Sub-Advisors
make recommendations regarding the investment and reinvestment of the
Portfolios' assets. The Sub-Advisors furnish to Wells Fargo Bank periodic
reports on the investment activity and performance of the Portfolios. The
Sub-Advisors also furnish such additional reports and information as Wells Fargo
Bank and the Trust's Board of Trustees and officers may reasonably request.
An Investment Subadvisory Agreement (the "Subadvisory Agreement") for a
Portfolio will remain in effect for a period of two years from the date of its
effectiveness and thereafter shall continue for successive one-year periods
provided such continuance is specifically approved at least annually by the
Board or by vote of the Interest holders of the Portfolio, and, in either case,
by a majority of the Trustees who are not parties to the Advisory Agreement or
interested persons of any such party (other than as trustees of the Trust). A
Portfolio's Subadvisory Agreement is terminable without penalty by the Board or
a majority of the outstanding voting securities of the Portfolio or by the
Advisor or Subadvisor on 60 days' written notice to the other party and will
automatically terminate in the event of its assignment.
<PAGE>
As compensation for sub-advisory services to the Portfolios, WCM, Galliard,
Peregrine, Smith and Schroder are each entitled to receive the following fees:
- ------------------------------ --------------------- -----------------------------------
Core Portfolio Sub-Advisor Fees
- ------------------------------ --------------------- -----------------------------------
- ------------------------------ --------------------- -----------------------------------
Disciplined Growth Smith 0-175M 0.35%
175-225M 0
225-500M 0.25%
>500M 0.20%
- ------------------------------ --------------------- -----------------------------------
- ------------------------------ --------------------- -----------------------------------
Equity Income WCM 0-200M 0.25%
200-400M 0.20%
>400M 0.15%
- ------------------------------ --------------------- -----------------------------------
- ------------------------------ --------------------- -----------------------------------
Index WCM 0-200M 0.02%
>200M 0.01%
- ------------------------------ --------------------- -----------------------------------
- ------------------------------ --------------------- -----------------------------------
International Schroder 0-100M 0.45%
100-200M 0.35%
200-600M 0.20%
>600M 0.185%
- ------------------------------ --------------------- -----------------------------------
- ------------------------------ --------------------- -----------------------------------
International Equity WCM 0-200M 0.35%
200-400M 0.25%
>400M 0.15%
- ------------------------------ --------------------- -----------------------------------
- ------------------------------ --------------------- -----------------------------------
Large Company Peregrine 0-25M 0.75%
Growth 25-50M 0.60%
50-275M 0.50%
>275M 0.30%
- ------------------------------ --------------------- -----------------------------------
- ------------------------------ --------------------- -----------------------------------
Small Cap Index WCM 0-200M 0.02%
>200M 0.01%
- ------------------------------ --------------------- -----------------------------------
- ------------------------------ --------------------- -----------------------------------
Small Cap Value Smith 0-110M 0.45%
110-150M 0%
150-300M 0.30%
>300M 0.25%
- ------------------------------ --------------------- -----------------------------------
- ------------------------------ --------------------- -----------------------------------
Small Company Peregrine 0-50M 0.90%
Growth 50-180M 0.75%
180-340M 0.65%
340-685M 0.50%
685-735M 0.52%
>735M 0.55%
- ------------------------------ --------------------- -----------------------------------
- ------------------------------ --------------------- -----------------------------------
Small Company Peregrine 0-200M 0.50%
Value >200M 0.75%
- ------------------------------ --------------------- -----------------------------------
<PAGE>
0-100M 0.10%
<PAGE>
100-200M 0.08%
- ------------------------------ --------------------- -----------------------------------
<PAGE>
> 200M 0.06%
- ------------------------------ --------------------- -----------------------------------
<PAGE>
0-10M 0.40%
<PAGE>
10-25M 0.30%
<PAGE>
25M-300M 0.20%
- ------------------------------ --------------------- -----------------------------------
<PAGE>
>300M 0.10%
- ------------------------------ --------------------- -----------------------------------
<PAGE>
0-100M 0.13%
<PAGE>
100-200M 0.10%
- ------------------------------ --------------------- -----------------------------------
<PAGE>
> 200M 0.08%
- ------------------------------ --------------------- -----------------------------------
<PAGE>
0-1500M 0.04%
<PAGE>
1500-2000M 0.05%
<PAGE>
2000-2500M 0.045%
<PAGE>
2500-3000M 0.04%
- ------------------------------ --------------------- -----------------------------------
<PAGE>
> 3000M 0.03%
- ------------------------------ --------------------- -----------------------------------
Administrator. The Trust has retained Wells Fargo as Administrator on
behalf of each Portfolio. Under the Administration Agreement between Wells Fargo
and the Trust, Wells Fargo shall provide as administration services, among other
things: (i) general supervision of the Funds' operations, including coordination
of the services performed by each Portfolio's investment advisor, transfer
agent, custodian, shareholder servicing agent(s), independent auditors and legal
counsel, regulatory compliance, including the compilation of information for
documents such as reports to, and filings with, the U.S. Securities and Exchange
Commission ("SEC") and state securities commissions; and preparation of proxy
statements and shareholder reports for each Portfolio; 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 also furnish office space and certain facilities required for
conducting the Portfolios' business together with ordinary clerical and
bookkeeping services. The Administrator is not entitled to receive an
administration fee as long as it receives an administration fee at the
underlying fund level.
The Table below shows the dollar amount of administrative fees payable
as a percentage of daily net assets by each Portfolio to the predecessor
Administrator. Specifically, the table details the dollar amount of fees that
would have been payable had certain waivers not been in place, together with the
dollar amount of fees waived and the dollar amount of net fees paid. The
advisory fee rates are set forth in Part A. This information is provided for the
past three years or such shorter terms as a Portfolio has been operational.
ADMINISTRATIVE FEES
Fee Fee Fee
Payable Waived Retained
Index Portfolio
Year ended May 31, 1999 $783,676 $779,240 $4,436
Year ended May 31, 1998 $652,010 $648,264 $3,746
Year ended May 31, 1997 $394,711 $163,837 $230,874
Small Company Growth Portfolio
Year ended May 31, 1999 $365,538 $ 1,559 $363,979
Year ended May 31, 1998 $486,767 $479,752 $7,015
Small Company Value Portfolio
Year ended May 31, 1999 $ 72,104 $68,547 $3,557
Year ended May 31, 1998 $101,259 $96,092 $5,167
Large Company Growth Portfolio
Year ended May 31, 1999 $695,688 $137,320 $558,368
Year ended May 31, 1998 $576,912 $572,067 $4,845
Equity Income Portfolio
Year ended May 31, 1999 $1,058,202 $425,107 $633,095
Year ended May 31, 1998 $860,981 $856,592 $4,389
Small Cap Index Portfolio
Year ended May 31, 1999 $60,678 $54,976 $5,702
Year ended May 31, 1998 $9,150 $3,594 $5,556
Managed Fixed Income Portfolio
Year ended May 31, 1999 $186,754 $184,012 $2,742
Year ended May 31, 1998 $155,633 $153,576 $2,057
Positive Return Portfolio
Year ended May 31, 1999 $124,478 $122,006 $2,472
Year ended May 31, 1998 $120,200 $117,575 $2,625
Stable Income Portfolio
Year ended May 31, 1999 $144,042 $142,032 $2,010
Year ended May 31, 1998 $131,001 $127,246 $3,755
International Portfolio
Year ended May 31, 1999 $1,312,586 $0 $1,312,586
Year ended May 31, 1998 $1,209,182 $0 $1,209,182
Year ended May 31, 1997 $ 270,828 $141,294 $ 129,534
Disciplined Growth Portfolio
Year ended May 31, 1999 $82,284 $79,837 $2,447
International Equity Portfolio
Year ended May 31, 1999 $22,367 $22,637 $0
Small Cap Value Portfolio
Year ended May 31, 1999 $53,786 $50,969 $2,817
Strategic Value Bond Portfolio
Year ended May 31, 1999 $120,347 $118,013 $2,334
Custodian. Norwest Bank Minnesota, N.A. ("Norwest Bank"), located at
Norwest Center, 6th and Marquette, Minneapolis, Minnesota 55479, acts as
Custodian for each Portfolio. The Custodian, among other things, maintains a
custody account or accounts in the name of each Portfolio, receives and delivers
all assets for each Portfolio upon purchase and upon sale or maturity, collects
and receives all income and other payments and distributions on account of the
assets of each Portfolio, and pays all expenses of each Portfolio. For its
services as Custodian, Norwest Bank is entitled to receive a fee of 0.02% of the
average daily net assets of each Portfolio except the International and
International Equity Portfolios for which it will receive a fee of 0.25% of the
average daily net assets on a annualized basis.
<PAGE>
Fund Accountant. Forum Accounting Services, LLC ("Forum Accounting"), located at
Two Portland Square, Portland, Maine 04101, serves as Fund Accountant for the
Portfolios. Forum Accounting served as the Accountant for the predecessor
Norwest Funds. In order to ensure an orderly fund accounting transition to Forum
Accounting for all the Portfolios, Wells Fargo will continue to serve as the
Fund Accountant for the Portfolios mentioned above during a transition period.
It is anticipated that the transition period will last until February 1, 2000,
by which time Forum Accounting will be serving as the Fund Accountant for all of
the Portfolios.
<PAGE>
If the conversion to Forum Accounting does not occur on or before February 1,
2000, Wells Fargo Bank will continue to serve as the Fund Accountant until the
conversion occurs, but not longer than one year from September 20, 1999, at
which time it is anticipated that Forum Accounting will serve as the Accountant
for the Portfolio. Wells Fargo Bank is entitled to receive the same fees as
Norwest Bank.
<PAGE>
For their services as Accountant, Forum Accounting is entitled to receive a
monthly base fee per Portfolio ranging from $4,667 to $6,333 for Portfolios with
significant holdings of asset-backed securities. In addition, each Portfolio
pays a monthly fee of $1,000 per class. Forum Accounting is also entitled to
receive a fee equal to 0.0025% of the average annual daily net assets of each
Portfolio.
Counsel: Morrison & Foerster LLP serves as legal counsel to the Trust and
the Portfolios. Their address is 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C. 20006-1812.
ITEM 16. BROKERAGE ALLOCATION AND OTHER PRACTICES.
The Trust has no obligation to deal with any dealer or group of dealers
in the execution of transactions in portfolio securities. Subject to policies
established by the Trust's Board of Trustees, Wells Fargo is responsible for
each Portfolio's investment decisions and the placing of portfolio transactions.
In placing orders, it is the policy of the Trust to obtain the best results
taking into account the dealer's general execution and operational facilities,
the type of transaction involved and other factors such as the dealer's risk in
positioning the securities involved. While Wells Fargo Bank generally seeks
reasonably competitive spreads or commissions, the Portfolios will not
necessarily be paying the lowest spread or commission available.
Purchases and sales of equity securities on a securities exchange are
effected through brokers who charge a negotiated commission for their services.
Orders may be directed to any broker including, to the extent and in the manner
permitted by applicable law, Stephens or Wells Fargo Securities Inc. In the
over-the-counter market, securities are generally traded on a "net" basis with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price that includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount.
Purchases and sales of non-equity securities usually will be principal
transactions. Portfolio securities normally will be purchased or sold from or to
dealers serving as market makers for the securities at a net price. Each of the
Portfolios also will purchase portfolio securities in underwritten offerings and
may purchase securities directly from the issuer. Generally, municipal
obligations and taxable money market securities are traded on a net basis and do
not involve brokerage commissions. The cost of executing a Portfolio's
securities transactions will consist primarily of dealer spreads and
underwriting commissions. Under the 1940 Act, persons affiliated with the Trust
are prohibited from dealing with the Trust as a principal in the purchase and
sale of securities unless an exemptive order allowing such transactions is
obtained form the SEC or an exemption is otherwise available. The Portfolio may
purchase securities form underwriting syndicates of which Stephens or Wells
Fargo is a member under certain conditions in accordance with the provision of a
rule adopted under the 1940 Act and in compliance with procedures adopted by the
Board of Trustees.
In placing orders for securities of a Portfolio, Wells Fargo is
required to give primary consideration to obtaining the most favorable price and
efficient execution. This means that Wells Fargo will seek to execute each
transaction at a price and commission, if any, that provide the most favorable
total cost or proceeds reasonably attainable in the circumstances. Commission
rates are established pursuant to negotiations with the broker based on the
quality and quantity of execution services provided by the broker in the light
of generally prevailing rates. The allocation of orders among brokers and the
commission rates paid are reviewed periodically by the Board of Trustees.
Wells Fargo, as the Investment Advisor of each of the Portfolios, may,
in circumstances in which two or more dealers are in a position to offer
comparable results for a Portfolio investment transaction, give preference to a
dealer that has provided statistical or other research services to Wells Fargo.
By allocating transactions in this manner, Wells Fargo is able to supplement its
research and analysis with the views and information of securities firms.
Information so received will be in addition to, and not in lieu of, the services
required to be performed by Wells Fargo under the Advisory Contracts, and the
expenses of Wells Fargo will not necessarily be reduced as a result of the
receipt of this supplemental research information. Furthermore, research
services furnished by dealers through which Wells Fargo places securities
transactions for a Portfolio may be used by Wells Fargo in servicing its other
accounts, and not all of these services may be used by Wells Fargo in connection
with advising the Portfolios.
Portfolio Turnover. The portfolio turnover rate is not a limiting
factor when Wells Fargo Bank deems portfolio changes appropriate. Changes may be
made in the portfolios consistent with the investment objectives and policies of
the Portfolios whenever such changes are believed to be in the best interests of
the Portfolios and their Interest holders. The portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of portfolio securities
by the average monthly value of the Portfolio's investment securities. For
purposes of this calculation, portfolio securities exclude all securities having
a maturity when purchased of one year or less. Portfolio turnover generally
involves some expenses to the Portfolios, including brokerage commissions or
dealer mark-ups and other transaction costs on the sale of securities and the
reinvestment in other securities. Portfolio turnover also can generate
short-term capital gain tax consequences. Portfolio turnover rate is not a
limiting factor when Wells Fargo deems portfolio changes appropriate.
<PAGE>
From time to time, Wells Fargo and Stephens may waive fees from the Portfolio in
whole or in part. Any such waiver will reduce expenses and, accordingly, have a
favorable impact on the Portfolio's performance.
ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.
DESCRIPTION OF INTERESTS
Under the Declaration of Trust, the Trustees are authorized to issue
Interests in one or more separate and distinct series. Investments in each
Portfolio have no preference, preemptive, conversion or similar rights and are
fully paid and nonassessable, except as set forth below. Each investor in a
Portfolio is entitled to a vote in proportion to the amount of its investment
therein. Investors in the Portfolios will all vote together in certain
circumstances (e.g., election of the Trustees and ratification of auditors, as
required by the 1940 Act and the rules thereunder). One or more Portfolios could
control the outcome of these votes. Investors do not have cumulative voting
rights, and investors holding more than 50% of the aggregate interests in the
Trust or in a Portfolio, as the case may be, may control the outcome of votes.
The Trust is not required and has no current intention to hold annual meetings
of investors, but the Trust will hold special meetings of investors when (1) a
majority of the Trustees determines to do so or (2) investors holding at least
10% of the interests in the Trust (or a Portfolio) request in writing a meeting
of investors in the Trust (or Portfolio). Except for certain matters
specifically described in the Declaration Trust, the Trustees may amend the
Trust's Declaration of Trust without the vote of Interest holders.
The Trust, with respect to a Portfolio, may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved by
the Trust's Board. A Portfolio may be terminated (1) upon liquidation and
distribution of its assets, if approved by the vote of a majority of the
Portfolio's outstanding voting securities (as defined in the 1940 Act) or (2) by
the Trustees on written notice to the Portfolio's investors. Upon liquidation or
dissolution of any Portfolio, the investors therein would be entitled to share
pro rata in its net assets available for distribution to investors.
The Trust is organized as a business trust under the laws of the State
of Delaware. The Trust's Interest holders are not personally liable for the
obligations of the Trust under Delaware law. The Delaware Business Trust Act
provides that an Interest holder of a Delaware business trust shall be entitled
to the same limitation of liability extended to shareholders of private
corporations for profit. However, no similar statutory or other authority
limiting business trust Interest holder liability exists in many other states,
including Texas. As a result, to the extent that the Trust or an Interest holder
is subject to the jurisdiction of courts in those states, the courts may not
apply Delaware law, and may thereby subject the Trust to liability. To guard
against this risk, the Trust Instrument of the Trust disclaims liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation and instrument entered into by the Trust or
its Trustees, and provides for indemnification out of Trust property of any
Interest holder held personally liable for the obligations of the Trust. Thus,
the risk of an Interest holder incurring financial loss beyond his investment
because of shareholder liability is limited to circumstances in which (1) a
court refuses to apply Delaware law, (2) no contractual limitation of liability
is in effect, and (3) the Trust itself is unable to meet its obligations.
ITEM 18. PURCHASE, REDEMPTION, AND PRICING OF SHARES
Beneficial Interests in the Portfolios are issued by the Trust in
private placement transactions which do not involve a "public offering" within
the meaning of Section 4(2) of the 1933 Act. Investments in the Portfolios may
only be made by investment companies or other entities which are "accredited
investors" within the meaning of Regulation D under the 1933 Act.
In addition to cash purchases of Interests, if accepted by the Trust,
investments in Beneficial Interests of a Portfolio may be made in exchange for
securities which are eligible for purchase by the Portfolio and consistent with
the Portfolio's investment objective and policies as described in Part A. In
connection with an in-kind securities payment, a Portfolio may require, among
other things, that the securities (i) be valued on the day of purchase in
accordance with the pricing methods used by the Portfolio; (ii) are accompanied
by satisfactory assurance that the Portfolio will have good and marketable title
to such securities received by it; (iii) are not subject to any restrictions
upon resale by the Portfolio; (iv) be in proper form for transfer to the
Portfolio; and (v) are accompanied by adequate information concerning the basis
and other tax matters relating to the securities. All dividends, interest,
subscription or other rights pertaining to such securities shall become the
property of the Portfolio engaged in the in-kind purchase transaction and must
be delivered to such Portfolio by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for investment
and not for immediate resale. Shares purchased in exchange for securities
generally cannot be redeemed until the transfer has settled.
In 1994, the Commission granted an exemptive order which permitted CT,
certain Norwest Advantage funds and other open-end management investment
companies or their separate series for which Norwest Bank Minnesota, N.A.
("Norwest") (or any person controlled by, controlling or under common control
with Norwest) acts as investment adviser to invest in the core portfolios of CT.
The original exemptive order, which imposed several substantive conditions upon
CT and Norwest Advantage funds, was amended effective August 6, 1996, to permit
any Norwest Advantage fund to invest all or a portion of its assets in a CT
portfolio, irrespective of investment style, and which removed certain
restrictions imposed on CT thereby permitting CT to accept investments from
persons other than Norwest Advantage funds. The exemptive order remains in
effect for the successor entities to these parties.
The Trust is required to redeem all full and fractional units of
Interests in the Trust. The redemption price is the net asset value per unit of
each Portfolio next determined after receipt by the Portfolio of a request for
redemption in proper form.
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 ("NAV"), or may be in cash. Upon
redemption, Interests shall not be cancelled and may be reissued from time to
time. The Trustees may require Interest holders to redeem Interest for any
reason under terms set by the Trustees, including the failure of a Interest
holder 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
Interest issued to him. To the extent permitted by law, the Trustees may retain
the proceeds of any redemption of Interests required by them for payment of
amount due and owing by a Interest holder 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 Interest holders to require
any Series or Class to redeem Interests during any period of time when and to
the extent permissible under the 1940 Act.
If the Trustees postpone payment of the redemption price and suspend
the right of Interest holders to redeem their Interests, 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 Interest holders shall have no right of redemption or payment until
the Trustees declare the end of the suspension. If the right of redemption is
suspended, an Interest holder may either withdraw his or her request for
redemption or receive payment based on the NAV per Interest next determined
after the suspension-terminates.
If the Trustees shall determine that direct or indirect ownership of
Interests of any Portfolio has become concentrated in any person to an extent
that would disqualify any Portfolio 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 Interests sufficient
to maintain or bring the direct or indirect ownership of Interests into
conformity with the requirements for such qualification, and (b) refuse to
transfer or issue shares to any person whose acquisition of Interests 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
described above. Interest holders shall upon demand disclose to the Trustees in
writing such information concerning direct and indirect ownership of Interests
as the Trustees deem necessary to comply with the requirements of any taxing
authority.
DETERMINATION OF NET ASSET VALUE
NAV is determined as of the close of regular trading (currently 1:00
p.m. Pacific time/3:00 p.m. Central time) on each day the New York Stock
Exchange ("NYSE") is open for business. Expenses and fees, including Advisory
fees, are accrued daily and are taken into account for the purpose of
determining the NAV of the Portfolios' Interests.
Securities of a Portfolio for which market quotations are available are
valued at latest prices. Any security for which the primary market is an
exchange is valued at the last sale price on such exchange on the day of
valuation or, if there was no sale on such day, the latest bid price quoted on
such day. If the values reported on a foreign exchange are materially affected
by events occurring after the close of the foreign exchange, assets may be
valued by a method that the Board of Trustees believes accurately reflects fair
value. In the case of other securities, including U.S. Government Securities but
excluding money market instruments maturing in 60 days or less, the valuations
are based on latest quoted bid prices. Money market instruments and debt
securities maturing in 60 days or less are valued at amortized cost. The assets
of a Portfolio , other than money market instruments or debt securities maturing
in 60 days or less, are valued at latest quoted bid prices. Futures contracts
will be marked to market daily at their respective settlement prices determined
by the relevant exchange. Prices may be furnished by a reputable independent
pricing service approved by the Trust's Board of Trustees. Prices provided by an
independent pricing service may be determined without exclusive reliance on
quoted prices and may take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. All other securities and other assets of a Portfolio for which current
market quotations are not readily available are valued at fair value as
determined in good faith by the Trust's Board of Trustees and in accordance with
procedures adopted by the Trustees.
ITEM 19. TAXATION.
The Trust is organized as a business trust under Delaware law. Under
the Trust's current classification for federal income tax purposes, it is
intended that each Portfolio will be treated as a non-publicly traded
partnership for such purposes and, therefore such Portfolio will not be subject
to any federal income tax. However, each investor in a Portfolio will be taxable
on its share (as determined in accordance with the governing instruments of the
Trust) of such Portfolio's income and gains in determining its federal income
tax liability. The determination of such share will be made in accordance with
the Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.
The Trust's taxable year-end is the last day of May. Although the Trust
will not be subject to federal income tax, it will file appropriate federal
income tax returns.
It is intended that each Portfolio's assets, income and distributions
will be managed in such a way that an entity electing and qualifying as a
"regulated investment company" under the Code can continue to so qualify by
investing substantially all of its assets through a Portfolio, provided that the
regulated investment company meets other requirements for such qualification not
within the control of the Portfolio (e.g., distributing at least 90% of the
regulated investment company's "investment company taxable income" annually).
ITEM 20. UNDERWRITERS.
Stephens Inc. (the "Distributor") is the exclusive distributor for the
Interests in the Portfolios. Pursuant to a distribution agreement (the
"Distribution Agreement"), the Distributor, as agent, sells Interests in the
Portfolios on a continuous basis and transmits purchase and redemption orders
that it receives to the Trust.
The Distribution Agreement will continue year to year as long as such
continuance is 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 Placement Agent or by the Placement
Agent at any time after the second anniversary of the effective date of this
agreement on 60 days' written notice to the Trust.
ITEM 21. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 22. FINANCIAL STATEMENTS.
KPMG LLP has been selected as the independent auditors for the Trust.
KPMG LLP provides audit services, tax return preparation and assistance and
consultation in connection with review of certain SEC filings. KPMG LLP's
address is Three Embarcadero Center, San Francisco, California 94111.
<PAGE>
168
230
230
SCHEDULE A
DESCRIPTION OF RATINGS
The following summarizes the highest six ratings used by Standard &
Poor's Corporation ("S&P") for corporate and municipal bonds. The first four
ratings denote investment-grade securities.
AAA - This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay interest
and repay principal.
AA - Debt rated AA is considered to have a very strong capacity to
pay interest and repay principal and differs from AAA issues only in a
small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher-rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for those
in higher-rated categories.
BB, B - Bonds rated BB and B are regarded, on balance as
predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation. Debt
rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and principal
payments. Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will
likely impair capacity or willingness to pay interest and repay
principal.
To provide more detailed indications of credit quality, the AA, A and
BBB, BB and B ratings may be modified by the addition of a plus or minus sign to
show relative standing within these major rating categories.
The following summarizes the highest six ratings used by Moody's
Investors Service, Inc. ("Moody's") for corporate and municipal bonds. The first
four denote investment grade securities.
Aaa - Bonds that are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the Fundamentally strong
position of such issues.
Aa - Bonds that are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered upper medium grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa - Bonds that are rated Baa are considered medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba - Bonds that are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not as well safeguarded during both good times and bad times over
the future. Uncertainty of position characterizes bonds in this class.
B - Bond that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Moody's applies numerical modifiers (1, 2 and 3) with respect to
corporate bonds rated Aa through B. The modifier 1 indicates that the bond being
rated ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the bond ranks
in the lower end of its generic rating category. With regard to municipal bonds,
those bonds in the Aa, A and Baa groups which Moody's believes possess the
strongest investment attributes are designated by the symbols Aal, A1 or Baal,
respectively.
The following summarizes the highest four ratings used by Duff & Phelps
Credit Rating Co. ("D&P") for bonds, each of which denotes that the securities
are investment grade.
AAA - Bonds that are rated AAA are of the highest credit quality.
The risk factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt.
AA - Bonds that are rated AA are of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A - Bonds that are rated A have protection factors which are
average but adequate. However risk factors are more variable and greater
in periods of economic stress.
BBB - Bonds that are rated BBB have below average protection
factors but still are considered sufficient for prudent investment.
Considerable variability in risk exists during economic cycles.
To provide more detailed indications of credit quality, the AA, A and
BBB ratings may modified by the addition of a plus or minus sign to show
relative standing within these major categories.
The following summarizes the highest four ratings used by Fitch
Investors Service, Inc. ("Fitch") for bonds, each of which denotes that the
securities are investment grade:
AAA - Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA - Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A - Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB - Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A and
BBB ratings may be modified by the addition of a plus or minus sign to show
relative standing within these major rating categories.
The following summarizes the two highest ratings used by Moody's for
short-term municipal notes and variable-rate demand obligations:
MIG-1/VMIG-1 -- Obligations bearing these designations are of the best
quality, enjoying strong protection from established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
MIG-2/VMIG-2 -- Obligations bearing these designations are of high
quality, with ample margins of protection although not so large as in the
preceding group.
The following summarizes the two highest ratings used by S&P for
short-term municipal notes:
SP-1 - Indicates very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety characteristics
are given a "plus" (+) designation.
SP-2 - Indicates satisfactory capacity to pay principal and interest.
The three highest rating categories of D&P for short-term debt, each of
which denotes that the securities are investment grade, are D-1, D-2, and D-3.
D&P employs three designations, D-1+, D-1 and D-1-, within the highest rating
category. D-1+ indicates highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to alternative
sources of Master Portfolios, is judged to be "outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations." D-1 indicates very high
certainty of timely payment. Liquidity factors are excellent and supported by
good Fundamental protection factors. Risk factors are considered to be minor.
D-1 indicates high certainty of timely payment. Liquidity factors are strong and
supported by good Fundamental protection factors. Risk factors are very small.
D-2 indicates good certainty of timely payment. Liquidity factors and company
Fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small. D-3 indicates satisfactory liquidity and other protection factors which
qualify the issue as investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
The following summarizes the two highest rating categories used by
Fitch for short-term obligations each of which denotes that the securities are
investment grade:
F-1+ securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of assurance
for timely payment.
F-1 securities possess very strong credit quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less in degree than
issues rated F-1+.
F-2 securities possess good credit quality. Issues carrying this rating
have a satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned the F-1+ and F-1 ratings.
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of senior short-term
promissory obligations. Issuers rated Prime-2 (or related supporting
institutions) are considered to have a strong capacity for repayment of senior
short-term promissory obligations. This will normally be evidenced by many of
the characteristics of issuers rated Prime-1, but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
For commercial paper, D&P uses the short-term debt ratings described
above.
For commercial paper, Fitch uses the short-term debt ratings described
above.
Thomson BankWatch, Inc. ("BankWatch") ratings are based upon a
qualitative and quantitative analysis of all segments of the organization
including, where applicable, holding company and operating subsidiaries.
BankWatch ratings do not constitute a recommendation to buy or sell securities
of any of these companies. Further, BankWatch does not suggest specific
investment criteria for individual clients.
BankWatch long-term ratings apply to specific issues of long-term debt
and preferred stock. The long-term ratings specifically assess the likelihood of
untimely payment of principal or interest over the term to maturity of the rated
instrument. The following are the four investment grade ratings used by
BankWatch for long-term debt:
AAA - The highest category; indicates ability to repay principal
and interest on a timely basis is extremely high.
AA - The second highest category; indicates a very strong ability
to repay principal and interest on a timely basis with limited incremental
risk versus issues rated in the highest category.
A - The third highest category; indicates the ability to repay
principal and interest is strong. Issues rated "A" could be more
vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.
BBB - The lowest investment grade category; indicates an acceptable
capacity to repay principal and interest. Issues rated "BBB" are, however,
more vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.
Long-term debt ratings may include a plus (+) or minus (-) sign to
indicate where within a category the issue is placed.
The BankWatch short-term ratings apply to commercial paper, other
senior short-term obligations and deposit obligations of the entities to which
the rating has been assigned. The BankWatch short-term ratings specifically
assess the likelihood of an untimely payment of principal or interest.
TBW-1 The highest category; indicates a very high
likelihood that principal and interest will be paid
on a timely basis.
TBW-2 The second highest category; while the degree of
safety regarding timely repayment of principal and
interest is strong, the relative degree of safety is
not as high as for issues rated "TBW-1".
TBW-3 The lowest investment grade category; indicates that
while more susceptible to adverse developments (both
internal and external) than obligations with higher
ratings, capacity to service principal and interest
in a timely fashion is considered adequate.
TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
The following summarizes the four highest long-term debt ratings used
by IBCA Limited and its affiliate, IBCA Inc. (collectively "IBCA"):
AAA - Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial such that adverse changes in business, economic
or financial conditions are unlikely to increase investment risk
significantly.
AA - Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial. Adverse changes in business, economic or
financial conditions may increase investment risk albeit not very
significantly.
A - Obligations for which there is a low expectation of investment
risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk.
BBB - Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment
risk than for obligations in other categories.
A plus or minus sign may be appended to a rating below AAA to denote
relative status within major rating categories.
The following summarizes the two highest short-term debt ratings used by
IBCA:
A1+ When issues possess a particularly strong credit feature, a
rating of A1+ is assigned.
A1 - Obligations supported by the highest capacity for timely
repayment.
A2 - Obligations supported by a good capacity for timely repayment.
</TABLE>
WELLS FARGO CORE TRUST
File No. 811-________
PART C
OTHER INFORMATION
Item 23. Exhibits.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Exhibit
Number Description
(a) - Amended and Restated Declaration of Trust, filed herewith.
(b) - Not applicable.
(c) - Not applicable.
(d)(1) - Investment Advisory Contract with Wells Fargo Bank, N.A., filed herewith
(2)(i) - Sub-Advisory Contract with Wells Capital Management, Inc., filed herewith.
(ii) - Sub-Advisory Contract with Galliard Capital Management, Inc., filed herewith.
(iii) - Sub-Advisory Contract with Schroder Investment
Management, Inc., filed herewith.
(iv) - Sub-Advisory Contract with Smith Asset Management, L.P., filed herewith.
(v) - Sub-Advisory Contract with Peregrine Capital Management, Inc., filed herewith.
(e) - Not applicable pursuant to General Instruction (B)(2)(b).
(f) - Not applicable.
(g) - Custody Agreement with Norwest Bank Minnesota, N.A., filed herewith.
(h)(1) - Administration Agreement with Wells Fargo Bank, N.A., filed herewith.
(2) - Placement Agency Agreement with Stephens, Inc., filed herewith
(3) - Fund Accounting Agreement with Forum Accounting Services, LLC, filed herewith.
(i) - Not applicable, pursuant to General Instruction (B)(2)(b).
(j) - Not applicable, pursuant to General Instruction (B)(2)(b).
(k) - Not applicable, pursuant to General Instruction (B)(2)(b).
(l) - Not applicable.
(m) - Not applicable.
(n) - Not applicable.
<PAGE>
WELLS FARGO CORE TRUST
AMENDED AND RESTATED
DECLARATION OF TRUST
DATED
AUGUST 19, 1999
<PAGE>
DECLARATION OF TRUST
OF
WELLS FARGO CORE TRUST
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................................1
ARTICLE II THE TRUSTEES...........................................................................................3
Section 1. Management of the Trust..........................................................................3
Section 2. Initial Trustees; Election and Number of Trustees................................................3
Section 3. Term of Office of Trustees.......................................................................3
Section 4. Qualification of Trustees........................................................................3
Section 5. Vacancies; Appointment of Trustees...............................................................3
Section 6. Temporary Vacancies or Absence...................................................................4
Section 7. Chairman.........................................................................................4
Section 8. Action by Trustees...............................................................................4
Section 9. Meetings of the Trustees; Required Notice........................................................5
Section 10. Committees......................................................................................5
Section 11. Audit Committee.................................................................................6
Section 12. Nominating Committee............................................................................6
Section 13. Ownership of Trust Property.....................................................................6
Section 14. Effect of Trustees Not Serving..................................................................6
Section 15. Trustees as Interestholders.....................................................................6
Section 16. Compensation of Trustees........................................................................7
ARTICLE III POWERS OF THE TRUSTEES................................................................................7
Section 1. Powers...........................................................................................7
Section 2. Certain Transactions............................................................................10
ARTICLE IV SERIES; CLASSES; INTERESTS............................................................................10
Section 1. Establishment of Series or Class................................................................10
Section 2. Interests.......................................................................................10
Section 3. Investment in the Trust.........................................................................11
Section 4. Assets and Liabilities of Series................................................................11
Section 5. Ownership and Transfer of Interests.............................................................12
Section 6. Status of Interests; Limitation of Interestholder Liability.....................................12
ARTICLE V DETERMINATION OF BOOK CAPITAL ACCOUNT
BALANCES, AND ALLOCATIONS........................................................................................13
Section 1 Book Capita Account Balances.....................................................................13
Section 2 Allocation of Net Profits and Net Losses.........................................................13
Section 3 Power to Modify the Foregoing Procedures.........................................................14
ARTICLE VI DISTRIBUTIONS AND REDEMPTION..........................................................................14
Section 1. Distributions...................................................................................14
Section 2. Determination of Net Income.....................................................................14
Section 3. Redemptions.....................................................................................15
Section 4. Determination of Net Asset Value................................................................15
Section 5 Suspension of Right of Redemption................................................................15
ARTICLE VII INTERESTHOLDERS' VOTING POWERS AND MEETINGS..........................................................16
Section 1. Voting Powers...................................................................................16
Section 2. Meetings of Interestholders.....................................................................17
Section 3. Quorum; Required Vote...........................................................................17
ARTICLE VIII CONTRACTS WITH SERVICE PROVIDERS....................................................................17
Section 1. Investment Adviser..............................................................................17
Section 2. Principal Underwriter...........................................................................17
Section 3. Transfer Agency, Accounting, and Other Services.................................................18
Section 4. Custodian.......................................................................................18
Section 5. Parties to Contracts with Service Providers.....................................................18
ARTICLE IX EXPENSES OF THE TRUST AND SERIES......................................................................18
ARTICLE X LIMITATION OF LIABILITY AND INDEMNIFICATION............................................................19
Section 1. Limitation of Liability.........................................................................19
Section 2. Mandatory Indemnification.......................................................................19
Section 3. Indemnification of Interestholders..............................................................20
Section 4. Contractual Modification of Duties..............................................................20
ARTICLE XI OFFICERS..............................................................................................21
Section 1. General.........................................................................................21
Section 2. Election, Tenure and Qualifications of Officers.................................................21
Section 3. Vacancies and Newly Created Offices.............................................................21
Section 4. Removal and Resignation.........................................................................21
Section 5. President.......................................................................................21
Section 6. Treasurer and Assistant Treasurer(s)............................................................21
Section 7. Secretary and Assistant Secretaries.............................................................22
Section 8. Authority to Execute and File Applications for Exemptive Relief.................................22
Section 9. Compensation of Officers........................................................................22
Section 10. Surety Bond....................................................................................22
ARTICLE XII MISCELLANEOUS........................................................................................22
Section 1. Trustee Action; Expert Advice; No Bond or Surety................................................22
Section 2. Record Dates....................................................................................23
Section 3. Dissolution or Termination of a Class, Series or the Trust......................................23
Section 4. Reorganization..................................................................................24
Section 5. Declaration.....................................................................................24
Section 6. Derivative Actions..............................................................................24
Section 7. Applicable Law..................................................................................24
Section 8. Amendments......................................................................................25
Section 9. Fiscal Year.....................................................................................25
Section 10. Seravility.....................................................................................25
Section 11. Principal Office...............................................................................26
Section 12. Inspection of the Books........................................................................26
</TABLE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
WELLS FARGO CORE TRUST
This Declaration of Trust, made on March 10, 1999, and amended and
restated on March 26, 1999 and August 19, 1999, creates a Delaware business
trust for the investment and reinvestment of money and property received by the
Trust from time to time. The Trustees declare that all money and property
received by the Trust shall be held and managed in trust pursuant to this
Amended and Restated Declaration of Trust. The name of the Trust created by this
Declaration is Wells Fargo Core Trust.
DEFINITIONS
<TABLE>
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Unless otherwise provided or required by the context:
"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;
"Board" means the Board of Trustees of the Trust as described in Article II of this Declaration;
"Book Capital Account" means, with respect to any Interestholder, the
Capital Account maintained for such Interestholder on a daily basis in
accordance with Article V of this Declaration of Trust;
"By-Laws" means the By-Laws of the Trust if adopted by the Trustees, as amended from time to time;
"Class" means the class of Interests of a Series established pursuant to Article IV;
"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;
"Commission," "Interested Person," and "Principal Underwriter" have the meanings provided in the 1940 Act;
"Covered Person" means a person so defined in Article IX, Section 2;
"Declaration" shall mean this Amended and Restated Declaration of Trust
as amended, modified, supplemented or restated from time to time.
"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;
with the valuation procedures of the Trust as approved by the Board of Trustees; as follows:
"Interestholder" means a record owner of Interests of the Trust;
"Interests" means the equal proportionate non-transferable units of
interest into which the beneficial interest of the Trust is divided from time to
time (including whole and fractional Interests), or if more than one series or
class of interests is authorized by the Trustees, the equal proportionate
non-transferable units of interest into which each series or class of interests
is divided from time to time;
"Majority Interestholder Vote" means "the vote of a majority of the
outstanding voting securities" as defined in the 1940 Act;
"Net Losses" of a Series for any given time period shall mean the
excess of the Net Asset Value of the Series as of the opening of the business on
the first day of the period, after any additional contributions made on such
date, over the Net Asset Value of the Series at the close of business on the
last day of such period, prior to any distribution being made;
"Net Profits" of a Series for any given time period shall mean the
excess of the Net Asset Value of the Series as of the opening of business on the
first day of the period, after any distribution being made with respect to such
period, over the Net Asset Value of the Series as of the opening of business on
the first day of such period, after any additional contributions made on such
date;
"Outstanding Interests" means Interests shown in the books and records
of the Trust or its transfer agent as then issued and outstanding, but does not
include any Interests that have been repurchased or redeemed by the Trust and
are being held in the treasury of the Trust;
"Percentage Interest" shall mean, with respect to any Interestholder,
as of any day, the ratio (expressed as a percentage) of such Interestholder's
Book Capital Account, as of close of business on the preceding day to the
aggregate Book Capital Accounts of all Interestholders as of the close of
business on such preceding day, such Book Capital Accounts to be determined
after giving effect to all contributions, distributions, and allocations through
such preceding day.
"Trust" means Wells Fargo Core Trust, created hereby;
"Trustee" means a person serving as a Trustee in accordance with
Article II, in his capacity as such, and "Trustees," when used collectively,
means the Trustees acting collectively as the Board;
"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.
THE TRUSTEES
Management of the Trust. The business and affairs of the Trust shall
be managed by or under the direction of the Board, 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.
Initial Trustees; Election and Number of Trustees. The initial
Trustees shall be the persons initially signing this Declaration prior to its
amendment and restatement. The number of Trustees (other than the initial
Trustees) shall ten (10) or such other number as is fixed from time to time by a
majority of the Trustees; provided, that there shall be at least two (2)
Trustees. The Interestholders shall elect the Trustees, only if required by the
1940 Act, on such dates as the Trustees may fix from time to time.
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 has become physically or mentally incapacitated or is otherwise
unable to serve fully, 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 Interestholders by a vote
of at least two-thirds of the Outstanding Interests if required by Section 16(c)
of the 1940 Act as interpreted by the staff of the Commission.
Each Trustee shall retire from service on the Board no later than the
end of the calendar year in which such Trustee reaches the age of 72, or until
such other time as determined by an appropriate resolution of the full Board,
including a majority of the remaining Trustees. However, any Trustee who is a
Trustee as of March 26, 1999, and who had reached the age of 72 prior to such
date shall continue to serve as a Trustee of the Trust until the end of such
calendar year as is determined by an appropriate resolution of the full Board,
including a majority of the remaining Trustees, at which time he shall retire
from service on the Board
Qualification of Trustees. No person shall be qualified to serve,
stand for election or be appointed as a Trustee if such person has already
reached the age of 70. Persons serving as Trustees as of March 26, 1999 who
reached the age of 70 prior to that date, are exempt from this qualification
requirement until the end of the fiscal year in which they turn 72 and retire
pursuant to the retirement policy described in Section 3, or pursuant to the
Board resolution that establishes the calendar year in which they must retire.
Vacancies; Appointment of Trustees. Whenever a vacancy in the Board
exists, regardless of the reason for such vacancy, the remaining Trustees may
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, and the person must meet the
qualification standards set out in Section 4. Such appointment shall be made by
a written instrument signed by a majority of the Trustees or by an appropriate
resolution, 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 signed this
Declaration or otherwise 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 Interestholders are entitled to 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.
Temporary Vacancies or Absence. Whenever a vacancy in the Board
exists, 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 or is otherwise unable to serve fully, the
remaining Trustees shall have all the powers hereunder and their certification
as to such vacancy, absence, or incapacity or inability 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.
Chairman. The Board may appoint one or more of its members to be
Chairman or Co-Chairmen of the Board. The Chairman or Co-Chairmen shall preside
at all meetings of the Trustees, and shall have such other duties and powers as
the Trustees determine from time to time. Absent an express declaration
otherwise by an appropriate resolution of the Board, the Chairman or Co-Chairmen
are not considered officers of the Trust and shall not have the powers or duties
of officers of the Trust. If the Trustees choose to appoint a Chairman or
Co-Chairman who will 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.
Action by Trustees. The Trustees shall act by majority vote at a
meeting duly called at which a quorum is present or, except as specified below,
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 or by Board resolution.
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 of the 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 Board resolution
of the Trustees. Notice of any other meeting shall, and notice of any regular
meeting may, be given to each Trustee by first class mail sent at least three
business days before the meeting, by overnight delivery sent at least two
business days before the meeting, or by telephone, facsimile or other electronic
mechanism sent to his or her home or business address at least twenty-four hours
before 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.
Committees. To facilitate certain requirements under the 1940 Act,
the Trust shall have a standing Audit Committee and a standing Nominating
Committee (collectively, the "Standing Committees"). The Trustees may designate
other committees of the Board. 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 full Board. The Trustees may rescind
any action of any committee, but such rescission shall not have retroactive
effect except as agreed by the committee. The Trustees may delegate to any
committee any of its powers, subject only to the express limitations of the 1940
Act.
Committees may act with or without a meeting. Each committee may adopt
such rules governing its proceedings, quorum and manner of acting as it deems
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.
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. The Board may expand or clarify the responsibilities of the
Audit Committee by adopting a committee charter or otherwise, but may not narrow
the responsibilities set forth here without the consent of the Audit Committee.
Nominating Committee. The Nominating Committee is responsible for
recommending to the Board persons to be nominated for election as Trustees by
the Interestholders at any required Interestholder 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. The Board may expand or clarify the
responsibilities of the Nominating Committee by adopting a committee charter or
otherwise, but may not narrow the responsibilities set forth here without the
consent of the Nominating Committee.
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
Interestholder shall have any interest in specific property of the Trust or of
any Series or any right of partition or possession thereof, but each
Interestholder shall have, as provided in Article IV, a proportionate undivided
beneficial interest in the assets of the Trust or Series represented by
Interests.
Effect of Trustees Not Serving. The death, resignation, retirement,
removal, incapacity, or inability or refusal to serve of any one or more or all
of the Trustees, shall not operate to annul the Trust or to revoke any existing
agency created pursuant to the terms of this Declaration.
Trustees as Interestholders. 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 Interests to the same extent as any
other Interestholder; the Trustees may issue and sell Interests to and buy
Interests 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 Interestholders of the Trust.
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.
POWERS OF THE TRUSTEES
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
Interestholder or assignee of Interests, 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' power and authority shall include, without limitation,
the power and the authority:
(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
property of every kind and description; and to hold cash or other property
uninvested, without in any 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;
(g) To provide for the distribution of Interests 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 establish separate and distinct Series, each with its own defined
investment objectives and policies and distinct investment purposes, and with
separate Interests representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article IV;
(m) 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;
(n) To the full extent permitted by Section 3804 of the Delaware Act, to
allocate assets, revenue, liabilities and expenses of the Trust to a particular
Series and liabilities and expenses to a particular Series or 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;
(o) 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;
(p) To make distributions of income and of capital gains to Interestholders in
the manner hereinafter provided for;
(q) 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 and any other applicable law;
(r) 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 serving, 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;
(s) To purchase, and pay for out of Trust Property or the assets belonging to
any appropriate Series, insurance policies insuring the Interestholders,
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;
(t) To issue, sell, repurchase, redeem, cancel, retire, acquire, hold, resell,
reissue, dispose of and otherwise deal in Interests; to establish terms and
conditions regarding the issuance, sale, repurchase, redemption, cancellation,
retirement, acquisition, holding, resale, reissuance, disposition of or dealing
in Interests; and, subject to Articles IV and V, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Interests any
funds or property of the Trust or of the particular Series with respect to which
such Interests are issued;
(u) To definitively interpret the investment objectives, policies and
limitations of the Trust or any Series; and
(v) 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
any other action in connection with or 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 Board or 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 Board
and the Trustees.
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, principal underwriter 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.
SERIES; CLASSES; INTERESTS
Establishment of Series or Class. The Board may divide the Trust into
one or more Series. The Trustees may divide any Series into one or more Classes
of Interests. 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 Interests 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 shall 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 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 Interests and need not issue any Interests. Each Share
of a Series shall represent an equal undivided beneficial interest in the net
assets of such Series except to the extent affected by expense allocations. Each
holder of Interests of a Series shall be entitled to receive his or her pro rata
share of all distributions made with respect to such Series except to the extent
affected by expense allocations. Upon redemption of his or her Interests, such
Interestholder shall be paid solely out of the funds and property of such
Series. The Trustees may change the name of any Series or Class.
Interests. The beneficial interest in the Trust shall be divided into
Interests of one or more separate and distinct Series or Classes established by
the Trustees. The number of Interests 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 Interests issued hereunder shall be fully paid and
nonassessable. Interestholders shall have no preemptive or other right to
subscribe to any additional Interests or other securities issued by the Trust.
The Trustees shall have full power and authority, in their sole discretion and
without obtaining Interestholder approval, to issue original or additional
Interests at such times and on such terms and conditions as they deem
appropriate; to issue fractional Interests and Interests held in the treasury;
to establish and to change in any manner Interests 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 Interests of any Series or
Classes into a greater or lesser number; to classify or reclassify any unissued
Interests of any Series or Classes into one or more Series or Classes of
Interests; to abolish any one or more Series or Classes of Interests; to issue
Interests 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 Interests as the Trustees may deem desirable.
Interests 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 Interests.
Investment in the Trust. The Trust may accept investments in any
Series from any persons and in any form, subject to such limitations or terms as
they may from time to time impose. Unless the Board directs otherwise, 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 Interestholder's account in the form of full Interests 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 discretion, (a) impose a sales charge upon investments in
any Series or Class, (b) issue fractional Interests, or (c) determine the Net
Asset Value per Share of the initial investment. 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.
Assets and Liabilities of Series. All consideration received by the
Trust for the issue or sale of Interests 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 Series shall belong only to that Series for all purposes,
and to no other Series, and shall be 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 Interestholders 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 Interestholders 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 Interestholders 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 Interestholder or former Interestholder of any Series shall have a
claim on or any right to any assets allocated or belonging to any other Series.
Ownership and Transfer of Interests. The Trust or Transfer Agent
shall maintain a register containing the names and addresses of the
Interestholders of each Series and Class thereof, the number of Interests of
each Series and Class held by such Interestholders, and a record of all Share
transfers. The register shall be conclusive as to the identity of
Interestholders of record and the number of Interests held by them from time to
time. Interests shall be uncertificated unless expressly authorized by the
Trustees. The Trustees may authorize the issuance of certificates representing
Interests and adopt rules governing their use. The Trustees may make rules
governing the transfer of Interests, whether or not represented by certificates.
No Interestholder 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.
Status of Interests; Limitation of Interestholder Liability.
Interests shall be deemed to be personal property giving Interestholders only
the rights provided in this Declaration. Every Interestholder, 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 Interestholder, as such, 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. Interestholders, as such,
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 Interestholder or Trustee or any other series.
DETERMINATION OF BOOK CAPITAL ACCOUNT BALANCES,
AND ALLOCATIONS
Book Capital Account Balances. A Book Capital Account shall be
maintained for each Interestholder of each Series. With respect to each Series,
each Book Capital Account shall be credited with the amounts of consideration
paid by the Interestholder to purchase or increase its interest in the Series
and with its share of the Series' Net Profits, shall be charged with such
Interestholder's share of the Series Net Losses, distributions and withholding
taxes (if any) and shall otherwise appropriately reflect transactions of the
Series and the Interestholders. No interest shall be paid on any amount of
consideration paid to the Trust to purchase or increase Interests.
(a)......The Book Capital Account Balances of Interestholders of each
Series shall be determined periodically at such time or times as the Trustees
may determine. The power and duty to make such calculations may be delegated to
the custodian, fund accountant or any other person as the Trustees may
determine;
(b)......Notwithstanding any other provision of this Declaration, the
Book Capital Accounts and any related accounts (including without limitation tax
capital accounts, gross appreciation [unrealized gains] accounts, and gross
depreciation [unrealized loss] accounts of the Interestholders and the Series
shall at all times be determined and maintained in compliance with Treasury
Department Regulation ss. 1.704-1(b)(2)(iv). The Trustees are authorized to
prescribe in their absolute discretion, such policies for the maintenance of
such Accounts as they consider comply with requirements of the Code.
Allocation of Net Profits and Net Losses.
(a)......Net Profits and Net Losses of each Series shall be determined
and allocated daily as of the close of business to and among Interestholders of
that Series in proportion to their respective interest in the Series, determined
as of the opening of business on such day.
(b)......Except as otherwise provided in this Section, for each fiscal
year, items of income, deduction, gain, loss or credit that are recognized by a
Series for tax purposes shall be allocated pursuant to Treasury Department
Regulations ss. 1.704-1(b) in such manner as to equitably reflect amounts
credited or debited to the Book Capital Account of each Interestholder of that
Series for such year. Allocations of such items also shall be made, where
appropriate, in accordance with Section 704(c) of the Code and the regulations
thereunder, as may be provided in any Policies adopted by the Trustees.
(c) .....Expenses of a Series, if any, which are borne by any
Interestholder of that Series in its individual capacity shall be specially
allocated to that Interestholder;
(d)......Notwithstanding subparagraphs (b) and (c), in the event that
any Interestholder of a Series unexpectedly receives any adjustments,
allocations or distributions described in Treasury Department Regulations ss.
1.704(b)(2)(ii)(d)(4) through ss. 1.704(b)(2)(ii)(d)(6), items of income
(including gross income) and gain of that Series shall be specially allocated to
such Interestholder in an amount and manner sufficient to eliminate the deficit
balance in the Interestholder's Book Capital Account, ss. 1.704-1(b)(2)(ii)(d)
created by such adjustments, allocations or distributions as quickly as
possible. Any special allocations of income and gain of a Series pursuant to
this subparagraph shall be taken into account in computing subsequent
allocations of income and gain of that Series pursuant to this Article, so that
the net amount of any items of that Series so allocated and the income, gain,
loss, deduction and all other items of that Series allocated to each
Interestholder pursuant to this Article shall, to the extent possible, equal the
net amount that would have been allocated to each such Interestholder pursuant
to the provisions of this Article if such special allocations had not been made.
Power to Modify the Foregoing Procedures. Notwithstanding any other
provision of this Article, the Trustees may prescribe, in their absolute
discretion, such other bases and times for determining, for financial reporting
and/or tax accounting purposes, (a) the Net Profits, Net Losses, taxable income,
tax loss, and/or net assets of any Series (or, where appropriate in the
Trustee's judgment, the Trust as a whole), and/or (b) the allocations of the Net
Profits or Net Losses and taxable income or tax loss so determined among, or the
payment of distributions to, the Interestholders of any Series as they deem
necessary or desirable to enable the Trust or any Series to comply with any
provision of the 1940 Act, the Code, or any rule or regulation thereunder, or
any order of exemption issued by the Commission, all as in effect now or
hereafter amended or modified.
DISTRIBUTIONS AND REDEMPTIONS
Distributions. The Trustees may distribute periodically to the
Interestholders of each Series of Interests an amount approximately equal to the
net income of that Series, as determined by the Trustees or as they may
authorize in their discretion. The Trustees also may distribute from time to
time to the Interestholders of any one or more Series an amount equal to all or
part of the gain realized on the sale or disposition of the assets of the Series
or all or part of the principal of the Trust or Series. The amount and payment
of distributions and their form, whether they are in cash, Interests or other
Trust Property, shall be determined by the Trustees in their discretion.
Dividends and other distributions may be paid pursuant to a standing resolution
adopted once or more often as the Trustees determine. All distributions on
Interests of a particular Series shall be distributed pro rata to the
Interestholders of that Series in proportion to the number of Interests 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
Interestholders such dividend reinvestment plans, cash dividend payout plans or
similar plans as the Trustees deem appropriate.
Determination of Net Income. In determining the net income of each
Series or Class of Interests for any period, there shall be deducted from income
for that period (a) such portion of all charges, taxes, expenses and liabilities
due or accrued as the Trustees shall consider properly chargeable and fairly
applicable to income for that period or any earlier period and (b) whatever
reasonable reserves the Trustees shall consider advisable for possible future
charges, taxes, expenses and liabilities which the Trustees shall consider
fairly chargeable and fairly applicable to income for that period or any earlier
period. The net income of each Series or Class for any period may be adjusted
for amounts included on account of net income in the net asset value of
Interests issued or redeemed or repurchased during that period. In determining
the net income of a Series or Class for a period ending on a date other than the
end of its fiscal year, income may be estimated as the Trustees shall deem fair.
Gains on the sale or disposition of assets shall not be treated as income, and
losses shall not be charged against income unless appropriate under applicable
accounting principles, except in the exercise of the discretionary powers of the
Trustees. Any amount contributed to the Trust which is received as income
pursuant to a decree of any court of competent jurisdiction shall be applied as
required under such decree.
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 Interests at a
redemption price per Interest 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 and/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,
Interests shall not be cancelled and may be reissued from time to time. The
Trustees may require Interestholders to redeem Interests for any reason under
terms set by the Trustees, including the failure of a Interestholder 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 Interests issued to
him. To the extent permitted by law, the Trustees may retain the proceeds of any
redemption of Interests required by them for payment of amounts due and owing by
a Interestholder 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 Interestholders to require any Series or Class to
redeem Interests during any period of time when and to the extent permissible
under the 1940 Act.
Determination of Net Asset Value. The Trustees shall cause the Net
Asset Value of Interests 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 Interest 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 Interests 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 such Exchange is open
for trading.
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 Interestholders to redeem their Interests, 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 Interestholders 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 Interestholder 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.
INTERESTHOLDERS' VOTING POWERS AND MEETINGS
Voting Powers. The Interestholders 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 Interestholders to vote for any matter, including the creation,
operation, dissolution, or termination of the Trust. The Interestholders 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
Interestholders' right to vote on any specific matter, the Interestholders'
right to vote shall be deemed to be amended, modified or interpreted in
accordance therewith without further approval by the Trustees or the
Interestholders.
Currently, the 1940 Act requires that Interestholders 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
Interestholders may vote on any additional matter only as the Trustees may
consider desirable, and so authorize. Interestholders have the right to call
special meetings and vote to remove Trustees but only if and to the extent that
the Commission staff takes the position that Section 16(c) of the 1940 Act gives
them such right.
On any matter that requires Interestholder approval under the 1940 Act,
whether Interestholders 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 Interestholders in the discretion of the
Trustees, or for which the 1940 Act does not expressly specify the voting
procedure, all Interests shall be voted in the aggregate and not by 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. Interests 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 Interestholders 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, Interests may be voted only in person or by written proxy
unless the Trustees specifically authorize other permissible methods of
transmission. Until Interests of a Series are issued, as to that Series the
Trustees may exercise all rights of Interestholders and may take any action
required or permitted to be taken by Interestholders by law, or this
Declaration.
Meetings of Interestholders. There shall be no annual
Interestholders' meeting unless required by law. The first Interestholders'
meeting shall be held to elect Trustees at such time and place as the Trustees
designate, unless such action is taken by consent of Interestholders. Special
meetings of the Interestholders of any Series or Class may be called by the
Trustees. Only if required under Section 16(c) of the 1940 Act, as interpreted
by the staff of the Commission, special meetings shall be called by the Trustees
upon the written request of Interestholders owning at least ten percent of the
Outstanding Interests of the Trust entitled to vote for purposes of removing a
Trustee. Interestholders shall be entitled to at least fifteen calendar days
notice of any meeting, given as determined by the Trustees.
Quorum; Required Vote. One-third of the Outstanding Interests of each
Series or Class, or one-third of the Outstanding Interests of the Trust,
entitled to vote in person or by proxy shall be a quorum for the transaction of
business at a Interestholders' 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 Interestholders' meeting
may be held within a reasonable time without further notice. Except when a
larger vote is expressly required by the 1940 Act, if a quorum is present at a
meeting, an affirmative vote of a majority of the Outstanding Interests of the
Trust 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 Interests be voted on any
matter by Series or Classes, then a majority of the Outstanding Interests of
that Series or Class (or, if required by law, a Majority Interestholder Vote of
that Series or Class) voted in person or by proxy shall decide that matter
insofar as that Series or Class is concerned. Interestholders 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 Interests of the Trust or of such Series or Class, as the case may
be.
CONTRACTS WITH SERVICE PROVIDERS
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
Interestholders of the Trust or any Series shall have the right to vote to
approve investment advisory contracts to the extent such approval is required
under the 1940 Act.
Principal Underwriter. The Trustees may enter into one or more
distribution contracts on behalf of the Trust or any Series or Class, providing
for the distribution and sale of Interests 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 Interests 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 Interests, subject to the requirements of Section 12 of
the 1940 Act, Rule 12b-1 thereunder, and other applicable rules and regulations.
Transfer Agency, Accounting, and Other Services. The Trustees, on
behalf of the Trust or any Series or Class, may enter into one or more transfer
agency, accounting, administration contracts and contracts for such other
services necessary or appropriate to carry out the business and affairs of the
Trust with any party or parties on terms and conditions acceptable to the
Trustees.
Custodian. The Trustees shall at all times place and maintain the
securities and similar investments of the Trust and of each Series in custody
under arrangements that meet 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 one or more contracts 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 same in its own
banking department or elsewhere, (c) disburse such funds upon orders or
vouchers, and (d) employ one or more sub-custodians.
Parties to Contracts with Service Providers. The Trustees may enter
into any contract with any entity, even if one or more of the Trustees or
officers of the Trust may be an officer, director, trustee, partner,
Interestholder, 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 Interestholder, 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.
Each 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.
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 Interests;
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 their existence; costs of preparing and printing the
prospectuses of the Trust and each Series, statements of additional information
and Interestholder reports and delivering them to Interestholders; expenses of
meetings of Interestholders 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 or notice 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 incurred by them
in administering the Trust. The Trustees shall have a lien on the assets
belonging to the appropriate Trust or the 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 Interestholders thereto, for the reimbursement to
them of such expenses or disbursements, or for any losses or liabilities to
which they become subject in their capacity as Trustees.
LIMITATION OF LIABILITY AND INDEMNIFICATION
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 Interestholder for any
loss, damage or claim incurred by reason of any act 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.
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.
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.
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;
Any repeal or modification of this Article IX shall be prospective
only, to the extent that such repeal or modification would, if applied
retrospectively, affect any limitation on the liability of any Covered Person in
an a manner that would be adverse to such Covered Person or affect any
indemnification available to any Covered Person in a manner that would be
adverse to such Covered Person with respect to any act or omission which
occurred prior to such repeal, modification or adoption.
Section 3......... Indemnification of Interestholders. If any Interestholder or
former Interestholder of any Series shall be held personally liable solely by
reason of his or her being or having been a Interestholder and not because of
his or her acts or omissions or for some other reason, the Interestholder or
former Interestholder (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, at its
discretion, be entitled to assume the defense of any claim made against such
Interestholder for any act or obligation of the Series and satisfy any judgment
thereon from the assets of the Series.
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 Interestholder, any such
Covered Person acting under this Declaration shall not be liable to the Trust or
any Series thereof or to any Interestholder 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 or limit the duties and
liabilities of a Covered Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Covered Person.
OFFICERS
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 7 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.
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 more than one office, 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 Interestholder, unless specified otherwise by the Trustees.
Vacancies and Newly Created Offices. Whenever a vacancy shall occur
in any office or if any new office is created, the Trustees may fill such
vacancy or new office.
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 the power to remove to the Chairman or President with respect to any
Other Officer. 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.
President. The President is the principal executive officer of the
Trust and shall have the power and responsibility to perform all duties
incidental to the office of President, subject to the Trustees' supervision, and
such other duties as from time to time, may be assigned to him by the Board In
the absence of a Chairman, the President shall preside over meetings of the
Board, unless the Trustees determine otherwise.
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 have the power and
responsibility to 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.
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.
Secretary and Assistant Secretaries. The Secretary shall record all
resolutions, votes and proceedings of the meetings of Trustees and
Interestholders 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 have the power and responsibility to 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.
Authority to Execute and File Applications for Exemptive Relief. The
Officers of the Trust, including, without limitation, the President, Treasurer,
any Assistant Treasurer, Secretary, any Assistant Secretary, or any of them 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.
Compensation of Officers. Each officer may receive such compensation from the Trust for services and reimbursement for
expenses as the Trustees may determine.
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.
MISCELLANEOUS
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 or affected thereby. 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 advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.
Record Dates. The Trustees may fix in advance a date up to ninety
(90) days before the date of any Interestholders' 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
Interests shall go into effect as a record date for the determination of the
Interestholders 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 Interests.
Dissolution or Termination of a Class, Series or the Trust. (a) This
Trust shall have perpetual existence. Notwithstanding the foregoing, the
Trustees may, without Interestholder approval (unless the 1940 Act or other
applicable law expressly provides otherwise):
sell and convey all or substantially all of the assets of the
Trust or any Series or Class of a Series to another Class or to another Series
or to another entity which is an open-end investment company as defined in the
1940 Act, or is a class or 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 Interests of or interests in such Series, entity, or series
thereof; or
at any time sell and convey, or convert into money, all or substantially all of the assets of the Trust or any
affected Series or Class of a Series;
Upon payment or the making of reasonable provision for the payment of
all known liabilities of the Trust or any affected Class or Series in either (i)
or (ii), by assumption or otherwise, the Trustees may distribute the remaining
proceeds or assets (as the case may be) ratably among the Interestholders of the
Trust or any affected Class or Series; however, the payment to the
Interestholders of any particular Class or Series may be reduced by any fees,
expenses or charges allocated to that Series or Class; and may dissolve the
Trust or any affected Series or Class of a Series.
(b) In determining whether to dissolve the Trust, a Series or a Class
of a Series, the Trustees may take into account whether continuation of the
Trust, Series or Class is in the best interests of the Trust, Series or such
Class, or their respective Interestholders as a result of factors or events
adversely affecting the ability of the Trust or such Series or Class to conduct
its business and operations in an economically viable manner. Such factors and
events may include the inability of the Trust, Series or Class to maintain its
assets at an appropriate size, changes in laws or regulations governing the
Trust, Series or Class 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, Series or Class. If a
majority of the Trustees determine that the continuation of the Trust, Series,
or Class is not in the best interests of the Trust, such Series or
Interestholders, such determination is conclusive and binding upon the Trust,
Series, Class and their respective Interestholders.
(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 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.
Reorganization. Unless Interestholder approval is expressly required
under the 1940 Act, the Trustees may, without the need of any action or vote of
the Interestholders 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.
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. Any
agreement of merger or consolidation or certificates 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.
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.
Derivative Actions. As expressly provided in the Delaware Act,
Interestholders have the right to bring a derivative action if they meet the
express requirements of Delaware law. However, no derivative action may be
brought by Interestholders unless, in addition to any requirements of Delaware
law, Interestholders owning not less than one-third of the Outstanding Interests
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.
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 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.
Amendments. Because this Declaration does not confer any independent
rights to Interestholders not expressly granted under Delaware law or the 1940
Act, this Declaration may be amended without Interestholder approval, and all
Interestholders purchase Interests with notice that this Declaration may be so
amended unless expressly required under the 1940 Act. The Trustees may, without
any Interestholder 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 Interestholders 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.
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
Interestholder approval.
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.
Principal Office. The principal office of the Trust shall be located
in San Francisco, California, or in such other location as the Trustees may from
time to time determine.
Inspection of the Books. Except as expressly required under the 1940
Act or conferred under other applicable law, Interestholders 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 Interestholders under the conditions and regulations that they
deem desirable.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the Trustees, have executed
this Declaration as of the date first above written.
/s/Robert C. Brown_________
Robert C. Brown,
as Trustee and not individually
/s/Donald H. Burkhardt
Donald H. Burkhardt,
as Trustee and not individually
/s/Jack S. Euphrat
Jack S. Euphrat,
as Trustee and not individually
/s/Peter G. Gordon
Peter G. Gordon,
as Trustee and not individually
/s/W. Rodney Hughes
W. Rodney Hughes,
as Trustee and not individually
/s/Richard M. Leach
Richard M. Leach,
as Trustee and not individually
/s/J. Tucker Morse
J. Tucker Morse,
as Trustee and not individually
/s/Timothy J. Penny
Timothy J. Penny,
as Trustee and not individually
/s/Donald C. Willeke
Donald C. Willeke,
as Trustee and not individually
</TABLE>
<PAGE>
WELLS FARGO CORE TRUST
INVESTMENT ADVISORY AGREEMENT
This AGREEMENT is made as of this 8th day of November, 1999, between
Wells Fargo Core Trust (the "Trust"), a business trust organized under the laws
of the State of Delaware with its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201 and Wells Fargo Bank, N.A. (the "Adviser"),
a banking association organized under the laws of the United States of America
with its principal place of business at 420 Montgomery Street, 12th Floor, San
Francisco, California, 94104.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "1940 Act") as an open-end management investment company
and is authorized to issue interests (as defined in the Trust's Trust
Instrument), in separate series;
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust listed on Schedule A hereto as such
Schedule may be amended or supplemented from time to time by mutual agreement
(each a "Fund" and collectively the "Funds"), and the Adviser is willing to
provide those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust and the Adviser agree as follows:
Section 1. The Trust; Delivery of Documents. The Trust is engaged in
the business of investing and reinvesting its assets in securities of the type
and in accordance with the limitations specified in its Trust Instrument,
By-Laws (if any) and Registration Statement filed with the Securities and
Exchange Commission (the "Commission") under the 1940 Act and the Securities Act
of 1933 (the "Securities Act"), including any representations made in the
prospectus and statement of additional information relating to the Funds
contained therein and as may be supplemented from time to time, all in such
manner and to such extent as may from time to time be authorized by the Trust's
Board of Trustees (the "Board"). The Board is authorized to issue any unissued
shares in any number of additional classes or series. The Trust has delivered
copies of the documents listed in this Section to the Adviser and will from time
to time furnish the Adviser with any amendments thereof.
Section 2. Investment Adviser; Appointment. The Trust hereby employs
Adviser, subject to the direction and control of the Board, to manage the
investment and reinvestment of the assets in the Funds and, without limiting the
generality of the foregoing, to provide the other services specified in Section
3 hereof.
Section 3. Duties of the Adviser.
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets for the Funds. Among other
things, the Adviser shall make all decisions with respect to the allocation of
the Funds' investments in various securities or other assets, in investment
styles and, if applicable, in other investment companies or pooled vehicles in
which a Fund may invest. To carry out such decisions, the Adviser is hereby
authorized, as agent and attorney-in-fact for the Trust, for the account of, at
the risk of and in the name of the Trust, to place orders and issue instructions
with respect to those transactions of the Funds. In all purchases, sales and
other transactions in securities for the Funds, the Adviser is authorized to
exercise full discretion and act for the Trust in the same manner and with the
same force and effect as the Trust might or could do with respect to such
purchases, sales or other transactions, as well as with respect to all other
things necessary or incidental to the furtherance or conduct of such purchases,
sales or other transactions.
(b) The Adviser will report to the Board at each regular meeting
thereof all material changes in the Funds since the prior report, and will also
keep the Board informed of important developments affecting the Trust, each Fund
and the Adviser, and on its own initiative will furnish the Board from time to
time with such information as the Adviser may believe appropriate, whether
concerning the individual companies whose securities are held by a Fund, the
industries in which they engage, or the economic, social or political conditions
prevailing in each country in which a Fund maintains investments. The Adviser
will also furnish the Board with such statistical and analytical information
with respect to securities in the Funds as the Adviser may believe appropriate
or as the Board reasonably may request. In making purchases and sales of
securities for the Funds, the Adviser will comply with the policies set from
time to time by the Board as well as the limitations imposed by the Trust's
Trust Instrument, By-Laws (if any) and Registration Statement under the 1940 Act
and the Securities Act, the limitations in the 1940 Act and in the Internal
Revenue Code of 1986, as amended, applicable to the Trust and the investment
objectives, policies and restrictions of each Fund.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be appropriate or necessary to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be imposed on the
Trust in any such respect.
(d) The Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the 1940 Act. The Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Commission and the Internal Revenue
Service. The books and records pertaining to the Trust which are in possession
of the Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Adviser's normal business hours. Upon the reasonable request of
the Trust, copies of any such books and records shall be provided promptly by
the Adviser to the Trust or the Trust's authorized representatives.
(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.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Section 6. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Adviser shall
at all times comply with:
(a) all applicable provisions of the 1940 Act, and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as it
may be amended from time to time, under the Securities Act and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as it may be amended from time to time;
(d) the provisions of any By-laws of the Trust, if adopted and as they
may be amended from time to time, or resolutions of the Board that may be
adopted from time to time;
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Trust or the Funds; and
(f) any other applicable provisions of state or federal law.
</TABLE>
Section 7. Broker-Dealer Relationships. In connection with the purchase
and sale of securities for the Funds, the Adviser is responsible for
broker-dealer selection and negotiation of brokerage commission rates. The
Adviser's primary consideration in effecting a security transaction will be to
obtain the best price and execution. In selecting a broker-dealer to execute
each particular transaction for a Fund, the Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the Fund on a continuing basis. Accordingly, the price to the
Fund in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Board may
from time to time determine, the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of having caused a Fund to pay a broker or dealer that provides
brokerage and research services to the Adviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Adviser with
respect to the Fund and to other clients of the Adviser. The Adviser is further
authorized to allocate the orders placed by it on behalf of the Funds to brokers
and dealers who also provide research or statistical material, or other services
to the Funds or to the Adviser. Such allocation shall be in such amounts and
proportions as the Adviser shall determine and the Adviser will report on said
allocations regularly to the Board, indicating the brokers to whom such
allocations have been made and the basis therefor.
Section 8. Expenses of the Fund. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Trust include, but are not limited to, brokerage
commissions, taxes, legal, auditing or governmental fees, the cost of preparing
share certificates, custodian, transfer agent and shareholder service agent
costs, expense of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to trustees and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
Section 9. Compensation.
(a) As compensation for the advisory services provided under this
Agreement, the Trust shall pay the Adviser fees, payable monthly, at the annual
rates indicated on Schedule A hereto, as such Schedule may be amended or
supplemented from time to time;
(b) Except as provided in the following paragraph, no fee shall be
payable hereunder with respect to a Fund during any period in which the Fund
invests all (or substantially all) of its 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 two 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 in a Fund of Funds
structure should invest a portion of its assets directly in portfolio
securities, rather than in a portfolio of Wells Fargo Core Trust (Delaware) or
other portfolio, with respect to those assets the Fund will pay the Adviser the
same fee that the portfolio was paying its adviser (the fees of each portfolio
will be disclosed in the proxy statement and prospectus).
Section 10. Standard of Care. The Trust shall expect of the Adviser, and
the Adviser will give the Trust the benefit of, the Adviser's best judgment and
efforts in rendering its services to the Trust, and as an inducement to the
Adviser's undertaking these services at the compensation level specified, the
Adviser shall not be liable hereunder for any mistake in judgment. In the
absence of willful misfeasance, bad faith, negligence or reckless disregard of
obligations or duties hereunder on the part of the Adviser or any of its
officers, directors, employees or agents, the Adviser shall not be subject to
liability to the Trust or to any shareholders of the Trust for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
Section 11. Non-Exclusivity. The services of the Adviser to the Funds are
not to be deemed to be exclusive, and the Adviser shall be free to render
investment advisory or other services to others (including other investment
companies) and to engage in other activities. It is understood and agreed that
officers or directors of the Adviser may serve as officers and directors of the
Trust, and that officers or directors of the Trust may serve as officers or
directors of the Adviser, to the extent that such services may be permitted by
law, and that the officers and directors of the Adviser are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or from serving as partners, officers, directors or trustees of any
other firm or trust, including other investment advisory companies.
Section 12. Records. The Adviser shall, with respect to orders the Adviser
places for the purchase and sale of portfolio securities of the Funds, maintain
or arrange for the maintenance of the documents and records required pursuant to
Rule 31a-1 under the 1940 Act as well as such records as the Funds'
administrator reasonably requests to be maintained, including, but not limited
to, trade tickets and confirmations for portfolio trades. All such records shall
be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1 or any successor rule. All such records will be the
property of the Funds and will be available for inspection and use by the Funds.
The Adviser will promptly notify the Funds' Administrator if it experiences any
difficulty in maintaining the records in an accurate and complete manner.
Section 13. Term and Approval. This Agreement shall become effective with
respect to a Fund after approved in accordance with the requirements of the 1940
Act, and executed by the Adviser and the Trust, and shall thereafter continue
from year to year, provided that the continuation of the Agreement is
specifically approved in accordance with the requirements of the 1940 Act, which
currently requires that the continuation be approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote
of "a majority of the outstanding voting securities" of the Fund (as defined in
Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's
Directors who are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of a party to this Agreement (other than as Directors
of the Trust), by votes cast in person at a meeting specifically called for such
purpose.
Section 14. Termination. As required under the 1940 Act, this Agreement
may be terminated with respect to a Fund at any time, without the payment of any
penalty, by vote of the Trust's Board of Trustees or by vote of a majority of a
Fund's outstanding voting securities, or by the Adviser, on sixty (60) days'
written notice to the other party. The notice provided for herein may be waived
by the party entitled to receipt thereof. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" for purposes of
this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act, as
it may be interpreted by the Commission or its staff in interpretive releases,
or applied by the Commission staff in no-action letters issued under the 1940
Act.
Section 15. Indemnification by the Adviser. The Trust shall not be
responsible for, and the Adviser shall indemnify and hold the Trust or any Fund
of the Trust harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to the willful misfeasance, bad faith, negligent acts or reckless
disregard of obligations or duties on the part of the Adviser or any of its
officers, directors, employees or agents.
Section 16. Indemnification by the Trust. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of duties hereunder on
the part of the Adviser or any of its officers, directors, employees or agents,
the Trust hereby agrees to indemnify and hold harmless the Adviser against all
claims, actions, suits or proceedings at law or in equity whether brought by a
private party or a governmental department, commission, board, bureau, agency or
instrumentality of any kind, arising from the advertising, solicitation, sale,
purchase or pledge of securities, whether of the Funds or other securities,
undertaken by the Funds, their officers, directors, employees or affiliates,
resulting from any violations of the securities laws, rules, regulations,
statutes and codes, whether federal or of any state, by the Funds, their
officers, directors, employees or affiliates. Federal and state securities laws
impose liabilities under certain circumstances on persons who act in good faith,
and nothing herein shall constitute a waiver or limitation of any rights which a
Fund may have and which may not be waived under any applicable federal and state
securities laws.
Section 17. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
shall be c/o Stephens Inc., 111 Center Street, Suite 300, Little Rock, Arkansas
72201, Attention :R. Greg Feltus, and that of the Adviser shall be 525 Market
Street, 12th Floor, San Francisco, California 94163, Attention:
Michael J. Hogan.
Section 18. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission,
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the Commission, such provision shall be
deemed to incorporate the effect of such rule, regulation or order. The duties
and obligations of the parties under this Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 19. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. If shareholder approval of
an amendment is required under the 1940 Act, no such amendment shall become
effective until approved by a vote of the majority of the outstanding shares of
the affected Funds. Otherwise, a written amendment of this Agreement is
effective upon the approval of the Board of Trustees and the Adviser.
Section 20. Wells Fargo Name. The Adviser and the Trust each agree that
the name "Wells Fargo," which comprises a component of the Trust's name, is a
property right of the parent of the Adviser. The Trust agrees and consents that:
(I) it will use the words "Wells Fargo" as a component of its corporate name,
the name of any series or class, or all of the above, and for no other purpose;
(ii) it will not grant to any third party the right to use the name "Wells
Fargo" for any purpose; (iii) the Adviser or any corporate affiliate of the
Adviser may use or grant to others the right to use the words "Wells Fargo," or
any combination or abbreviation thereof, as all or a portion of a corporate or
business name or for any commercial purpose, other than a grant of such right to
another registered investment company not advised by the Adviser or one of its
affiliates; and (iv) in the event that the Adviser or an affiliate thereof is no
longer acting as investment adviser to any Fund or class of a Fund, the Trust
shall, upon request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing the words "Wells
Fargo" and following such change, shall not use the words "Wells Fargo," or any
combination thereof, as a part of its corporate name or for any other commercial
purpose, and shall use its best efforts to cause its trustees, officers and
shareholders to take any and all actions that the Adviser may request to effect
the foregoing and to reconvey to the Adviser any and all rights to such words.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO CORE TRUST
on behalf of the Funds
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
By: /s/Richard H. Blank, Jr.
Richard H. Blank, Jr.
Assistant Secretary
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/Michael J. Hogan
Michael J. Hogan
Executive Vice President
By: /s/C. David Messman
C. David Messman
Vice President
<PAGE>
Schedule A
- ------------------------------------------------------- -----------------------------------------------------
Core Trust Portfolios Advisory Fee
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Disciplined Growth Fund 0.75
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Equity Income Portfolio 0.75
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Index Portfolio 0.15
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
International Portfolio 1.00
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
International Equity Portfolio 1.00
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Large Company Growth Portfolio 0.75
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Managed Fixed Income Portfolio 0.50
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Positive Return Bond Portfolio 0.50
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Small Cap Index Portfolio 0.25
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Small Cap Value Portfolio 0.90
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Small Company Growth Portfolio 0.90
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Small Company Value Portfolio 0.90
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Stable Income Portfolio 0.50
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Strategic Value Bond Portfolio 0.50
- ------------------------------------------------------- -----------------------------------------------------
Approved by Board of Trustees: March 26, 1999
</TABLE>
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO CORE TRUST, WELLS FARGO BANK, N.A. AND
WELLS CAPITAL MANAGEMENT
This AGREEMENT is made as of this 8th day of November, 1999, between
Wells Fargo Core 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, Incorporated, a corporation
organized under the laws of the State of California, with its principal place of
business at 525 Market Street, San Francisco, California 94163 (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 (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 Declaration of Trust, as
amended or supplemented from time to time, 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.
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 Declaration of Trust, as amended or supplemented from time to
time, 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.
(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 or supplemented 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-Adviser must comply
with Rule 17j-1 under the 1940 Act, as it may be amended from time to time, and
any broadly accepted industry practices, if requested by the Trust or the
Adviser.
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.
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 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.
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 525 Market Street, 10th Floor, San Francisco,
California 94163, Attention: J. Mari Casas.
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 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WELLS FARGO CORE TRUST
on behalf of the Funds
By: /s/Richard H. Blank, Jr.
Richard H. Blank, Jr.
Assistant Secretary
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/Michael J. Hogan
Michael J. Hogan
Executive Vice President
By: /s/C. David Messman
C. David Messman
Vice President
WELLS CAPITAL MANAGEMENT INCORPORATED
on behalf of the Sub-Adviser
By: /s/
J. Mari Casas
Chief Operating Officer
<PAGE>
Appendix A
----------------------------------------------------------------
Core Trust Funds
----------------------------------------------------------------
----------------------------------------------------------------
Equity Income Portfolio
----------------------------------------------------------------
----------------------------------------------------------------
Index Portfolio
----------------------------------------------------------------
----------------------------------------------------------------
International Equity Portfolio
----------------------------------------------------------------
----------------------------------------------------------------
Small Cap Index Portfolio
----------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE A
WELLS FARGO CORE TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the 8th day of November, 1999, by and
between Wells Fargo Bank, N.A. (the "Adviser") and Wells Capital Management,
Incorporated (the "Subadviser") and
WHEREAS, the parties and Wells Fargo Funds Trust (the "Trust") have
entered into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement")
whereby the Sub-Adviser provides investment management advice to each series of
the Trust as listed in Schedule A to the Sub-Advisory Agreement (each a "Fund"
and collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid
to the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be 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.
<PAGE>
Appendix A
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------- ----------------------------------- -----------------------------------
Name of Fund Breakpoints Sub-advisory Rate
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Equity Income 0-200M 0.25
200-400M 0.20
>400M 0.15
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Index Portfolio [None] 0.02
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
International Equity 0-200M 0.35
200-400M 0.25
>400M 0.15
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Small Cap Index Portfolio 0-200M 0.02
>200M 0.01
- ------------------------------------- ----------------------------------- -----------------------------------
WELLS FARGO BANK, N.A.
/s/ Michael J. Hogan
By: Michael J. Hogan
Executive Vice President
/s/ C. David Messman
By: C. David Messman
Vice President
WELLS CAPITAL MANAGEMENT INCORPORATED
on behalf of the Sub-Adviser
By: /s/ J. Mari Casas
J. Mari Casas
Chief Operating Officer
</TABLE>
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO CORE TRUST, WELLS FARGO BANK, N.A.
AND GALLIARD CAPITAL MANAGEMENT, INC.
This AGREEMENT is made as of this 8th day of November, 1999, between
Wells Fargo Core Trust (the "Trust"), a business trust organized under the laws
of the State of Delaware with its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201, Wells Fargo Bank, N.A. (the "Adviser"), a
banking association organized under the laws of the United States of America
with its principal place of business at 420 Montgomery Street, San Francisco,
California 94104, and Galliard Capital Management, Inc., a corporation organized
under the laws of the State of Minnesota, with its principal place of business
at 800 LaSalle Avenue, Suite 2060, Minneapolis, Minnesota 55479 (the
"Sub-Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "1940 Act") as an open-end, series management investment
company; and
WHEREAS, the Trust and the Adviser desire that the Sub-Adviser perform
investment advisory services for each of the series of the Trust listed in
Appendix A hereto (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 Declaration of Trust, as
amended or supplemented from time to time, 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.
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 Declaration of Trust, as amended or supplemented from time to
time, 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.
(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 or supplemented 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-Adviser must comply
with Rule 17j-1 under the 1940 Act, as it may be amended from time to time, and
any broadly accepted industry practices, if requested by the Trust or the
Adviser.
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.
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 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.
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 800 La Salle Avenue, Suite 2060, Minneapolis,
Minnesota 55479, Attention: John R. Caswell.
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 and
shareholders to take any and all actions that the Adviser may request to effect
the foregoing and to reconvey to the Adviser any and all rights to such words.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to
be executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO CORE TRUST
on behalf of the Funds
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
By: /s/Richard H. Blank, Jr.
Richard H. Blank, Jr.
Assistant Secretary
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/Michael J. Hogan
Michael J. Hogan
Executive Vice President
By: /s/C. David Messman
C. David Messman
Vice President
GALLIARD CAPITAL MANAGEMENT,
INC.
on behalf of the Sub-Adviser
By: /s/ John R. Caswell
John R. Caswell
Managing Partner
</TABLE>
<PAGE>
Appendix A
----------------------------------------------------------------
Core Trust Funds
----------------------------------------------------------------
----------------------------------------------------------------
Managed Fixed Income Portfolio
----------------------------------------------------------------
----------------------------------------------------------------
Stable Income Portfolio
----------------------------------------------------------------
----------------------------------------------------------------
Strategic Value Bond Portfolio
----------------------------------------------------------------
Approved by the Board of Trustees: March 26, 1999.
<PAGE>
SCHEDULE A
WELLS FARGO CORE TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the 8th day of November, 1999, by and
between Wells Fargo Bank, N.A. (the "Adviser") and
Galliard Capital Management, Inc. (the "Sub-Adviser") and
WHEREAS, the parties and Wells Fargo Core Trust (the "Trust") have
entered into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement")
whereby the Sub-Adviser provides investment management advice to each series of
the Trust as listed in Schedule A to the Sub-Advisory Agreement (each a "Fund"
and collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid
to the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be paid to the
Sub-Adviser under the Sub-Advisory Agreement shall be calculated as follows on a
monthly basis by applying annual rate of percentage of the assets of the Funds
listed in Appendix A.
<PAGE>
Appendix A
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------- ----------------------------------- -----------------------------------
Name of Fund Breakpoints Sub-Advisory Rate
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Managed Fixed Income Portfolio 0-100M 0.10
100-200M 0.08
>200M 0.06
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Stable Income Portfolio 1-1500M 0.04
1500-2000M 0.05
2000-2500M 0.045
2500-3000M 0.04
>3000M 0.03
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Strategic Value Bond Portfolio 0-100M 0.13
100-200M 0.10
>200M 0.08
- ------------------------------------- ----------------------------------- -----------------------------------
WELLS FARGO BANK, N.A.
/s/ Michael J. Hogan
By: Michael J. Hogan
Executive Vice President
/s/ C. David Messman
By: C. David Messman
Vice President
GALLIARD CAPITAL MANAGEMENT, INC.
/s/John R. Caswell
By: John R. Caswell
Managing Partner
</TABLE>
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO CORE TRUST, WELLS FARGO BANK, N.A.
AND SCHRODER INVESTMENT MANAGEMENT NORTH AMERICA INC.
This AGREEMENT is made as of this 8th day of November, 1999, between
Wells Fargo Core Trust (the "Trust"), a business trust organized under the laws
of the State of Delaware with its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201, Wells Fargo Bank, N.A. (the "Adviser"), a
banking association organized under the laws of the United States of America
with its principal place of business at 420 Montgomery Street, San Francisco,
California 94104, and Schroder Investment Management North America Inc., a
corporation organized under the laws of the State of Delaware, with its
principal place of business at 787 Seventh Avenue, New York, New York 10019 (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 (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 Declaration of Trust, as
amended or supplemented from time to time, 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.
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 Declaration of Trust, as amended or supplemented from time to
time, By-Laws (if any), Registration Statement under the 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 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.
(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 1940 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 or supplemented 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-Adviser must comply
with Rule 17j-1 under the 1940 Act, as it may be amended from time to time, and
any broadly accepted industry practices, if requested by the Trust or the
Adviser.
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.
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 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.
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 787 Seventh Avenue, New York, New York 10019,
Attention: Cathie Mazza.
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 and
shareholders to take any and all actions that the Adviser may request to effect
the foregoing and to reconvey to the Adviser any and all rights to such words.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO CORE TRUST
on behalf of the Funds
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
By: /s/Richard H. Blank, Jr.
Richard H. Blank, Jr.
Assistant Secretary
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/Michael J. Hogan
Michael J. Hogan
Executive Vice President
By: /s/C. David Messman
C. David Messman
Vice President
SCHRODER INVESTMENT MANAGEMENT NORTH AMERICA INC.
on behalf of the Sub-Adviser
By: /s/ Catherine A. Mazza
Catherine A. Mazza
Director
</TABLE>
<PAGE>
Appendix A
International Portfolio
<PAGE>
SCHEDULE A
WELLS FARGO CORE TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the 8th day of November, 1999, by and
between Wells Fargo Bank, N.A. (the "Adviser") and Schroder Investment
Management North America Inc. (the "Sub-Adviser") and
WHEREAS, the parties and Wells Fargo Core Trust (the "Trust") have
entered into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement")
whereby the Sub-Adviser provides investment management advice to each series of
the Trust as listed in Schedule A to the Sub-Advisory Agreement (each a "Fund"
and collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid
to the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be paid to the
Sub-Adviser under the Sub-Advisory Agreement shall be calculated as follows on a
monthly basis by applying annual rate listed below of the assets of the
International Portfolio:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------- -----------------------------------------------------
Breakpoints Advisory Rate
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
For the first $100 million 0.45
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
For the next $100 million 0.35
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
For the next $400 million 0.20
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
For the sums in excess of $600 million 0.185
- ------------------------------------------------------- -----------------------------------------------------
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO BANK, N.A.
/s/ Michael J. Hogan
By: Michael J. Hogan
Executive Vice President
/s/ C. David Messman
By: C. David Messman
Vice President
SCHRODER INVESTMENT MANAGEMENT NORTH AMERICA INC.
/s/ Catherine A. Mazza
By: Catherine A. Mazza
Director
</TABLE>
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO CORE TRUST, WELLS FARGO BANK, N.A.
AND SMITH ASSET MANAGEMENT, L.P.
This AGREEMENT is made as of this 8th day of November, 1999, between
Wells Fargo Core Trust (the "Trust"), a business trust organized under the laws
of the State of Delaware with its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201, Wells Fargo Bank, N.A. (the "Adviser"), a
banking association organized under the laws of the United States of America
with its principal place of business at 420 Montgomery Street, San Francisco,
California 94104, and Smith Asset Management, L.P., a limited partnership with
its principal place of business of 300 Crescent Court, Suite 750, Dallas, Texas
75201 (the "Sub-Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "1940 Act") as an open-end, series management investment
company; and
WHEREAS, the Trust and the Adviser desire that the Sub-Adviser perform
investment advisory services for each of the series of the Trust listed in
Appendix A hereto (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 Declaration of Trust, as
amended or supplemented from time to time, 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.
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 Declaration of Trust, as amended or supplemented from time to
time, 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.
(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 or supplemented 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-Adviser must comply
with Rule 17j-1 under the 1940 Act, as it may be amended from time to time, and
any broadly accepted industry practices, if requested by the Trust or the
Adviser.
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.
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 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.
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 Smith Asset Management, L.P., 300 Crescent Court,
Suite 750, Dallas, Texas 75201, Attention: Stephen S. Smith.
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 and
shareholders to take any and all actions that the Adviser may request to effect
the foregoing and to reconvey to the Adviser any and all rights to such words.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO CORE TRUST
on behalf of the Funds
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
By: /s/Richard H. Blank, Jr.
Richard H. Blank, Jr.
Assistant Secretary
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/Michael J. Hogan
Michael J. Hogan
Executive Vice President
By: /s/C. David Messman
C. David Messman
Vice President
SMITH ASSET MANAGEMENT, L.P.
on behalf of the Sub-Adviser
By: /s/ Stephen S. Smith
Stephen S. Smith
Principal
</TABLE>
<PAGE>
Appendix A
----------------------------------------------------------------
Core Trust Funds
----------------------------------------------------------------
----------------------------------------------------------------
Disciplined Growth Portfolio
----------------------------------------------------------------
----------------------------------------------------------------
Small Cap Value Portfolio
----------------------------------------------------------------
<PAGE>
SCHEDULE A
WELLS FARGO CORE TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the 8th day of September, 1999, by and
between Wells Fargo Bank, N.A. (the "Adviser") and Smith Asset Management, L.P.
(the "Sub-Adviser") and
WHEREAS, the parties and Wells Fargo Core Trust (the "Trust") have
entered into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement")
whereby the Sub-Adviser provides investment management advice to each series of
the Trust as listed in Schedule A to the Sub-Advisory Agreement (each a "Fund"
and collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid
to the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be paid to the
Sub-Adviser under the Sub-Advisory Agreement shall be calculated as follows on a
monthly basis by applying annual rate of percentage of the assets of the Funds
listed in Appendix A.
<PAGE>
Appendix A
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------- ----------------------------------- -----------------------------------
Name of Fund Breakpoints Sub-Advisory Rate
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Disciplined Growth Portfolio 0-175M 0.35
175-225M 0
225M-500M 0.25
>500M 0.20
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Small Cap Value Portfolio 0-110M 0.45
110M-150M 0
150-300M 0.30
>300M 0.25
- ------------------------------------- ----------------------------------- -----------------------------------
WELLS FARGO BANK, N.A.
/s/ Michael J. Hogan
By: Michael J. Hogan
Executive Vice President
/s/ C. David Messman
By: C. David Messman
Vice President
SMITH ASSET MANAGEMENT, L.P.
on behalf of the Sub-Adviser
By: /s/ Stephen S. Smith
Stephen S. Smith
Principal
</TABLE>
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO CORE TRUST, WELLS FARGO BANK, N.A.
AND PEREGRINE CAPITAL MANAGEMENT, INC.
This AGREEMENT is made as of this 8th day of November, 1999, between
Wells Fargo Core 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 (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 Declaration of Trust, as
amended or supplemented from time to time, 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.
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 Declaration of Trust, as amended or supplemented from time to
time, 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.
(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 or supplemented 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-Adviser must comply
with Rule 17j-1 under the 1940 Act, as it may be amended from time to time, and
any broadly accepted industry practices, if requested by the Trust or the
Adviser.
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.
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 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.
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 800 LaSalle Avenue, Minneapolis, Minnesota 55402,
Attention: Robert B. Mersky.
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 and
shareholders to take any and all actions that the Adviser may request to effect
the foregoing and to reconvey to the Adviser any and all rights to such words.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
WELLS FARGO CORE TRUST
on behalf of the Funds
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
By: /s/Richard H. Blank, Jr.
Richard H. Blank, Jr.
Assistant Secretary
WELLS FARGO BANK, N.A.
on behalf of the Adviser
By: /s/Michael J. Hogan
Michael J. Hogan
Executive Vice President
By: /s/C. David Messman
C. David Messman
Vice President
PEREGRINE CAPITAL MANAGEMENT, INC.
on behalf of the Sub-Adviser
By: /s/Robert B. Mersky
Robert B. Mersky President
</TABLE>
<PAGE>
Appendix A
Large Company Growth Portfolio
Positive Return Bond Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Approved by Board of Trustees: March 26, 1999
<PAGE>
SCHEDULE A
WELLS FARGO CORE TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the 8th day of November, 1999, 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 Core 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 Funds
listed in Appendix A.
<PAGE>
Appendix A
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------- ----------------------------------- -----------------------------------
Core Trust Fund Breakpoints Sub-Advisory Rate
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Large Company Growth Portfolio 0-25M 0.75
25-50M 0.60
50-275M 0.50
>275M 0.30
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Positive Return Bond Portfolio 0-10M 0.40
10-25M 0.30
25-300M 0.20
>300M 0.10
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Small Company Growth Portfolio 0-50M 0.90
50-180M 0.75
180-340M 0.65
340-685M 0.50
685-735M 0.52
>735M 0.55
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Small Company Value Portfolio 0-200M 0.50
>200M 0.75
- ------------------------------------- ----------------------------------- -----------------------------------
WELLS FARGO BANK, N.A.
/s/ Michael J. Hogan
By: Michael J. Hogan
Executive Vice President
/s/ C. David Messman
By: C. David Messman
Vice President
PEREGRINE CAPITAL MANAGEMENT, INC.
on behalf of the Sub-Adviser
By: /s/Robert B. Mersky
Robert B. Mersky
President
</TABLE>
<PAGE>
PLACEMENT AGENCY AGREEMENT
Wells Fargo Core Trust
111 Center Street
Little Rock, Arkansas 72201
This AGREEMENT is made as of this 8th day of November, 1999, by and
between Wells Fargo Core Trust, a Delaware business trust (the "Trust") and
Stephens Inc., an Arkansas corporation (the "Placement Agent").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
authorized to issue an indefinite number of interests in separate series; and
WHEREAS, the Trust desires to retain the Placement Agent to perform
placement agent services to the Trust's investment portfolios listed on Appendix
A (individually, a "Portfolio" and collectively, the "Portfolios"), and the
Placement Agent is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Stephens will act as Placement Agent of the interests covered
by the Trust's registration statement then in effect under the 1940 Act. As
Placement Agent, Stephens shall have the right to sell interests of the
Portfolios upon the terms set forth in the Trust's registration statement, as
such registration statement is in effect and is amended from time to time. In
acting as Placement Agent under the Placement Agency Agreement, neither Stephens
nor its employees nor any agents thereof shall make any offer or sale of
Interests in a manner which would require the interests to be registered under
the Securities Act of 1933, as amended (the "1933 Act"). As used in this
Agreement the term "registration statement" shall mean any registration
statement filed with the Securities and Exchange Commission (the "SEC") under
the 1940 Act, as modified by any amendments thereto that at any time shall have
been filed with the SEC by or on behalf of the Trust.
2. The Trust shall sell through the Placement Agent, as the
Trust's agent, and deliver, upon the terms set forth herein, Portfolio interests
that the Placement Agent orders from the Trust and for which the Placement Agent
has received and confirmed unconditional purchase orders. All orders from the
Placement Agent shall be subject to acceptance and confirmation by the Trust.
3. As the Trust's agent, the Placement Agent may sell and
distribute Portfolio interests in such manner not inconsistent with the
provisions hereof as the Placement Agent may determine from time to time. In
that connection the Placement Agent 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 1940 Act, and of any
securities association registered under the Securities Exchange Act of 1934 (the
"1934 Act").
4. The Placement Agent's right to accept purchase orders for
Portfolio interests or to make sales thereof shall not apply to Portfolio
interests that may be offered by the Trust to interestholders for the
reinvestment of cash distributed to interestholders by the Trust or Portfolio
interests that may otherwise be offered by the Trust to interestholders, unless
the Placement Agent is otherwise notified by the Trust.
5. (a) The Placement Agent 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 Placement Agent.
(b) The Placement Agent shall pay all expenses incurred in
connection with its qualification as a dealer or
broker under Federal or state laws.
6. The Trust shall furnish the Placement Agent from time to time,
for use in connection with the sale of Portfolio interests, such written
information with respect to the Trust as the Placement Agent 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 Placement Agent copies of its reports to its stockholders
and such additional information regarding the Trust's financial condition as the
Placement Agent may reasonably request from time to time.
7. The registration statement has been or will be, as the case may
be, carefully prepared in conformity with the 1940 Act and the rules and
regulations (the "Rules and Regulations") of the SEC. The Trust represents and
warrants to the Placement Agent that the registration statement contains or will
contain all statements required to be stated therein in accordance with 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 the registration statement
shall not 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 Portfolio interests. The Trust shall
from time to time file such amendment or amendments to the registration
statement 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 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 Portfolio
interests. If the Trust shall not file such amendment or amendments within 15
days after receipt by the Trust of a written request from the Placement Agent to
do so, the Placement Agent may, at its option, terminate this agreement
immediately. The Trust shall not file any amendment to the registration
statement without giving the Placement Agent 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 Placement Agent that any amendment to the registration statement
filed hereafter by the Trust will contain all statements required to be stated
therein in accordance with 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 Portfolio interests.
8. The Trust shall indemnify, defend and hold harmless the
Placement Agent, its officers and directors and any person who controls the
Placement Agent 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 Placement Agent, its officers or directors or
any such controlling person, may incur under the 1933 Act, the 1940 Act, the
common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in the registration statement, private
placement memorandum, or other offering material (collectively "Offering
Material"), 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 Placement Agent 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 Placement
Agent against any liability to the Trust or its stockholders to which the
Placement Agent 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 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 Placement Agent, its officers or directors 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 Placement
Agent. If the Trust elects to assume the defense of any such suit and retain
counsel approved by the Placement Agent, 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 Placement Agent does not approve of counsel chosen by the
Trust, the Trust will reimburse the Placement Agent, its officers and directors
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 Placement Agent
or them. In addition, The Placement Agent shall have the right to employ one
separate counsel to represent it, its officers and directors 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 Placement Agent against the
Trust hereunder if in the reasonable judgment of the Placement Agent it is
advisable because of actual or potential differing interests between the
Placement Agent, its officers and directors or such controlling person and the
Trust in the conduct of the defense of such action, for the Placement Agent, its
officers and directors 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 Placement Agent, its
officers and directors or any such controlling person and shall survive the
delivery of any interests as provided in this agreement. This indemnity
agreement shall inure exclusively to the benefit of the Placement Agent and its
successors, the Placement Agent's officers and directors and their respective
estates and any such controlling persons and their successors and estates. The
Trust shall promptly notify the Placement Agent of the commencement of any
litigation or proceedings against it in connection with the issue and sale of
any Portfolio interests.
9. The Placement Agent agrees to indemnify, defend and hold
harmless the Trust, its officers and directors and any person who controls the
Trust within the meaning of Section 15 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, 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 Placement Agent 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, (b) any
alleged act or omission on the Placement Agent'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 Placement
Agent's obligations and duties under the Agreement or by reason of its alleged
reckless disregard thereof. This indemnity agreement is expressly conditioned
upon the Placement Agent'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 Placement
Agent at its principal office in Little Rock, Arkansas, and sent to the
Placement Agent 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 Placement Agent of any such action shall not relieve the
Placement Agent 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 Placement Agent's part otherwise than on account
of the indemnity agreement contained in this paragraph. The Placement Agent
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 Placement Agent'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.
10. No Portfolio interests shall be sold through the Placement
Agent or by the Trust under this agreement and no orders for the purchase of
Portfolio interests 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 1940 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 Portfolio interests from any interestholder in
accordance with the provisions of the Trust's registration statement or its
Declaration of Trust, as amended from time to time. The Trust will use its best
efforts at all times to have Portfolio interests effectively registered under
the 1940 Act.
11. The Trust agrees to advise the Placement Agent immediately:
(a) of any request by the SEC for amendments to the registration statement
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 then in effect 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 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 that may from time to
time be filed within the SEC under the 1940 Act.
12. 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 regulations made or adopted pursuant
to the 1940 Act or by any securities association registered under the 1934 Act.
13. The Placement Agent 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
Placement Agent of any of its responsibilities or obligations to the Trust under
this agreement.
14. Subject to the provisions of paragraph 7, 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
Placement Agent or by the Placement Agent at any time after the second
anniversary of the effective date of this agreement on 60 days' written notice
to the Trust.
15. 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.
16. Miscellaneous.
(a) Any notice or other instrument authorized or required by
this Agreement to be given in writing to the Trust or the Placement Agent 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 Core Trust
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank, Jr.
With copies to:
C. David Messman
Wells Fargo Bank, N.A.
525 Market Street, 12th Floor
San Francisco, CA 94163
Marco E. Adelfio
Morrison & Foerster LLP
2000 Pennsylvania Avenue, N.W.
Suite 5500
Washington, D.C. 20006
To the Placement Agent:
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank, Jr.
(b) This Agreement shall extend to and be binding upon the
parties hereto and their respective successors and assigns; subject to the
provisions of paragraph 14.
(c) 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.
(d) 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 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.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(f) 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.
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.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WELLS FARGO CORE TRUST
By: /s/David I. Goldstein
David I. Goldstein
Assistant Treasurer
STEPHENS INC.
By: /s/Richard H. Blank, Jr.
Richard H. Blank, Jr.
Senior Vice President
</TABLE>
<PAGE>
Appendix A
Disciplined Growth Portfolio
Equity Income Portfolio
Index Portfolio
International Equity Portfolio
International Portfolio
Large Company Growth Portfolio
Managed Fixed Income Portfolio
Positive Return Portfolio
Small Cap Index Portfolio
Small Cap Value Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Stable Income Portfolio
Strategic Value Bond Portfolio
<PAGE>
ADMINISTRATION AGREEMENT
Wells Fargo Core Trust
111 Center Street
Little Rock, Arkansas 72201
THIS AGREEMENT is made as of this 8th day of November, 1999, by and
between Wells Fargo Core 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;
(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;
(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 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, 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 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 Core 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.
(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 CORE TRUST
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
By: /s/Richard H. Blank, Jr.
Richard H. Blank, Jr.
Assistant Secretary
WELLS FARGO BANK, N.A.
By: /s/Michael J. Hogan
Michael J. Hogan
Senior Vice President
By: /s/Elizabeth A. Gottfried
Elizabeth A. Gottfried
Vice President
</TABLE>
<PAGE>
191
230
Appendix A
Funds of Wells Fargo Core Trust Covered by This Agreement
Fee of 0.15% of average daily net assets on an annual basis: except that no
administration fee will be charged to the Core Trust Portfolios, so long as an
administration fee is charged to the Gateway Funds of Wells Fargo Funds Trust.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Disciplined Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Equity Income Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Index Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
International Equity Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
International Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Large Company Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Managed Fixed Income Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Positive Return Bond Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Small Cap Index Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Small Cap Value Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Small Company Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Small Company Value Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Stable Income Portfolio
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Strategic Value Bond Portfolio
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Approved by Board of Trustees: March 26, 1999
<PAGE>
CUSTODY AGREEMENT
WELLS FARGO CORE TRUST
AGREEMENT, dated as of November 8, 1999, between Wells Fargo Core
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 the investment portfolios ("Fund") listed in Appendix A
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 B or such other
Certificate as may be received from time to time by the Custodian.
(c) Authorized Administrative Person: The term Authorized Administrative
Person shall mean those persons, duly authorized by the Board of
Trustees, to give Oral and Written Instructions with respect to the
payment of expenses for designated Funds.
(d) Board: The term Board shall mean the Board of Trustees of the Trust.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) Custodian: The term Custodian shall mean the Custodian in its capacity as
custodian under this Agreement.
(k) Foreign Securities: The term Foreign Securities shall mean "Foreign
Securities" as that term is defined in Rule 17f-5 under the 1940 Act.
(l) Foreign Custodian: The term Foreign Custodian shall mean "Eligible
Foreign Custodian" as that term is defined in Rule 17f-5 under the 1940
Act.
(m) 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.
(n) 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.
(o) 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 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.
(p) 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.
(q) 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 or
such other Certificate as may be received by the Custodian from time to
time.
(r) 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 or a Fund. Each Oral Instruction
shall specify whether it is applicable to the entire Trust or a
specific Fund of the Trust.
(s) 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.
(t) 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.
(u) 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.
(v) 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.
(w) Share Certificates: The term Share Certificates shall mean the certificates
for the Shares.
(x) 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.
(y) 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.
(z) 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.
(aa) Trust: The term Trust shall mean Wells Fargo Funds Trust.
(bb) 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 or a Fund. 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 each Fund shall be and remain the sole property of the Fund 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 and each Fund, 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 or a Fund. Notwithstanding
the foregoing, a separate bank account may be established by the Trust to be
used as a petty cash account in 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 a
Fund 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 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 each Fund 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 on behalf of the
Fund. The Trust may deposit with the Custodian additional Securities of the
Funds 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
Funds 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 a Fund in a Book-Entry Account
maintained for the Custodian.
So long as any deposit referred to in (b) or (c) above is maintained
for a Fund, 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 or a Fund to or from the account; (iii) with respect to Securities of a
Fund transferred to the account, identify as belonging to the Fund 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 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 or affected Fund for any
loss or damage to the Trust or the Fund 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 on behalf of the affected Fund 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 or the affected Fund 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 Fund or its
nominee. In the event that any Securities are registered in the name of the Fund
or its nominee, the Trust on behalf of the Fund 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 a Fund from time to time as follows:
(a) For the purchase of Securities by the Fund, 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 Fund.
(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 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 a Fund, or returning
cash collateral for Securities loaned by a Fund, 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 Fund deems
appropriate to include in dividends or distributions declared on the Shares.
(g) For paying or reimbursing the Fund 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 Fund 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 on behalf of a Fund.
(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.
SECTION 9. DELIVERY OF SECURITIES
The Custodian is hereby authorized and directed to deliver Securities
of the Funds from time to time as follows:
(a) For completing sales of Securities sold by a Fund, 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 a Fund or depositing with a borrower Securities to be loaned by a
Fund, (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 a Fund, upon receipt of Written
or Oral Instructions.
(i) For depositing Securities with the issuer thereof, or its agents,
for the purpose of transferring such Securities into the name of a Fund, 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 Fund 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 Fund 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 on behalf of the Fund, (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 Fund 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 on behalf of a Fund.
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 Fund shall cause all Securities
released from collateral status to be returned directly to the Custodian.
SECTION 11. INDEBTEDNESS TO CUSTODIAN
If, in its sole discretion, the Custodian advances funds to a Fund to
pay for the purchase of Securities, to cover an overdraft of the Fund's account
with the Custodian, or to pay any other indebtedness to the Custodian, the
Fund's indebtedness shall be deemed to be a loan by the Custodian to the Fund,
payable on demand and bearing interest at the rate specified in the separate
Overdraft and Compensating Balances Procedures; provided, however, that the
Custodian shall give the Fund 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 Fund 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 Fund, or in which the Fund may have an interest. The Fund
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 Fund on the Custodian's books. Under no
circumstances will one Fund be liable for the indebtedness of another Fund.
SECTION 12. COMPENSATING BALANCES
The Custodian may compensate a Fund for any interest earned by the
Custodian on uninvested cash balances maintained in a Fund's account pursuant to
the Overdraft and Compensating Balances Procedures. The Custodian shall maintain
records, or provide the Fund with such records, sufficient to identify payments
made pursuant to this section, and the uninvested cash balance and interest
earned on such balance that prompted the compensating balances payment.
SECTION 13. SECURITIES LOANS
The Custodian may from time to time lend securities of a Fund in
accordance with and pursuant to a separate securities lending agreement.
<TABLE>
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SECTION 14. OPTIONS, FUTURES CONTRACTS AND SEGREGATED ACCOUNTS
The Custodian's responsibilities regarding option contracts will be
governed by the following sub-paragraphs:
(a) Options.
(i) Upon receipt of Written or Oral Instructions relating to the
purchase of an option or sale of a covered call option, the Custodian shall: (A)
receive and retain confirmations or other documents, if any, evidencing the
purchase or writing of the option; (B) if the transaction involves the sale of a
covered call option, deposit and maintain in a segregated account the Securities
(either physically or by book-entry in a Securities Depository) subject to the
covered call option written on behalf of the Funds; and (C) pay, release and/or
transfer such securities, cash or other assets in accordance with any notices or
other communications evidencing the expiration, termination or exercise of such
options which are furnished to the Custodian by the Options Clearing Corporation
(the "OCC"), the Securities or Options Exchanges on which such options were
traded, or such other organization as may be responsible for handling such
option transactions.
(ii) Upon receipt of instructions relating to the sale of a naked
option (including stock index and commodity options), the Custodian, the Fund
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 Custodian shall: (A) receive and retain confirmations or other
documents, if any, evidencing the writing of the option; (B) deposit and
maintain in a segregated account Securities (either physically or by book-entry
in a Securities Depository cash and/or other assets; and (C) pay, release and/or
transfer such Securities, cash or other assets in accordance with any such
agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the Securities or Options Exchanges on which such options
were traded, or such other organization as may be responsible for handling such
option transactions. The Custodian shall not be responsible for determining the
quality and quantity of assets held in any segregated account established in
compliance with applicable margin maintenance requirements and the performance
of other terms of any option contract.
(b) Futures Contracts. Upon receipt of Written or Oral Instructions,
the custodian shall enter into a futures margin procedural agreement among the
Fund, the Custodian and the designated futures commission merchant (a
"Procedural Agreement"). Under the Procedural Agreement the Custodian shall: (A)
receive and retain confirmations, if any, evidencing the purchase or sale of a
futures contract or an option on a futures contract by a Series; (B) deposit and
maintain in a segregated account cash, Securities and/or other assets designated
as initial, maintenance or variation "margin" deposits intended to secure the
Funds' performance of its obligations under any futures contracts purchased or
sold, or any options on futures contracts written by the Funds, in accordance
with the provisions of any Procedural Agreement designed to comply with the
provisions of the Commodity Futures Trading Commission and/or any commodity
exchange or contract market (such as the Chicago Board of Trade), or any similar
organization(s), regarding such margin deposits; and (C) release assets from
and/or transfer assets into such margin accounts only in accordance with any
such Procedural Agreements. The Custodian shall not be responsible for
determining the type and amount of assets held in the segregated account or paid
to the broker-dealer in compliance with applicable margin maintenance
requirements and the performance of any futures contract or option on a futures
contract in accordance with its terms.
(c) Segregated Accounts. Upon receipt of Written or Oral Instructions,
the Custodian shall establish and maintain on its books a segregated account or
accounts for and on behalf of the Funds, into which account or accounts may be
transferred assets of each Fund, including Securities maintained by the
Custodian in a Securities Depository, said account or accounts to be maintained
(i) for the purpose of compliance by the Fund with the procedures required by
SEC 1940 Act Release Number 10666 or any subsequent release or releases relating
to the maintenance of segregated accounts by registered investment companies or
(ii) for such other purposes as may be set forth, from time to time in Written
or Oral Instructions. The Custodian shall not be responsible for the
determination of the type or amount of assets to be held in any segregated
account referred to in this paragraph.
SECTION 15. 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. The Fund 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 Fund 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 Fund or its designee may vote, consent or
otherwise act.
SECTION 16. COMPENSATION
(a) Each Fund agrees to pay to the Custodian compensation for its
services as set forth in Appendix B hereto, or as shall be set forth in written
amendments to Appendix B approved by the Fund and the Custodian from time to
time.
(b) The Fund shall pay all fees and expenses of any Sub-Custodian
approved by the Fund.
SECTION 17. CORPORATE ACTIVITY
The Custodian will exercise its best efforts to forward to the Fund 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 a Fund, the Custodian shall enter into its ledgers appropriate notations
indicating such receipt and shall notify the Fund 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 18. RECORDS
The Custodian acknowledges and agrees that all books and records
maintained for the Trust or a Fund 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.
SECTION 19. 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 Funds, 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 or affected Fund,
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 Fund; provided, however, that no such reimbursement shall occur unless the
Fund is notified of the claim and is afforded an opportunity to contest or
defend the claim, if it so elects. A Fund 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 20. 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 Fund or the Securities held hereunder.
SECTION 21. FOREIGN SECURITIES
The Custodian shall be authorized to provide services as an eligible
foreign custodian and act as a foreign custody manager, as those terms are
defined in Rule 17f-5 under the 1940 Act, as amended. The Custodian shall not be
responsible for acting as a foreign custody manager unless and until the
Custodian accepts such delegation of responsibility pursuant to a separate
Delegation Agreement, approved by the Board of Trustees, that describes the
Custodian's duties as a foreign custody manager and identifies the Funds for
which the Custodian will so act.
SECTION 22. 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.
(b) 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 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, 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 22. 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.
SECTION 23. 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 24. 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 CORE TRUST
By: /s/
Richard H. Blank, Jr.
Assistant Secretary
NORWEST BANK MINNESOTA, N.A.
By: /s/
Jay Kiedrowski
Executive Vice President
</TABLE>
<PAGE>
CUSTODY AGREEMENT
Wells Fargo Core Trust
Appendix A
For its custodial services, the Custodian shall receive a fee, with respect to
each Portfolio, except the International Portfolio and the International Equity
Portfolio, listed below, of 0.02% of the average daily net assets of each such
Fund. The anticipated custodial fee for the International Portfolio and the
International Portfolio is 0.25%, on an annualized basis.
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Funds of Wells Fargo Core Trust Covered by This Agreement
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Disciplined Growth Portfolio
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Index Portfolio
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Equity Income Portfolio
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International Equity Portfolio
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International Portfolio
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Large Company Growth Portfolio
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Managed Fixed Income Portfolio
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Positive Return Bond Portfolio
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Small Cap Index Portfolio
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Small Cap Value Portfolio
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Small Company Growth Portfolio
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Small Company Value Portfolio
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Stable Income Portfolio
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Strategic Value Bond Portfolio
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</TABLE>
Approved by the Board of Trustees: March 26, 1999
As Amended: August 19, 1999
<PAGE>
<TABLE>
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WELLS FARGO CORE TRUST
SECURITIES LENDING AGREEMENT
This Agreement, made as of the 8th day of November, 1999, by and among
Wells Fargo Core Trust (the "Trust") on behalf of its funds now existing or
hereafter created (the "Funds"), Wells Fargo Bank, N.A., as adviser for the
Funds ("Wells Fargo") and Norwest Bank Minnesota, N.A., as custodian for the
Funds (the "Custodian").
WHEREAS, the Custodian has established a securities lending program
(the "Program") to permit its retirement plan, trust and custody clients to loan
securities;
WHEREAS, the Funds listed in Exhibit A desire to participate in the
Program and the Board of Trustees having approved their participation in the
Program; and
NOW, THEREFORE, the parties hereto agree as follows:
1. Adviser's Activities
As investment adviser to the Funds, Wells Fargo's responsibility
with respect to securities lending activities shall be to perform
or supervise the performance by sub-advisers or, to the extent
delegated by this Agreement, the Custodian, in accordance with
securities lending guidelines approved by the Board of Trustees of
the Trust (the "Guidelines"), of the following:
a. To negotiate or approve the terms and conditions of securities loans entered into by the Funds.
b. To evaluate the creditworthiness of and select borrowers (the "Borrowers").
c. To invest any cash collateral received from the Borrowers or obtained through
repurchase transactions with respect to non-cash
collateral received from the Borrowers.
d. To identify to the Custodian securities in the Funds that are
eligible to be loaned under the Program and securities that
are not eligible to be loaned.
e. To provide to the Custodian a schedule of permitted lending rates.
f. To update all such information as necessary in consultation with the Custodian.
2. Delegation of Authority
Wells Fargo hereby delegates to the Custodian the administration
of the Funds' securities lending activities, subject to the
monitoring and supervision of Wells Fargo and/or the appropriate
sub-advisers (the "Advisers"), and the Custodian hereby accepts
such delegation. Pursuant to this delegation of authority:
a. The Custodian may only enter into loans on terms and conditions approved by
the Advisers (the "Securities Loan Agreement"). b. The Custodian may only enter
into loans with entities whose creditworthiness have been evaluated by the
Advisers and who have
been approved by the Advisers to act as Borrowers.
c. The Custodian may only invest cash collateral received from
the Borrowers or obtained through repurchase arrangements with
respect to non-cash collateral in securities specified by the
Adviser in writing, as provided to the Custodian from time to
time.
d. The Advisers retain full discretion and power to prevent any
loan from being made or to instruct the Custodian to terminate
any loan once made.
3. Custodian's Activities
For the compensation described below and in accordance with the
Guidelines, and subject to the direction and supervision of the
Advisers, the Custodian undertakes the following:
a. To enter into a Securities Loan Agreement with each Borrower
setting forth the general terms governing loans made under the
Program.
b. To open an account (the "Account") for each Fund participating
in the Program. Each loan made will be made on behalf of and
solely for the benefit of an Account.
c. To implement loans consistent with its delegated authority and
with the Funds' prospectuses directly or through a finder, for
a minimum of one day but within the term as set forth in the
Guidelines, retaining the power to terminate the loan at any
time unless otherwise agreed with the Funds.
d. To require each loan when made to be collateralized in the
amount of 102% of the market value of any domestic securities
loaned or 105% of the market value of any international
securities loaned, as the case may be, and accrued interest.
e. To mark each loaned security to market daily using the closing
valuation as of the prior business day. The Custodian shall
use a pricing service to obtain market valuation. If the
market value of the given collateral falls to 100% of the
market value of the loaned security plus accrued interest, the
Custodian shall request additional collateral from the
Borrower to bring the collateralization back to 102% for any
domestic securities loaned or 105% for any international
securities loaned. Collateral in excess of 102% or 105%, as
the case may be, will be returned to the Borrower if
requested.
f. To receive and take possession of collateral in the form of
cash, government securities (as defined in the Investment
Company Act of 1940 (the "Act")), irrevocable letters of
credit issued by certain approved banks, or such other
collateral as may be permitted by the Securities and Exchange
Commission (the "Commission") or its staff. To the extent
permitted under the Act, and as interpreted by the staff of
the Commission or pursuant to any exemptive order thereunder,
cash received from all loans from Accounts may be commingled
for investment purposes. Such cash may be invested only in
securities approved in writing by the Advisers that are
permissible investments for each Fund.
g. Normally, securities loaned and cash or government securities
transferred as collateral will be processed, similar to
security purchases and sales, through the Depository Trust
Company or a Federal Reserve Bank or any other appropriate
clearing organization (the "Clearing Organization").
4. Allocation of Security Loans Among Participants
The Custodian maintains a list of securities available for lending
through the Program, including available Fund securities. The
Custodian will use reasonable efforts to allocate loans among
participants in the Program in a way that is fair to all
participants, including the Funds. As a result of this allocation,
the Funds understand that a single Borrower may be lent a
significant portion, or all, of the Funds' securities available
for lending. The Funds also understand that other Program
participants may absorb all demand for particular securities and
that the Funds' securities may not be loaned even where identical
securities are being loaned by the Custodian as part of the
Program on behalf of other participants.
5. Termination of Any Security Loan
A loan may be terminated by the Custodian or the Borrower at any
time pursuant to the Securities Loan Agreement covering the loan.
The Advisers may request the Custodian to terminate any loan of
securities for any reason at any time. Upon such loan termination,
the Custodian will take delivery or receive through a Clearing
Organization the securities to be returned. The Custodian will
return to the Borrower directly or through the Clearing
Organization the collateral securing the loan. The Securities Loan
Agreement will provide for the return of corporate securities no
later than the third business day following loan termination
notice and, in the case of government securities, no later than
the next business day following loan termination notice.
Notwithstanding the foregoing, the Custodian will have a
reasonable time after receiving the Advisers' loan termination
request to liquidate cash collateral investments prior to
terminating the loan.
6. Portfolio Investment Activity and Corporate Actions in Regard to Loaned Securities
The Funds' Accounts are entitled to all cash dividends, stock
dividends, stock splits, rights of distribution, conversion
privileges, tender and exchange offers, and similar corporate
actions with respect to any loaned securities as if the securities
had not been loaned. During any period when securities are loaned,
the Funds waive their right to vote such securities. The Funds may
regain the right to vote securities by causing a timely
termination of a loan in advance of the record date established
for determining stockholder entitlement to vote. Any securities of
the portfolio that are on loan may be sold by the Advisers at any
time. Upon receipt by the Custodian of notice from the Advisers of
any sale, the Custodian will initiate action to terminate the loan
of the securities sold. If such notice is not received by the
Custodian, the Custodian assumes no liability for the failure of
the transaction to settle on contractual settlement date.
7. Recordkeeping and Reporting
The Custodian will monitor daily the value of the loaned security
and the collateral. The Custodian will provide recordkeeping and
accounting services necessary for the operation of the Program.
The Custodian will keep security loan records separate from the
Funds' custodial or fiduciary portfolio records. The Custodian
will credit income from each loan to the Funds' Accounts at least
once a month. The Custodian will provide the Advisers with a
detailed monthly report, which shall include all loan activity,
Borrowers to whom loans were made, and income earned. The
Custodian will also provide the Advisers with a list of each
Fund's securities lending positions on a daily basis and will
provide such other reports as the Advisers or the Board of
Trustees of the Trust may reasonably request.
8. Fees
In acting as Custodian for the Funds, the Custodian will receive a
transaction-based charge for every securities movement in the
Account associated with each loan (the "Transaction Charge"). The
Transaction Charge will be in the amounts shown on Exhibit A to
this Agreement, provided that, on a monthly basis, the aggregate
Transaction Charge shall not exceed 40% of the Account Revenues,
as defined below. Total Transaction Charges will be determined and
charged monthly. As of the effective date of this Agreement, an
exemptive order (the "Order") is being sought from the Commission,
which would permit the Custodian to receive a percentage of the
Account Revenues. As used herein, "Account Revenues" means all
revenue, in the form of (a) earnings on the investment of cash
collateral provided by a Borrower in connection with a loan from
an Account through the Program, net of any agreed-upon amount
payable to the Borrower out of such earnings, or (b) separate
lending fees payable by a Borrower when the collateral provided by
the Borrower is in the form of letters of credit or government
securities, in each case net of expenses. Until the Order is
obtained, and all conditions of the Order have been satisfied, the
Funds will retain all Account Revenues. After the Order is
obtained, and all conditions of the Order have been satisfied, the
Funds will receive 60% of the Account Revenues, and the Custodian
will receive the remaining 40% of the Account Revenues in lieu of
the Transaction Charge. Account Revenues will be calculated and
credited monthly.
9. Risk of Loss
The Funds assume all risk of loss arising out of Borrower defaults
on return of lent securities, collateral deficiencies or
collateral investment loss, provided the terms and conditions of
this Agreement and the Guidelines have been observed by the
Custodian. If the Borrower defaults on the return of a lent
security, in accordance with the Securities Loan Agreement, the
Funds or the Custodian, if authorized, may purchase securities
identical to the lent securities (or their equivalent in the event
of reorganization, recapitalization or merger of the issuer of the
borrowed security) and may apply the collateral to the payment of
the purchase price, expenses and other obligations under the
Securities Loan Agreement. The Custodian assumes all risk of loss
arising out of negligent operation of its Program or any failure
by it to observe the terms and conditions of this Agreement or the
Guidelines.
10. Termination
This Agreement may be terminated at any time by any party upon 60
days' written notice to the others. Upon mutual agreement, the
parties may waive all or part of the notice period. The Custodian
will terminate all loans from the Funds' Accounts in accordance
with the Security Loan Agreement in time for lent securities to be
returned to the Funds prior to the effective date of any such
termination.
11. Construction
Each Fund shall be deemed to have entered into this Agreement
severally and not jointly, and the provisions of this Agreement
shall be construed accordingly. Each reference hereunder to the
Funds or a Fund shall be deemed a separate reference solely to the
Fund to which a particular loan under this Agreement relates.
Under no circumstances shall the rights, obligations or remedies
hereunder with respect to a particular Fund constitute a right,
obligation or remedy applicable to any other Fund. In particular,
and without otherwise limiting the scope of this Section: (i) the
collateral and mark to market requirements specified in Section 3
of this Agreement shall be calculated separately based solely upon
the loans entered into by each Fund; and (ii) the Custodian shall
have no right to set off claims against or amounts owed by one
Fund by applying property of another Fund.
12. Notices
Notice to the Funds shall be directed and mailed as follows:
Wells Fargo Core Trust
111 Center Street, Suite 300
Little Rock, AR 72201
Attn: Richard H. Blank, Jr.
With a copy to:
Morrison & Foerster LLP
2000 Pennsylvania Avenue, N.W., #5500
Washington, DC 20006
Attn: Marco E. Adelfio
Notice to the Advisers shall be directed and mailed as follows:
Wells Fargo Bank, N.A.
525 Market Street, 12th Floor
San Francisco, CA 94105
Attn: Michael J. Hogan
With a copy to:
Wells Fargo Bank, N.A.
633 Folsom Street, 7th Floor
San Francisco, CA 94107
Attn: C. David Messman
Notice to the Custodian shall be directed and mailed as follows:
Norwest Bank Minnesota, N.A.
Investment Management & Trust- Securities Lending
Norwest Center
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0029
Attn: Robert G. Smith
13. Section Headings
The headings of sections in this Agreement are inserted for
convenience of reference and shall not be deemed to be a part of
or used in the construction of this Agreement.
14. Governing Law
This Agreement and all transactions hereunder shall be governed
by, interpreted, construed and enforced in accordance with the
laws of the State of California.
15. Successors and Assigns
This Agreement shall be binding on and enforceable against the
successors and assigns of the parties. This Agreement may not be
assigned by any party without the prior written consent of the
other parties hereto.
16. Effective Date and Term
This Agreement shall be effective on the 8th day of November,
1999. This Agreement shall continue in effect for one year, unless
earlier terminated in accordance with Section 10, and from year to
year thereafter provided it shall be renewed at least annually by
the Trust's Board of Trustees, including a majority of the Trust's
disinterested Trustees.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
WELLS FARGO CORE TRUST
By:/s/
Richard H. Blank, Jr.
Assistant Secretary
WELLS FARGO BANK, N.A.
By:/s/
Michael J. Hogan
Senior Vice President
By:/s/
Karla M. Rabusch
Vice President
NORWEST BANK MINNESOTA, N.A.
By:/s/
Robert G. Smith
Managing Director of Securities Lending
<PAGE>
- 16 -
230
230
Exhibit A
FUNDS OF WELLS FARGO CORE TRUST
1. Disciplined Growth Portfolio
2. Index Portfolio
3. Equity Income Portfolio
4. International Equity Portfolio
5. International Portfolio
6. Large Company Growth Portfolio
7. Managed Fixed Income Portfolio
8. Positive Return Bond Portfolio
9. Small Cap Index Portfolio
10. Small Cap Value Portfolio
11. Small Company Growth Portfolio
12. Small Company Value Portfolio
13. Stable Income Portfolio
14. Strategic Value Bond Portfolio
Approved by Board of Trustees: August 19, 1999
<PAGE>
EXHIBIT B
Fee Schedule for Securities Lending Activity
$25.00 for each new loan and return
$5.00 for each debit mark and credit mark per loan
Reasonable hourly charges as required for special lending situations
Effective Date: November 8, 1999
<PAGE>
WELLS FARGO CORE TRUST
FUND AND INTERESTHOLDER ACCOUNTING AGREEMENT
AGREEMENT made as of the 1st day of October, 1999, by and between Wells
Fargo Core 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 may offer 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
and interestholder recordkeeping 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 and interestholder recordkeeper 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 Amended and Restated Declaration of
Trust 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 1940 Act (the "Registration Statement"), (iii) the Trust's current Part A
and Part B of each Fund (collectively, as currently in effect and as amended or
supplemented, the "Offering Document") 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.
SECTION 2A. 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 Offering Document;
(ii) calculate each item of income, expense, deduction, credit, gain
and loss, if any, and process each Fund's stated expense ratio 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 "SEC yield" and money market fund seven day yields
for each Fund, and each Class thereof, as applicable;
(v) provide the Trust and such other persons as the Administrator may
direct with the following reports (A) Key Numbers Summary, (B) trial
balance, (C) current security position report by tax lot, (D) security
position report by security identifier, (E) stale pricing and (F) cash
position and projection report;
(vi) prepare and record once daily, as of the time when the net asset
value of a Fund is calculated or at such other time 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) 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;
(ix) provide information typically supplied in the investment company
industry to the Fund's transfer agent and NASDAQ;
(x) transmit the NAVs and dividend factors of all Funds to the
Administrator and to those persons designated by the Administrator in
writing either by internet e-mail or facsimile transmission as
designated by the Administrator;
(xi) provide the Trust or the Administrator with the data requested by
the Trust or the Administrator that is required to update the
Registration Statement;
(xii) provide the Trust or independent accountants the data requested
with respect to the preparation of the Trust's income, excise and other
tax returns;
(xiii) provide the Trust or Administrator with unadjusted Fund data
directly from Forum's portfolio accounting system for any Fund business
day and other data reasonably requested for the preparation of the
Trust's semi-annual financial statements;
(xiv) process all distributions as directed in writing by the Trust or
the Administrator;
(xv) transmit to and receive from each Fund's transfer agent
appropriate data to reconcile daily Shares outstanding and other data
with the transfer agent;
(xvi) reconcile cash daily and reconcile security identifier, units,
maturities and rates at least monthly with each Fund's custodian;
(xvii) verify investment trade tickets when received from an investment
adviser and maintain individual ledgers and historical tax lots for
each security;
(xviii) 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
(xix) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time by the Administrator in the
procedures adopted by the Board pursuant to mutually acceptable
compensation and implementation agreements.
SECTION 2B. INTERESTHOLDER RECORDKEEPING DUTIES
(a) In accordance with procedures established from time to time by
agreement between the Administrator and Forum, with respect to each Fund, Forum
shall perform the following services:
(i) provide the services of a transfer agent and, as relevant, agent in
connection with accumulation, open-account or similar plans (including
without limitation any periodic investment plan or periodic withdrawal
program) that are customary for open-end management investment
companies including: (A) maintaining all accounts for interestholders,
(B) preparing interestholder meeting lists, (C) mailing proxies to
interestholders, (D) mailing interestholder reports and prospectuses to
current interestholders, (E) withholding taxes on U.S. resident and
non-resident alien accounts, (F) preparing and mailing statements of
account to interestholders for all purchases and redemptions of Units
and other transactions in interestholder accounts, (G) preparing and
mailing activity statements for interestholders, and (H) providing
interestholder account information;
(ii) receive for acceptance orders for the purchase of Shares and
promptly deliver payment and appropriate documentation therefor to the
custodian of the applicable Fund (the "Custodian");
(iii) pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate interestholder account;
(iv) receive for acceptance redemption requests and deliver the
appropriate documentation therefor to the Custodian;
(v) as and when it receives monies paid to it by the Custodian with
respect to any redemption, pay the redemption proceeds as required by
the prospectus pursuant to which the redeemed Shares were offered and
as instructed by the redeeming interestholders;
(vi) effect transfers of Shares upon receipt of appropriate
instructions from interestholders and instructions from the Trust;
(vii) receive from interestholders or debit interestholder accounts for
sales commissions, including contingent deferred, deferred and other
sales charges, and service fees (i.e., wire redemption charges) and
prepare and transmit payments to underwriters, selected dealers and
others for commissions and service fees received;
(xiii) prepare and transmit payments to underwriters, selected dealers
and others for trail commissions, Rule 12b-1 fees, interestholder
service fees and other payments based on the amount of assets in
interestholder accounts;
(ix) maintain records of account for and provide reports and statements to the Trust and interestholders
as to the
foregoing;
(x) record the issuance of Shares of the Trust and maintain pursuant to
Rule 17Ad-10(e) under the Securities Exchange Act of 1934, as amended
("1934 Act") a record of the total number of Shares of the Trust and
each Fund that are authorized, based upon data provided to it by the
Trust, and are issued and outstanding and provide the Trust on a
regular basis a report of the total number of Shares that are
authorized and the total number of Shares that are issued and
outstanding; and
(xi) provide a system which will enable the Trust to monitor the total
number of Shares of each Fund sold in each State.
(b) Forum shall provide the following additional services on behalf of
the Trust and such other services agreed to in writing by the Trust and Forum:
(i) monitor and make appropriate filings with respect to the
escheatment laws of the various states and territories of the United
States;
(ii) receive and tabulate proxy votes; and
(iii) solicit interestholders with respect to interestholder meetings.
(c) The Trust or the Administrator or other agent (i) shall identify to
Forum in writing those transactions and assets to be treated as exempt from
reporting for each state and territory of the United States and for each foreign
jurisdiction (collectively "States") and (ii) shall monitor the sales activity
with respect to interestholders domiciled or resident in each State. The
responsibility of Forum for the Trust's State registration status is solely
limited to the reporting of transactions to the Trust, and Forum shall have no
obligation, when recording the issuance of Shares, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the issue or sale of
such Shares, which functions shall be the sole responsibility of the Trust.
(d) Forum shall establish and maintain facilities and procedures
reasonably acceptable to the Trust for the safekeeping, control, preparation and
use of share certificates (if authorized to be issued by the Trust), check
forms, and facsimile signature imprinting devices. Forum shall establish and
maintain facilities and procedures reasonably acceptable to the Trust for
safekeeping of all records maintained by Forum pursuant to this Agreement.
(e) Forum shall procure, at its cost, the services of an affiliate that
is registered as a transfer agent under the 1934 Act to perform those services
hereunder that must be performed by a registered transfer agent, if any.
SECTION 2C. OTHER DUTIES
(a) 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 (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 (including
interestholder 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.
(b) The books and records prepared and maintained pursuant to Section
2C(a) 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.
(d) Forum shall provide the Trust and, subject to agreement to be bound
by this subsection, the Administrator and any other service provider to the
Trust specified by the Trust, upon request, read only access to a fund
accounting database file containing books, records, and information maintained
in electronic format by Forum for the Trust pursuant to this Agreement. The
database, which will be updated as of the latest close of business, will be
placed in a directory on Forum's network so as to be retrievable by the Trust or
Administrator. The database will include, with respect to a Fund, trial balance
data, daily portfolios, portfolio history, and statistical data from the date
Forum first became or becomes the Fund's fund accountant, in a format structured
to ensure reasonable and efficient use. 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 2A(a)(xix).
(f) Forum shall obtain a report from a reputable certified public
accountant firm on the processing of fund accounting transactions by Forum in
accordance with Statement of Auditing Standards 70 (issued by the Auditing
Standards Board of the American Institute of Certified Public Accountants).
Forum shall obtain such a report as of a date no later than June 30, 2000 and
shall supply a copy of the report to the Trust and the Administrator by
September 30, 2000. Forum shall obtain annual updates to such report and shall
remedy any material weakness identified in the report within 90 days of the
issuance of the report.
(g) 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 Offering
Documents 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 of 1933,
as amended ("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 interestholders 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; provided, however, that with respect to any activity outside of
normal processing Forum shall not be liable to the Trust or any of the Trust's
interestholders for any action or inaction of Forum relating to any event
whatsoever in the absence of bad faith, willful misfeasance or gross negligence
in the performance or disregard of Forum's duties or obligations under this
Agreement. An activity related to the processing of data shall be deemed to be
outside of normal processing if Forum is willing and able to accept the data
(from whatever source) electronically and, after Forum has given the Trust 90
days' notice of such ability, the data is not transmitted to Forum in an
electronic format that may be manipulated and that contains sufficient imbedded
detail to define each piece of data; provided, however, that such notice shall
not be required with respect to (i) portfolio investment purchases and sales and
rate changes, (ii) custody account activity and positions, (iii) capital
transactions, (iv) broker quotes and non-proprietary fund prices and factors.
(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 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 15 (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 to the Trust,
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 in a
writing delivered to Forum by the Board or by the Administrator 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.
(e) Forum shall not be liable for the errors of other service providers
to the Trust or their systems, 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 interestholder for any losses experienced by
the Fund or any Fund interestholder, 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 interestholder that experiences an aggregate 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 interestholder 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.
(h) To the extent any NAV Difference of $0.01 per Fund share or more
exists, Forum shall be entitled, with the appropriate efforts of the Trust and
the Administrator, to collect from and pay to each interestholder the amounts
and Shares required to make the interestholder whole as if the NAV Difference
had not occurred.
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.
All fees payable hereunder shall be accrued daily by the Trust. The
fees payable for the services listed in clause (i) of Appendix C hereto shall be
payable monthly on the first Fund business day of each calendar month for
services to be performed during that month. 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 (ii) 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 October 1, 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 December 31, 2002 (the "Initial Term") and shall continue in effect
thereafter for successive one year periods unless earlier terminated in
accordance with this Section or until the Fund ceases operations.
(c) Notwithstanding Section 5(b), this Agreement may be terminated with
respect to any or all Funds by the Board or Forum at any time without notice 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
rights may not be exercised 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.
(d) Notwithstanding Section 5(b), this Agreement may be terminated with
respect to any or all Funds by the Board at any time with 180 days' notice prior
to the expiration of the Initial Term if Forum fails to meet or exceed its
Service Standard Percentage:
(i) in any four consecutive months; or
(ii) in any six months during any consecutive period of twelve months.
The Service Standard Percentage and whether Forum met or exceeded it shall be
calculated each month. Forum shall meet or exceed the Service Standard
Percentage for a given month if Forum meets or exceeds at least 3 (three) of the
5 (five) Service Standard criteria listed in Appendix B. For these purposes,
each of the Service Standard criteria shall be measured on an aggregate basis
for all Funds combined with all "Funds" that are included as "Funds" in a Fund
Accounting Agreement between Forum and Wells Fargo Variable Trust or between
Forum and Wells Fargo Funds Trust, if any (to the extent that the comparable
Service Standard criteria exist for such other Funds).
The Trust may change this standard and require that Forum shall meet or
exceed the Service Standard Percentage for a given month if Forum meets or
exceeds at least 4 (four) of the 5 (five) Service Standard criteria listed in
Appendix B. Such change may only be made with respect to the month of April 2001
and all months thereafter and only upon 60 days' notice to Forum.
Notwithstanding anything to the contrary, Forum shall use its best efforts to
satisfy all Service Standard criteria and score at least 99.8 each month on each
Service Standard criteria.
Nothing in this subsection (d) 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(c).
(e) Notwithstanding Section 5(b), this Agreement may be terminated with
respect to any or all Funds by the Board at any time after the date that is 180
days prior to the expiration of the Initial Term on 180 days' written notice to
Forum.
(f) Notwithstanding Section 5(b), this Agreement may be
terminated by Forum at any time on 180 days' written notice to the
Trust.
(g) Notwithstanding Section 5(b), this Agreement may be terminated with
respect to any or all Funds by the Board at any time if Wells Fargo & Company
directly or indirectly acquires, is acquired by, merges, consolidates or
otherwise reorganizes with (a "Reorganization") any company and immediately
thereafter (i) Wells Fargo & Company or its successor controls or is under
common control with any company that provides in the normal course of business
the services listed in Section 2, whether generally to the mutual fund industry
or only to mutual funds advised or sponsored by its affiliates or (ii) Wells
Fargo & Company or an affiliate of it advises a family of mutual funds for which
the services listed in Section 2 are performed by a company not affiliated with
Wells Fargo & Company. Such termination may be made at any time after the
occurrence of the event described in the preceding sentence by the Board on 90
days' written notice to Forum. In the event that the Trust elects to terminate
this Agreement pursuant to clause (i) of this subsection with respect to a Fund,
the Trust shall pay Forum twelve (the "multiplier") times the greater of (x) the
monthly average fees due to Forum under this Agreement during the last three
whole months prior to the Reorganization and (y) the monthly average fees paid
to Forum during the last three whole months prior to delivery of the notice of
termination ("Termination Fee"). The multiplier will be reduced one-twelfth for
each three full calendar month period after December 31, 1999 that expires prior
to the Reorganization; provided, however, that the multiplier shall be at least
four. If notice of termination under this subsection is given on or before March
31, 2000 with respect to a Fund the Termination Fee shall be $6,400,000 divided
by the sum of the number of Funds plus the number of "Funds" as that term is
defined in the Fund Accounting Agreement for Wells Fargo Funds Trust and Wells
Fargo Variable Trust. In the event that the Trust elects to terminate this
Agreement pursuant to clause (ii) of this subsection with respect to a Fund, the
Trust shall pay Forum one and one-half times the Termination Fee as calculated
above.
(h) Any termination in accordance with Sections 5(c) through 5(g) shall
be without penalty.
(i) The provisions of Sections 2(C)(b), 3, 4, 5(i), 5(j), 7, 8,
9(b), 12, 15 and 16 shall survive any termination of this
Agreement.
(j) This Agreement and the rights and duties under this Agreement may
not be assigned by either Forum or the Trust except by the specific written
consent of the other party . Notwithstanding anything in this Agreement to the
contrary, the transfer of ownership of all or part the equity interests in Forum
to Forum's management staff or the heirs of John Keffer shall not be deemed to
be an assignment. 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 if the Trust and Forum shall so
agree.
SECTION 7. CONFIDENTIALITY
(a) Forum acknowledges that the interestholder list and all information
related to interestholders furnished to Forum by the Trust or by a
interestholder in connection with this Agreement constitute proprietary
information (collectively, "Customer Data") of substantial value to the Trust.
In no event shall Proprietary Information be deemed Customer Data. Forum agrees
to treat all Customer Data as proprietary to the Trust and further agrees that
it shall not divulge any Customer Data to any person or organization except as
may be provided under this Agreement or as may be directed by the Trust.
(b) 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
(i) prepare or assist in the preparation of periodic reports to interestholders and regulatory bodies such as the SEC;
(ii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(iii) 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.
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; provided, however, that Forum
shall be responsible or liable for any failure or delay in performance of its
obligations under this Agreement due to the failure of Forum to have a
reasonable business continuity plan.
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 INTERESTHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the interestholders 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 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 interestholders of the
Funds.
SECTION 13. ISSUANCE AND TRANSFER OF SHARES; CERTIFICATES
(a) Forum shall make original issues of Shares of each Fund in
accordance with the Offering Document only upon receipt of (i) instructions
requesting the issuance, (ii) a certified copy of a resolution of the Board
authorizing the issuance and (iii) necessary funds for the payment of any
original issue tax applicable to such Shares.
(b) Transfers of Shares of each Fund shall be registered on the
interestholder records maintained by Forum. In registering transfers of Shares,
Forum may rely upon the Uniform Commercial Code as in effect in the State of
Delaware or any other statutes that, in the opinion of Forum's counsel, protect
Forum and the Trust from liability arising from (i) not requiring complete
documentation, (ii) registering a transfer without an adverse claim inquiry,
(iii) delaying registration for purposes of such inquiry or (iv) refusing
registration whenever an adverse claim requires such refusal. As interestholder
recordkeeper, Forum will be responsible for delivery to the transferor and
transferee of such documentation as is required by the Uniform Commercial Code.
(c) Shares shall be issued to investors in a Fund at the net asset
value per unit next determined after Forum receives a completed purchase order.
A purchase order shall be complete at the time specified in the Prospectus
pursuant to which the Shares are offered and when Forum or its agent receives
(i) an instruction directing investment in a Fund, (ii) a wire or other
electronic payment in the amount designated in the instruction and (iii) in the
case of an initial purchase, a completed account application.
(d) The Trust shall not issue Share certificates.
SECTION 14. REPRESENTATIONS AND WARRANTIES
(a) Forum represents and warrants to the Trust that:
(i) It is a limited liability company duly organized and existing and
in good standing under the laws of the State of Delaware and it is duly
qualified to carry on its business in the State of Maine;
(ii) All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
(iii) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
(iv) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of Forum, enforceable against Forum
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.
(b) The Trust represents and warrants to Forum that:
(i) It is a business trust duly organized and existing and in good standing under the laws of the State of Delaware;
(ii) It is empowered under applicable laws and by its Organic Documents
to enter into and perform this Agreement;
(iii) All proceedings required by the Organic Documents have been taken
to authorize it to enter into and perform this Agreement;
(iv) It is an open-end management investment company registered under
the 1940 Act;
(v) All Shares of the Funds, when issued, shall be validly issued,
fully paid and non-assessable; and
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Trust, enforceable against
the Trust 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.
SECTION 15. 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 16. 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 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.
(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.
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 CORE TRUST
By:
Richard H. Blank, Jr.
Assistant Secretary
FORUM ACCOUNTING SERVICES, LLC
By:
Stacey E. Hong
Director
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WELLS FARGO CORE TRUST
FUND AND INTERESTHOLDER ACCOUNTING AGREEMENT
Appendix A
Funds and Classes of the Trust
as of October 1, 1999
Funds Classes
International Equity Portfolio Single Class
International Portfolio Single Class
Index Portfolio Single Class
Small Company Growth Portfolio Single Class
Small Company Value Portfolio Single Class
Large Company Growth Portfolio Single Class
Income Equity Portfolio Single Class
Managed Fixed Income Portfolio Single Class
Positive Return Bond Portfolio Single Class
Stable Income Portfolio Single Class
Disciplined Growth Portfolio Single Class
Small Cap Value Portfolio Single Class
Strategic Value Bond Portfolio Single Class
Small Cap Index Portfolio Single class
<PAGE>
- B5 -
230
WELLS FARGO CORE TRUST
FUND AND INTERESTHOLDER ACCOUNTING AGREEMENT
Appendix B
Service Standards
as of October 1, 1999
(i) Criteria 1: NAV Accuracy - Reporting to Transfer Agent
Number of Accurate NAVs Reported to the Transfer Agent divided by
Total Number of NAVs Required to Report to the Transfer Agent 99.6%
ARTICLE II "NAV" for this purpose is class net assets divided by total class
shares outstanding and includes dividend factors. An NAV is accurate if, upon
recalculation, the change in reported extended class NAV is less than a full
penny and, with respect to dividend factors, any revision to previously reported
data requires the Transfer Agent to reprocess shareholder account data. ARTICLE
III Numerator and denominator include (i) NAVs affected by "non-controllable
information" and (ii) Gateway funds delayed due to Core Portfolio accounting
issues related to non-controllable information. o Each NAV error is treated as
an NAV error only once (i.e., if an error lasts more than one business day
before it is
discovered, it is treated as one error and excluded from both
the numerator and denominator in the calculation after the
first day).
(ii) Criteria 2: NAV Accuracy - Reported to NASDAQ
Number of Accurate NAVs Reported to NASDAQ divided by
Number of Total NAVs Required to be Reported to NASDAQ...............................................99.6%
o "NAV" for this purpose is class net assets divided by total
class shares outstanding and includes dividend factors. An NAV
is accurate if, upon recalculation, the NAV Difference is less
than a full penny and, with respect to dividend factors, any
revision to previously reported data requires the Transfer
Agent to reprocess shareholder account data.
ARTICLE IV Numerator and denominator include (i) NAVs affected by
non-controllable information and (ii) Gateway funds delayed due to Core
Portfolio accounting issues related to non-controllable information. o Each NAV
error is treated as an NAV error only once (i.e., if an error lasts more than
one business day before it is
discovered, it is treated as one error and excluded from both
the numerator and denominator in the calculation after the
first day).
(iii) Criteria 3: NAV Timeliness to Transfer Agent
Number of NAV transmissions to Transfer Agent by designated time divided by
Required Number of NAV transmissions 99.6%
ARTICLE V "NAV" for this purpose is class net assets divided by class total
shares outstanding. ARTICLE VI Designated time is 7:00 p.m., ET.
ARTICLE VII Numerator and denominator include (i) NAVs affected by
non-controllable information and (ii) Gateway funds delayed due to accounting
issues related to Core Portfolio non-controllable information.
(iv) Criteria 4: Cash Availability Reporting
Accurate and Timely Cash Availability Reports ("CAR") to Investment Adviser
divided by Number of Funds Requiring Cash Availability Reporting 99.6%
o Timely CAR means (i) notwithstanding any other clause to the contrary,
with respect to any Fund or Core Portfolio participating in a "consolidated
repurchase agreement," by the later of two hours and fifteen minutes after
receipt of final transfer agency capital transaction reporting to Forum with
respect to Wells Fargo Funds Trust and the Trust (or their respective
predecessor mutual funds) or one hour after receipt of final transfer agency
capital transaction reporting to Forum with respect to Wells Fargo Variable
Trust; (ii) with respect to a stand-alone fund with a single investment adviser,
within one half hour of receipt of final transfer agency capital transaction
reporting; (iii) with respect to a stand-alone fund with more than one
investment adviser, within two hours of receipt of final transfer agency capital
transaction reporting; (iv) with respect to a non-money market Core Portfolio,
within one hour after receipt of final transfer agency capital transaction
reporting, and (v) with respect to a money market Gateway fund, or Core
Portfolio with no more than three relationships, within one half hour after
receipt of final transfer agency capital transactions reporting.
o Accurate CAR means any CAR wherein the difference between the
CAR that should have been reported and the CAR that was
reported divided by the CAR that should have been reported is
greater than 1/2 of 1%.
ARTICLE VIII Numerator and denominator include (i) funds affected by
non-controllable information and (ii) and Core Portfolios delayed due to Gateway
fund accounting issues related to non-controllable information.
(v) Criteria 5: Monthly Reporting Proof Package Timeliness
Funds for Which Monthly Proofs are Completed by the 15th Calendar Day
of the Month Divided by Number of Funds................................................................95%
o Monthly proof means balance sheet review and monthly portfolio reconciliation.
ARTICLE IX Numerator and denominator include (i) funds affected by
non-controllable information and (ii) Gateway funds affected by Core Portfolio
non-controllable information.
(vi) General Definitions
(A) "Transfer Agent" means Boston Financial Data Services, Inc.
and does not include other persons to which Forum communicates
fund information.
(B) The numerator and denominator are calculated daily and the
quotient is reported on a cumulative monthly and rolling
twelve month basis.
(C) Denominator includes those NAVs for classes of shares that
have direct shareholder investment for standards (i), (ii) and
(iii).
(D) "Non-controllable information" includes the following events:
(I) With Respect to Investment Adviser Reporting for
Funds WNAV is Calculated as of the Close of the NYSE
(currently, 4:00 p.m., ET):
o "Confirmed future trades" (portfolio investment
purchases and sales with future dated settlement)
that are not received by Forum prior to 11:00 a.m.,
ET (2:30 p.m. ET for IPOs, repurchase agreements and
trade corrections (cancellations or changes to
previously reported trade details)), on trade date
plus one business day.
o Security identifiers for purchases of securities not
held by the Fund that are not received by Forum prior
to 8:00 p.m., ET, on trade date.
o Post cash availability reporting, i.e., "Confirmed
same day trades" (portfolio investment purchases and
sales settling on trade date), that are not received
by Forum prior to 1:00 p.m., ET, on trade date.
o "Trades Control" sheets (indicating the number of
confirmed trades accompanying the confirmed future
trades) that are not received by Forum prior to 10:00
a.m., ET, on trade date plus one business day.
o "Trades Control" sheets (including the number of
confirmed same day trades) that are not received by
Forum prior to 1:00 p.m. ET, on trade date.
o "Trades Control" sheets (indicating the number IPOs,
and trade corrections) that are not received by Forum
prior to 2:30 p.m., ET, on trade date.
o Confirmed future trades and confirmed same day trades
information that is not complete or does not include
all necessary information to enable Forum to properly
identify, record, and account for the security.
Required trade ticket information includes, as
applicable: buy, sell, trade date, settlement date,
broker, CUSIP/sedol, ticker, issuer name, face rate,
rate change date, coupon date, credit ratings,
shares/face, price, factor, cost, detail of fees and
commission, and net proceeds.
o Note: Each time requirement with respect to a Fund in
this section (vi)(D)(I) shall be advanced by an
amount equal to the time that day that Forum is late
in reporting cash available or other portfolio
related data.
(II) With Respect to Investment Adviser Reporting for Money MarketF:
o Confirmed future trades and same day trades that are
not received by Forum prior to one and a half hours
after shareholder trading cutoff.
o "Trades Control" (indicating the number of future and
same day confirmed trades) that are not received by
Forum prior to one and a half hours after shareholder
trading cutoff.
o Confirmed future trades and same day trade
information that is not complete or does not include
all necessary information to enable Forum to properly
identify, record, and account for the security.
Required trade ticket information includes as
applicable: buy, sell, trade date, settlement date,
broker, CUSIP/sedol, ticker, issuer name, face rate,
rate change date, coupon date, credit ratings,
shares/face, price, factor, cost, detail of fees and
commission, and net proceeds.
o Note: Each time requirement with respect to a Fund in
this section (vi)(D)(II) shall be advanced by an
amount equal to the time that day that Forum is late
in reporting cash available or other portfolio
related data.
(III) With Respect to Transfer Agent/Shareholder Servicing Reporting
o Capital transaction reporting not received timely by Forum including:
o Capital transactions reporting "supersheets" and principal gain loss reporting
files not received by Forum prior to 7:00 a.m.
ET.
o Capital transaction reporting "WTA" not received by Forum prior to 9:00 a.m.
ET (9:10 a.m. ET for dates before January 1, 2000). o Capital transaction
reporting "estimates" not received by Forum prior to 9:00 a.m. ET (9:10 a.m. ET
for dates before January 1,
2000).
o Capital transactions reporting not received by Forum
due to a failure of "Connect Direct" hardware,
software, and related technical support.
o Capital transaction reporting that requires
interpretation due to the use of transaction codes
not originally agreed upon and provided by Transfer
Agent in advance of transactions reported by Transfer
Agent to the fund.
o Revision to any class information previously reported
by agreed upon deadlines, including "supersheet,"
"estimates," "principal gains and losses," or any
other information that fund accounting would rely on
to record capital transactions.
o Transfer Agency does not respond to Forum inquiries regarding suspect data
within thirty minutes of Forum's inquiry. o For Funds for which Forum reports a
second daily dividend factor after additional shareholder trades are reported to
Forum, any
time Forum cannot use the first factor for that day.
(IV) With Respect to Custody Reporting & Clearing of Items
o Custody reporting of fund cash availability that is not received by Forum
prior to 7:00, a.m., ET.
o Custody not resolving Forum inquires at least 1/2 hour prior to the
calculation of the next business day's cash availability. o Custody not
communicating corporate actions at least one day prior to ex-date.
(V) With Respect to Independent Valuation Services
o Security valuations (including those of the Core Portfolios) not received by
Forum prior to 4:45 p.m., ET.
o Corporate action information not disseminated
accurately or that is not received by Forum at least
one day prior to ex-dividend date.
(VI) With Respect to Fair Value Determinations
o For all securities subject to "Fair Value"
determinations, broker quotes or similar pricing
information not received by Forum prior to 4:00 p.m.,
ET.
(VII) With Respect to Revisions
o Revisions to any information reported by the Transfer
Agent, investment advisers, custodians, and
independent valuation services or brokers not
received in writing.
o Revisions for which there are no clearly defined
escalation procedures provided by fund management in
working with Transfer Agent, investment advisers,
non-proprietary fund service providers, custodians,
and mutual fund or bank operating areas.
(VIII) With Respect to NAV Timelines Reporting to Transfer Agent
o Transfer Agent requirements for receiving all NAV
reporting in a consolidated file, when information is
available and could be communicated prior to the 7:00
p.m. ET deadline.
(IX) With Respect to Cash Availability Reporting
o Funds participating in asset allocation and
consolidated repurchase agreements whose reporting
are delayed due to non-controllable events described
herein attributable to interdependencies or other
funds participating in the asset allocation and
consolidated repurchase agreement process.
<PAGE>
C-6
230
C-6
230
WELLS FARGO CORE TRUST
FUND AND INTERESTHOLDER ACCOUNTING AGREEMENT
Appendix C
Fees and Expenses
as of October 1, 1999
(i) Fees
(A) Per Fund Fees
(i) Fee per Fund...................................................... $5,000/month
Fee per Fund not listed on Appendix A as of
October 1, 1999
International/Global Funds and Funds with
10% or more of month-end net assets invested in
asset-backed securities.................................. $5,833/month
Other Funds.............................................. $4,167/month
(ii) Fee per Gateway Fund (a Fund operating pursuant to Section
12(d)(1)(E) or 12(d)(1)(G) of the 1940 Act
or in a similar structure)........................................ $2,000/month
(iii) Fee per Core Portfolio (a Fund registered under the
1940 Act but whose securities are not registered
under the Securities Act of 1933)................................. $5,500/month
Fee per Core Portfolio not listed on Appendix A as of
October 1, 1999
International/Global Core Portfolios and Core
Portfolios with 10% or more of month-end net
assets invested in asset-backed securities............... $6,333/month
Other Core Portfolios.................................... $4,667/month
(iv) Fee for each additional Class of any Fund above one............... $1,000/month
(B) Basis Point Fees
0.0025% of the average annual daily net assets of each Fund (excluding
the net assets of a Fund that are invested in a Core Portfolio (i)
which pays Forum a similar fee and (ii) that the Administrator or an a
affiliate of the Administrator is the investment adviser or a majority
of the interests of which are owned by mutual funds advised by the
Administrator or an affiliate of the Administrator).
(ii) Out-Of-Pocket and Related Expenses
The Trust, on behalf of the applicable Fund, shall reimburse Forum for all
out-of-pocket and ancillary expenses reasonably incurred in providing the
services described in the Fund Accounting Agreement, including but not limited
to the cost of (or appropriate share of the cost of): (i) pricing, paydown,
corporate action, credit and other reporting services (but only to the extent
that the Trust requests that Forum use more than one reporting service with
respect to a service), (ii) taxes, (iii) postage and delivery services, (iv)
communications services, (v) electronic or facsimile transmission services, (vi)
reproduction, (vii) printing and distributing financial statements, (viii)
microfilm, microfiche and other storage medium and (ix) Trust record storage and
retention fees. In addition, any other expenses incurred by Forum at the request
or with the consent of the Trust, will be reimbursed by the Trust on behalf of
the applicable Fund.
<PAGE>
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 IX 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 Portfolios.
Item 26. Business and Other Connections of Investment Adviser.
(a) Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly owned
subsidiary of Wells Fargo & Company, serves as investment adviser to all of the
Registrant's investment portfolios, and to certain other registered open-end
management investment companies. Wells Fargo Bank's business is that of a
national banking association with respect to which it conducts a variety of
commercial banking and trust activities.
To the knowledge of Registrant, none of the directors or
executive officers of Wells Fargo Bank, 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 & Greene
Director 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 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
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
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
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 Cellular One
Director 651 Gateway Blvd.
San Francisco, CA 94080
David M. Tellep Chairman of the Board of Directors and
Chief Executive Officer of Lockheed Martin Corp.
6801 Rockledge Drive
Bethesda, MD 20817
Director of Edison International and
Southern California Edison Company
2244 Walnut Grove Ave.
Rosemead, CA 91770
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Chang-Lin Tien Chancellor of University of California at Berkeley
Director UC at Berkeley
Berkeley, CA 94720
John A. Young President, Director and Chief Executive Officer of
Director Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104
William F. Zuendt President and Chief Operating Officer of
President Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105
Director of 3Com Corp.
5400 Bayfront Plaza
P.O. Box 58145
Santa Clara, CA 95052
Director of MasterCard International
888 Seventh Avenue
New York, NY 10106
Trustee of Golden Gate University
536 Mission Street
San Francisco, CA 94163
(b) Schroder Investment Management North America Inc.
The description of Schroder Investment Management North America
Inc. ("SIMNA") in Parts A and B of the Registration Statement are incorporated
by reference herein. The following are the directors and principal officers of
SIMNA, including their business connections of a substantial nature. The address
of each company listed, unless otherwise noted, is 787 Seventh Avenue, 34th
Floor, New York, NY 10019. Schroder Capital Management International Limited
("Schroder Ltd.") is a United Kingdom affiliate of SIMNA which provides
investment management services to international clients located principally in
the United States. Schroder Ltd. and Schroders p.l.c. are located at 31 Gresham
St., London ECZV 7QA, United Kingdom.
Principal Business(es)
Name and Position During at Least the Last Two Fiscal Years
David M. Salisbury SIMNA
Chairman, Director Schroder Ltd.
Chief Executive, Director Schroders plc.
Director Schroders Series Trust II
Trustee and Officer
Richard R. Foulkes SIMNA
Deputy Chairman, Director Schroder Ltd.
Deputy Chairman Certain open end management investment companies for which
Officer SIMNA and/or its affiliates provide investment services
John A. Troiano SIMNA
Chief Executive, Director Schroder Ltd.
Chief Executive, Director Certain open end management investment companies for which
Officer SIMNA and/or its affiliates provide investment services
Sharon L. Haugh SIMNA
Executive Vice President, Director Schroder Fund Advisors Inc.
Director, Chairman Schroder Ltd.
Director Schroder Capital Management Inc.
Chairman, Director Certain open end management investment companies for which
Trustee SIMNA and/or its affiliates provide investment services
Gavin D.L. Ralston
Senior Vice President, Managing SIMNA
Director
Director Schroder Ltd.
Mark J. Smith SIMNA
Senior Vice President, Director Schroder Ltd.
Senior Vice President, Director Schroder Fund Advisors Inc.
Director Certain open end management investment companies for which
Trustee and Officer SIMNA and/or its affiliates provide investment services
Robert G. Davy SIMNA
Senior Vice President, Director Schroder Ltd.
Director Certain open end management investment companies for which
Officer SIMNA and/or its affiliates provide investment services
Jane P. Lucas SIMNA
Senior Vice President, Director Schroder Fund Advisors Inc.
Director Schroder Capital Management Inc.
Director Certain open end management investment companies for which
Officer SIMNA and/or its affiliates provide investment services
David R. Robertson
Group Vice President SIMNA
Senior Vice President Schroder Fund Advisors Inc.
Director of Institutional Business Oppenheimer Funds Inc.
(resigned 2/98)
Michael M. Perelstein
Senior Vice President, Director SIMNA
Senior Vice President, Director Schroder Ltd.
Louise Croset
First Vice President, Director SIMNA
First Vice President Schroder Ltd.
Trustee and Officer Schroder Series Trust II
Ellen B. Sullivan
Group Vice President, Director SIMNA
Director Schroder Capital Management Inc.
Catherine A. Mazza
Group Vice President SIMNA
President, Director Schroder Fund Advisors
Director Schroder Capital Management Inc.
Trustee and Officer Certain open and management investment companies for which
SIMNA and/or its affiliates provide investment services
Heather Crighton
First Vice President, Director SIMNA
First Vice President, Director Schroder Ltd.
Fariba Talebi
Group Vice President SIMNA
Director Schroder Capital Management Inc.
Officer Certain open and management investment companies for which
SIMNA and/or its affiliates provide investment services
Ira Unschuld
Group Vice President SIMNA
Officer Certain open and management investment companies for which
SIMNA and/or its affiliates provide investment services
Paul M. Morris
Senior Vice President SIMNA
Director Schroder Capital Management Inc.
Susan B. Kenneally
First Vice President, Director SIMNA
First Vice President, Director Schroder Ltd.
Jennifer A. Bonathan
First Vice President, Director SIMNA
First Vice President, Director Schroder Ltd.
(c) Wells Capital Management Incorporated
The descriptions of Wells Capital Management ("WCM") in Parts A and B
of this Registration Statement are incorporated by reference herein.
The following are the directors and principal executive officers of
WCM, including their business connections, which are of a substantial
nature. The address of WCM is 525 Market Street, San Francisco,
California 94105 and, unless otherwise indicated below, that address is
the principal business address of any company with which the directors
and principal executive officers are connected.
Principal Business(es)
at Least the Last
Name Position Two Fiscal Years
Allen J. Ayvazian Chief Equity Officer WCM
Robert Willis President and Chief Investment WCM
Officer
Brigid Breen Chief Compliance Officer WCM
Jose Casas Chief Operating Officer WCM
Larry Fernandes Principal WCM
Jacqueline Anne Flippin Principal WCM
Vice President and Investment McMorgan & Company
Portfolio Manager (until 1/98)
Stephen Galiani Senior Principal Director WCM
Qualivest Capital Management, Inc.
(until 5/97)
Madeleine Gish Senior Principal WCM
Kelli Ann Lee Managing Director WCM
Group Human Resource Manager Wells Fargo Bank, N.A.
(until 11/97)
Melvin Lindsey Managing Director WCM
Clark Messman Chief Legal Officer WCM
Brian Mulligan Managing Director WCM
Thomas O'Malley Managing Director WCM
Clyde Ostler Director WCM
Guy Rounsaville Director WCM
Katherine Schapiro Senior Principal WCM
Gary Schlossbertg Economist WCM
(d) Peregrine Capital Management, Inc.
The descriptions of Peregrine Capital Management, Inc. ("Peregrine") in
Parts A and B of the Registration Statement, are incorporated by
reference herein. The following are the directors and principal
executive officers of Peregrine, including their business connections
which are of a substantial nature. The address of Peregrine is LaSalle
Plaza, 800 LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402
and, unless otherwise indicated below, that address is the principal
business address of any company with which the directors and principal
executive officers are connected.
Principal Business(es)
at Least the Last
Name Position Two Fiscal Years
James R. Campbell Director Peregrine Capital Management, Inc.
Sixth and Marquette Ave.
Minneapolis, MN 55479-0116 Norwest Bank
President, Chief Officer, Director
Patricia D. Burns Senior Vice President Peregrine Capital Management, Inc.
Tasso H. Coin Senior Vice President Peregrine Capital Management, Inc.
John S. Dale Senior Vice President Peregrine Capital Management, Inc.
Julie M. Gerend Senior Vice President Peregrine Capital Management, Inc.
William D. Giese Senior Vice President Peregrine Capital Management, Inc.
Daniel J. Hagen Senior Vice President Peregrine Capital Management, Inc.
Ronald G. Hoffman Senior Vice President Peregrine Capital Management, Inc.
Secretary
Frank T. Matthews Vice President Peregrine Capital Management, Inc.
Jeannine McCormick Senior Vice President Peregrine Capital Management, Inc.
Barbara K. McFadden Senior Vice President Peregrine Capital Management, Inc.
Robert B. Mersky Chairman, President, Chief Peregrine Capital Management, Inc.
Executive Officer
Gary E. Nussbaum Senior Vice President Peregrine Capital Management, Inc.
James P. Rosse Vice President Peregrine Capital Management, Inc.
Jonathan L. Scharlau Assistant Vice President Peregrine Capital Management, Inc.
Jay H. Strohmaier Senior Vice President Peregrine Capital Management, Inc.
Paul E. von Kuster Senior Vice President Peregrine Capital Management, Inc.
Janelle M. Walter Assistant Vice President Peregrine Capital Management, Inc.
Paul R. Wurm Senior Vice President Peregrine Capital Management, Inc.
J. Daniel Vendermark Vice President Peregrine Capital Management, Inc.
Sixth and Marquette Avenue
Minneapolis, MN 55479-1013
Albert J. Edwards Senior Vice President Peregrine Capital Management, Inc.
Douglas G. Pugh Senior Vice President Peregrine Capital Management, Inc.
Colin Sharp Vice President Peregrine Capital Management, Inc.
(e) Galliard Capital Management, Inc.
The descriptions of Galliard Capital Management, Inc. ("Galliard") in
Parts A and B of the Registration Statement, are incorporated by
reference herein. The following are the directors and principal
executive officers of Galliard, including their business connections
which are of a substantial nature. The address of Galliard is LaSalle
Plaza, Suite 2060, 800 LaSalle Avenue, Minneapolis, Minnesota 55479
and, unless otherwise indicated below, that address is the principal
business address of any company with which the directors and principal
executive officers are connected.
Principal Business(es)
at Least the Last
Name Position Two Fiscal Years
P. Jay Kiedrowski Chairman Galliard Capital Management, Inc.
Sixth and Marquette Ave.
Minneapolis, MN 55479 Norwest Investment Management,
Chairman, Chief Executive Officer Inc.
Executive Vice President Norwest Bank Minnesota, N.A.
Employee
Crestone Capital Management, Inc.
Director
Richard Merriam Principal, Senior Portfolio Galliard Capital Management, Inc.
Manager
John Caswell Principal, Senior Portfolio Galliard Capital Management, Inc.
Manager
Karl Tourville Principal, Senior Portfolio Galliard Capital Management, Inc.
Manager
Laura Gideon Senior Vice President of Marketing Galliard Capital Management, Inc.
Leela Scattum Vice President of Operations Galliard Capital Management, Inc.
(f) Smith Asset Management, L.P.
The descriptions of Smith Asset Management, L.P. ("Smith") in Parts A
and B, of the Registration Statement, are incorporated by reference
herein. The following are the directors and principal executive
officers of Smith, including their business connections which are of a
substantial nature. The address of Smith is 300 Crescent Court, Suite
750, Dallas, Texas 75201 and, unless otherwise indicated below, that
address is the principal business address of any company with which the
directors and principal executive officers are connected.
Principal Business(es)
at Least the Last
Name Position Two Fiscal Years
Stephen S. Smith President, Chief Executive Partner Smith Partner Discovery Management
Stephen J. Summers Chief Operating Officer Smith Partner Discovery Management
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 LifeGoal Funds, Inc. and Nations Reserves, and Wells Fargo
Variable Trust, Wells Fargo Funds Trust and Wells Fargo Core 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 and administrator at 525 Market Street, San
Francisco, California 94105.
(c) Stephens maintains all Records relating to its services as distributor at
111 Center Street, Little Rock, Arkansas
72201.
(d) Norwest Bank Minnesota, N.A. maintains all Records relating to
its services as custodian at 6th & Marquette, Minneapolis, Minnesota 55479-0040.
(e) Wells Capital Management Incorporated maintains all Records
relating to its services as investment sub-adviser at 525 Market Street, San
Francisco, California 94105.
(f) Peregrine Capital Management, Inc. maintains all Records
relating to its services as investment sub-adviser at 800 LaSalle Avenue,
Minneapolis, Minnesota 55479.
(g) Galliard Capital Management, Inc. ("Galliard") maintains all
Records relating to its services as investment sub-adviser at 800 LaSalle
Avenue, Suite 2060, Minneapolis, Minnesota 55479.
(h) Smith Asset Management Group, LP maintains all Records
relating to its services as investment sub-adviser at 500 Crescent Court, Suite
250, Dallas, Texas 75201.
(i) Schroder Investment Management, North America Inc. maintains
all Records relating to its services as investment sub-adviser at 787 Seventh
Avenue, New York, New York 10019.
Item 29. Management Services.
Other than as set forth under the captions "Management,
Organization and Capital Structure" in Part A of this Registration Statement and
"Management of the Trust" in the Part B of this Registration Statement, the
Registrant is not a party to any management-related service contract.
Item 30. Undertakings.
Not applicable.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Little Rock, State of Arkansas on the 5th day of November, 1999.
WELLS FARGO CORE TRUST
By /s/ Richard H. Blank, Jr.
(Richard H. Blank, Jr.)
Assistant Secretary
