As filed with the Securities and Exchange Commission
On July 26, 2004
Registration No. 333-74295; 811-09253
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
---
Post-Effective Amendment No. 74 [X]
And
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 75 [X]
WELLS FARGO FUNDS TRUST
(Exact Name of Registrant as specified in Charter)
525 Market Street
San Francisco, CA 94105
(Address of Principal Executive Offices, including Zip Code)
Registrant's Telephone Number, including Area Code: (800) 643-9691
C. David Messman
Wells Fargo Funds Management, LLC
525 Market Street, 12th Floor
San Francisco, CA 94105
(Name and Address of Agent for Service)
With a copy to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster LLP
2000 Pennsylvania Ave., N.W.
Washington, D.C. 20006
It is proposed that this filing will become effective (check appropriate box):
[X] Immediately upon filing pursuant to Rule 485(b), or
[ ] 60 days after filing pursuant to Rule 485(a)(1), or
[ ] 75 days after filing pursuant to Rule 485(a)(2), or
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment.
EXPLANATORY NOTE
This Post-Effective Amendment No. 74 is being filed to add to the Registration Statement of Wells Fargo Funds Trust (the "Trust"), the audited financial statements and certain related financial information for the fiscal year ended October 31, 2003 for the Wells Fargo C&B Large Cap Value Fund, Wells Fargo C&B Mid Cap Value Fund and Wells Fargo C&B Tax-Managed Value Fund of the Trust, and to make certain other non-material changes to the Trust's Registration Statement.
WELLS FARGO FUNDS TRUST
Cross Reference Sheet
Form N-1A Item Number
1 Front and Back Cover Pages
2 Objectives
Principal Strategies
Summary of Important Risks
3 Summary of Expenses
Example of Expenses
4 Objectives
Principal Strategies
Summary of Important Risks
See Individual Fund Summaries
Additional Strategies and General Investment Risks
5 Not applicable
6 Organization and Management of the Funds
7 Your Account
How to Buy Shares
How to Sell Shares
Income and Gain Distributions
Taxes
8 Not Applicable
9 See Individual Fund Summaries
Part B Statement of Additional Information Captions
------ --------------------------------------------
10 Cover Page and Table of Contents
11 Capital Stock
Cover Page
12 Cover Page
Investment Policies
Additional Permitted Investment Activities and
Associated Risks
13 Management
14 Capital Stock
15 Management
Additional Purchase and Redemption Information
16 Portfolio Transactions
17 Capital Stock
18 Determination of Net Asset Value
Additional Purchase and Redemption Information
19 Federal Income Taxes
20 Management
21 Performance Calculations
22 Financial Information
Part C Other Information
------ -----------------
23-30 Information required to be included in Part C is set
forth under the appropriate Item, so numbered, in
Part C of this Document.
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[LOGO] WELLS FARGO FUNDS
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[GRAPHIC]
Wells Fargo Stock Funds
Prospectus
Wells Fargo C&B Large Cap Value Fund(SM)
Wells Fargo C&B Mid Cap Value Fund(SM)
Wells Fargo C&B Tax-Managed Value Fund(SM)
Class A, Class B, Class C
Please read this Prospectus and keep it for future reference. It is designed to provide you with important information and to help you decide if a Fund's goals match your own.
These securities have not been approved or disapproved by the U.S. Securities and Exchange Commission ("SEC"), nor has the SEC passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
Fund shares are NOT deposits or other obligations of, or issued, endorsed or guaranteed by Wells Fargo Bank, N.A. ("Wells Fargo Bank") or any of its affiliates. Fund shares are NOT insured or guaranteed by the U.S. Government, the Federal Deposit Insurance Corporation ("FDIC") or any other governmental agency. AN INVESTMENT IN A FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
July 26, 2004
(INTENTIONALLY LEFT BLANK)
Table of Contents Stock Funds
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Overview Objectives and Principal Strategies 4
Important summary information Summary of Important Risks 6
about the Funds.
Performance History 8
Summary of Expenses 12
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The Funds Key Information 14
Important information about C&B Large Cap Value Fund 15
the individual Funds.
C&B Mid Cap Value Fund 19
C&B Tax-Managed Value Fund 23
Additional Strategies and
General Investment Risks 26
Organization and Management
of the Funds 29
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Your Investment A Choice of Share Classes 32
How to open an account and Reductions and Waivers of Sales Charges 34
how to buy, sell and exchange
fund shares. Exchanges 37
Your Account 38
How to Buy Shares 41
How to Sell Shares 44
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Reference Additional Services and
Other Information 46
Additional information and
term definitions. Glossary 48
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Stock Funds Overview -------------------------------------------------------------------------------- |
See the individual Fund descriptions in this Prospectus for further details.
Italicized and colored words appear that way only to denote their inclusion in the Glossary section of this Prospectus.
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FUND OBJECTIVE
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C&B Large Cap Value Fund Seeks maximum long-term total return, consistent
with minimizing risk to principal.
C&B Mid Cap Value Fund Seeks maximum long-term total return, consistent
with minimizing risk to principal.
C&B Tax-Managed Value Fund Seeks maximum long-term, after-tax total return,
consistent with minimizing risk to principal.
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4 Stock Funds Prospectus
We principally invest in large-capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more. We seek total return by targeting companies that we believe are undervalued, possess strong financial positions and have a consistency and predictability in their earnings growth.
We principally invest in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index. As of December 31, 2003, this range was $500 million to $16 billion and is expected to change frequently. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions.
We emphasize investment in common stocks of companies with market capitalizations of $1 billion or more. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions. We attempt to minimize adverse federal income tax consequences for the Fund's shareholders by managing the amount of realized gains, through reduced portfolio turnover.
Stock Funds Prospectus 5
This section summarizes important risks that relate to an investment in the Funds. All are important to your investment choice. Additional information about these and other risks is included in:
. the individual Fund descriptions beginning on page 15;
. the "Additional Strategies and General Investment Risks" section beginning on page 26; and
. the Statement of Additional Information.
An investment in a Fund is not a deposit of Wells Fargo Bank or any of its affiliates and is not insured or guaranteed by the FDIC or any other government agency. It is possible to lose money by investing in a Fund.
Equity Securities
The Funds invest in equity securities, which are subject to equity market risk. This is the risk that stock prices will fluctuate and can decline and reduce the value of a Fund's portfolio. Certain types of stocks and certain individual stocks selected for a Fund's portfolio may underperform or decline in value more than the overall market. There is no guarantee that stocks selected as undervalued using a value style approach will perform as expected. Generally, stocks of larger companies tend to be less volatile and more liquid than stocks of smaller companies. Because the Funds typically invest in 30 to 50 companies, the value of an investment in one of the Funds will vary more in response to developments or changes affecting the market value of particular stocks than an investment in a mutual fund that is more broadly diversified.
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FUND SPECIFIC RISKS
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C&B Large Cap Value Fund The Fund is primarily subject to the risks
described above.
C&B Mid Cap Value Fund The Fund is primarily subject to the risks
described above. Stocks of medium-sized companies
may be more volatile and less liquid, in part
because the issuers may be more vulnerable to
adverse business or economic events, than the
stocks of larger, more established companies.
C&B Tax-Managed Value Fund The Fund is primarily subject to the risks
described above. The Fund is managed with a focus
on after-tax returns; therefore, it may not provide
as high a return before taxes as other funds, and
as a result may not be suitable for investors who
are not subject to current income tax (for example,
those investing through a tax-deferred retirement
account, such as an Individual Retirement Account
("IRA") or a 401(k) Plan).
6 Stock Funds Prospectus
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Performance History -------------------------------------------------------------------------------- |
The following information shows you how each Fund has performed and illustrates the variability of a Fund's returns over time. Each Fund's average annual returns for one-, five- and ten-year periods (or for the life of the Fund, as applicable) are compared to the performance of an appropriate broad-based index.
Please remember that past performance is no guarantee of future results.
Effective at the close of business on July 23, 2004, the Wells Fargo C&B Large Cap Value Fund, Wells Fargo C&B Mid Cap Value Fund and Wells Fargo C&B Tax-Managed Value Fund were organized as the successor funds to the C&B Large Cap Value Portfolio, C&B Mid Cap Value Portfolio and C&B Tax- Managed Value Portfolio, respectively. The historical performance information shown for each successor fund for periods prior to each fund's reorganization date reflects the historical information for its predecessor.
C&B Large Cap Value Fund Class A Calendar Year Returns */1/
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 ---- ----- ----- ----- ---- ---- ----- ---- ------ ----- 1.35% 31.91% 20.22% 27.98% 8.04% 2.06% 19.49% 6.59% (10.89)% 33.46% |
Best Qtr.: Q2 '03 . 20.94% Worst Qtr.: Q3 '02 . (17.54)%
* Performance shown reflects the performance of the Fund's Class D shares. The Fund's year-to-date performance through March 31, 2004, was 3.99%.
8 Stock Funds Prospectus
The table below provides average annual total return information for the Fund's Class A, Class B, and Class C shares, and includes both before- and after-tax returns for the Class A shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans, or IRAs.
Average Annual Total Returns/1/
for the period ended 12/31/03 1 year 5 years 10 years
------ ------- --------
Class A Returns Before Taxes (Incept. 7/26/2004) 33.46% 9.10% 13.14%
Class A Returns After Taxes on Distributions 33.31% 5.67% 9.04%
Class A Returns After Taxes on Distributions and Sale
of Fund Shares 21.91% 6.31% 9.49%
Class B Returns Before Taxes (Incept. 7/26/2004) 33.46% 9.10% 13.14%
Class C Returns Before Taxes (Incept. 7/26/2004) 33.46% 9.10% 13.14%
S&P 500 Index/2/
(reflects no deduction for fees, expenses or taxes) 28.69% (0.57)% 11.07%
Russell 1000 Value Index
(reflects no deduction for fees, expenses or taxes) 30.03% 3.56% 11.88%
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/1/ Performance shown reflects the performance of the Fund's Class D
shares, and includes fees and expenses that are not applicable to and
are lower than those of this Class. The annual returns of the Class D
shares are substantially similar to what this Class's returns would
be, because the shares are invested in the same portfolio of
securities and the annual returns differ only to the extent that the
Classes do not have the same fees and expenses. The Fund's Class D
shares incepted May 15, 1990.
/2/ S&P 500 is a registered trademark of Standard & Poor's.
Stock Funds Prospectus 9
C&B Mid Cap Value Fund Class A Calendar Year Returns */1/
'99 '00 '01 '02 '03 ----- ----- ----- ----- ----- (0.19)% 41.03% 25.16% (9.50)% 38.99% |
Best Qtr.: Q2 '99 . 20.78% Worst Qtr.: Q3 '02 . (20.75)%
* Performance shown reflects the performance of the Fund's Class D shares. The Fund's year-to-date performance through March 31, 2004, was 3.62%.
The table below provides average annual total return information for the Fund's Class A, Class B and Class C shares, and includes both before- and after-tax returns for the Class A shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans, or IRAs.
Average Annual Total Returns/1/
for the period ended 12/31/03 1 year 5 years Life of Fund
------ ------- ------------
Class A Returns Before Taxes (Incept. 7/26/2004) 38.99% 17.25% 14.66%
Class A Returns After Taxes on Distributions 38.77% 15.97% 13.54%
Class A Returns After Taxes on Distributions and Sale
of Fund Shares 25.60% 14.35% 12.19%
Class B Returns Before Taxes (Incept. 7/26/2004) 38.99% 17.25% 14.66%
Class C Returns Before Taxes (Incept. 7/26/2004) 38.99% 17.25% 14.66%
Russell Midcap Value Index
(reflects no deduction for fees, expenses or taxes) 38.07% 8.73% 7.71%
Russell Midcap Index
(reflects no deduction for fees, expenses or taxes) 40.06% 7.23% 8.17%
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/1/ Performance shown reflects the performance of the Fund's Class D shares, and includes fees and expenses that are not applicable to and are lower than those of this Class. The annual returns of the Class D shares are substantially similar to what this Class's returns would be, because the shares are invested in the same portfolio of securities and the annual returns differ only to the extent that the Classes do not have the same fees and expenses. The Fund's Class D shares incepted on February 18, 1998.
10 Stock Funds Prospectus
C&B Tax-Managed Value Fund Class A Calendar Year Returns */1/
'98 '99 '00 '01 '02 '03 ---- ---- ----- ----- ----- ----- 9.38% 5.55% 21.79% (0.97)% (7.28)% 28.10% |
Best Qtr.: Q2 '03 . 19.60% Worst Qtr.: Q3 '02 . (14.88)%
* Performance shown reflects the performance of the Fund's Class D shares. The Fund's year-to-date performance through March 31, 2004, was 3.04%.
The table below provides average annual total return information for the Fund's Class A, Class B and Class C shares, and includes both before- and after-tax returns for the Class A shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans, or IRAs.
Average Annual Total Returns/1/
for the period ended 12/31/03 1 year 5 years Life of Fund
------ ------- ------------
Class A Returns Before Taxes (Incept. 7/26/2004) 28.10% 8.62% 10.47%
Class A Returns After Taxes on Distributions 27.97% 7.92% 9.81%
Class A Returns After Taxes on Distributions and Sale
of Fund Shares 18.40% 7.13% 8.85%
Class B Returns Before Taxes (Incept. 7/26/2004) 28.10% 8.62% 10.47%
Class C Returns Before Taxes (Incept. 7/26/2004) 28.10% 8.62% 10.47%
S&P 500 Index/2/
(reflects no deduction for fees, expenses or taxes) 28.69% (0.57)% 6.43%
Russell 1000 Value Index
(reflects no deduction for fees, expenses or taxes) 30.03% 3.56% 8.35%
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/1/ Performance shown reflects the performance of the Fund's Class D
shares, and includes fees and expenses that are not applicable to and
are lower than those of this Class. The annual returns of the Class D
shares are substantially similar to what this Class's returns would
be, because the shares are invested in the same portfolio of
securities and the annual returns differ only to the extent that the
Classes do not have the same fees and expenses. The Fund's Class D
shares incepted February 12, 1997.
/2/ S&P 500 is a registered trademark of Standard & Poor's.
Stock Funds Prospectus 11
These tables are intended to help you understand the various costs and expenses you will pay as a shareholder in a Fund. These tables do not reflect charges that may be imposed in connection with an account through which you hold Fund shares. A broker-dealer or financial institution maintaining an account through which you hold Fund shares may charge separate account, service or transaction fees on the purchase or sale of Fund shares that would be in addition to the fees and expenses shown here.
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C&B Large Cap Value Fund C&B Tax-Managed
and C&B Mid Cap Value Fund Value Fund
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CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
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Maximum sales charge (load) imposed on
purchases (as a percentage of offering price) 5.75% None None 5.75% None None
Maximum deferred sales charge (load) (as a
percentage of the Net Asset Value ("NAV") at
purchase) None/1/ 5.00% 1.00% None/1/ 5.00% 1.00%
Redemption Fee None None None 1.00%/2/ None None
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C&B Large Cap C&B Mid Cap
Value Fund Value Fund
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CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
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Management Fees/3/ 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
Distribution (12b-1) Fees 0.00% 0.75% 0.75% 0.00% 0.75% 0.75%
Other Expenses/4/ 0.91% 0.91% 0.91% 0.64% 0.64% 0.64%
------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.66% 2.41% 2.41% 1.39% 2.14% 2.14%
------------------------------------------------------------------------------------------------
Fee Waivers 0.46% 0.46% 0.46% 0.00% 0.00% 0.00%
------------------------------------------------------------------------------------------------
NET EXPENSES/5/ 1.20% 1.95% 1.95% 1.39% 2.14% 2.14%
------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------
C&B Tax-Managed
Value Fund
------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------------------------------------------------------------------------------
Management Fees/3/ 0.75% 0.75% 0.75%
Distribution (12b-1) Fees 0.00% 0.75% 0.75%
Other Expenses/4/ 0.94% 0.94% 0.94%
------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.69% 2.44% 2.44%
------------------------------------------------------------------------------------------------
Fee Waivers 0.49% 0.49% 0.49%
------------------------------------------------------------------------------------------------
NET EXPENSES/5/ 1.20% 1.95% 1.95%
------------------------------------------------------------------------------------------------
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/1/ Class A shares that are purchased at NAV in amounts of $1,000,000 or more
may be assessed a 1.00% CDSC if they are redeemed within one year from the
date of purchase. See "A Choice of Share Classes" for further information.
All other Class A shares will not have a CDSC.
/2/ Deducted from the net proceeds of shares redeemed or exchanged within one
year after purchase. This fee is retained by the Fund. Please see
"Redemption Fee" on page 39 for further information.
/3/ Effective August 1, 2004, the Fund's investment adviser will implement a
breakpoint schedule for each Fund's management fee. The management fee
charged to a Fund will decline as the Fund's assets grow and will continue
to be based on a percentage of the Fund's average daily net assets. The
breakpoint schedule for each Fund is as follows: 0.75% for assets from $0
to $499 million; 0.70% for assets from $500 million to $999 million; 0.65%
for assets from $1 billion to $2.99 billion; 0.625% for assets from $3
billion to $4.99 billion; and 0.60% for assets $5 billion and higher.
Please see the Statement of Additional Information for further details.
/4/ Other expenses are based on estimates for the current fiscal year and
include various Fund start-up expenses, which will only be incurred in the
first year of the Fund's operation. Without including these first year
expenses, the Gross Operating Expense ratio, for Class A, Class B and Class
C shares, respectively, would have been as follows: for the C&B Large Cap
Value Fund: 1.52%, 2.27% and 2.27%; for the C&B Mid Cap Value
Fund:1.38%, 2.13% and 2.13%; and for the C&B Tax-Managed Value Fund: 1.54%,
2.29% and 2.29%. Other expenses may include expenses payable to affiliates
of Wells Fargo & Company.
/5/ For the C&B Large Cap Value Fund and the C&B Tax-Managed Value Fund, the
Adviser has committed through February 28, 2007, to waive fees and/or
reimburse expenses to the extent necessary to maintain the Fund's net
operating expense ratio shown. For the C&B Mid Cap Value Fund, the adviser
has committed through February 28, 2007, to waive fees and/or reimburse
expenses to the extent necessary to maintain the Fund's net operating
expense ratio at 1.40% for Class A, and 2.15% for Class B and Class C.
After this time, the net operating expense ratio may be increased only with
the approval of the Board of Trustees.
12 Stock Funds Prospectus
These examples are intended to help you compare the cost of investing in a Fund with the cost of investing in other mutual funds. The examples assume a fixed rate of return and that fund operating expenses remain the same. Your actual costs may be higher or lower than those shown.
You would pay the following expenses on a $10,000 investment assuming a 5% annual return and that you redeem your shares at the end of each period:
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C&B Large Cap C&B Mid Cap
Value Fund Value Fund
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CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
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1 YEAR $ 690 $ 698 $ 298 $ 708 $ 717 $ 317
3 YEARS $ 966 $ 945 $ 645 $ 990 $ 970 $ 670
5 YEARS $1,296 $1,353 $1,153 $1,292 $1,349 $1,149
10 YEARS $2,226 $2,270 $2,547 $2,148 $2,192 $2,472
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C&B Tax-Managed
Value Fund
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CLASS A CLASS B CLASS C
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1 YEAR $ 790 $ 698 $ 298
3 YEARS $ 968 $ 947 $ 647
5 YEARS $1,302 $1,359 $1,159
10 YEARS $2,243 $2,287 $2,564
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You would pay the following expenses on a $10,000 investment assuming a 5% annual return and that you do NOT redeem your shares at the end of each period:
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C&B Large Cap C&B Mid Cap
Value Fund Value Fund
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CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
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1 YEAR $ 690 $ 198 $ 198 $ 708 $ 217 $ 217
3 YEARS $ 966 $ 645 $ 645 $ 990 $ 670 $ 670
5 YEARS $1,296 $1,153 $1,153 $1,292 $1,149 $1,149
10 YEARS $2,226 $2,270 $2,547 $2,148 $2,192 $2,472
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C&B Tax-Managed
Value Fund
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CLASS A CLASS B CLASS C
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1 YEAR $ 690 $ 198 $ 198
3 YEARS $ 968 $ 647 $ 647
5 YEARS $1,302 $1,159 $1,159
10 YEARS $2,243 $2,287 $2,564
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Stock Funds Prospectus 13
In this Prospectus, "we" generally refers to Wells Fargo Funds Trust (the "Trust"), or Wells Fargo Funds Management, LLC ("Funds Management"), the Funds' investment adviser. "We" may also refer to the Funds' other service providers. "You" refers to the shareholder or potential investor.
The summary information on the previous pages is designed to provide you with an overview of each Fund. The sections that follow provide more detailed information about the investments and management of each Fund.
Investment Objective and Investment Strategies
The investment objective of each Fund in this Prospectus is non-fundamental, that is, it can be changed by a vote of the Board of Trustees alone. The objective and strategies description for each Fund tells you:
. what the Fund is trying to achieve;
. how we intend to invest your money; and
. what makes the Fund different from the other Funds offered in this Prospectus.
A summary of each Fund's key permitted investments and practices. Unless otherwise indicated, these investment policies and practices apply on an ongoing basis. Percentages of "the Fund's assets" are measured as percentages of net assets plus borrowings for investment purposes. The investment policy of each Fund concerning "80% of the Fund's assets" may be changed by the Board of Trustees without shareholder approval, but shareholders would be given at least 60 days notice.
Important Risk Factors
Describes the key risk factors for each Fund, and includes risks described in the "Summary of Important Risks" and "Additional Strategies and General Investment Risks" sections.
Italicized and colored words appear that way only to denote their inclusion in the Glossary section of this Prospectus.
14 Stock Funds Prospectus
Portfolio Managers: A team of investment professionals of the investment sub-adviser, Cooke & Bieler, L.P.
Investment Objective
The C&B Large Cap Value Fund seeks maximum long-term total return, consistent with minimizing risk to principal.
Investment Strategies
We principally invest in large-capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more. We seek total return by targeting companies that we believe are undervalued, possess strong financial positions and have a consistency and predictability in their earnings growth.
We select securities for the portfolio based on an analysis of a company's financial characteristics, an assessment of the quality of a company's management and the implementation of a valuation discipline. In selecting a company, we consider criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. We further narrow the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. We regularly review the investments of the portfolio and sell a portfolio holding when it has achieved its valuation targets, a change in the underlying company's outlook has occurred or more attractive investment alternatives are available.
We hold a smaller number of securities in the portfolio, usually 30 to 50 companies. This strategy enables us to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. We believe our assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while our insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets.
Under normal circumstances, we invest at least 80% of the Fund's assets in large-capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more.
Important Risk Factors
The Fund is primarily subject to the risks described under "Common Risks for the Funds" on page 6.
You should consider these risks along with the "Additional Strategies and General Investment Risks" section beginning on page 26. These considerations are all important to your investment choice.
Stock Funds Prospectus 15
The table below shows the financial performance of the Fund's Class D shares. This table is intended to help you understand the Fund's financial performance for the past 5 years. Total returns represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). The information provided for the fiscal years 2003 and 2002 has been audited by KPMG LLP; the information for prior periods has been audited by a predecessor independent registered public accounting firm. The financial statements and the independent auditor's report are included in the annual report of the Funds, a copy of which is available upon request. The information for the six-month period ended April 30, 2004, is unaudited and is contained in the semi-annual report of the Funds, also available upon request.
CLASS D SHARES--
COMMENCED ON MAY 15, 1990
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April 30, 2004/1, 2/ October 31, 2003/2/
(unaudited)
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For the period ended:
Net asset value, beginning of period $ 7.42 $ 6.49
Income from investment operations:
Net investment income (loss) 0.02 0.05
Net realized and unrealized gain
(loss) on investments 0.68 1.61
Total from investment operations 0.70 1.66
Less distributions:
Dividends from net investment
income (0.02) (0.05)
Distributions from net realized
gain -- (0.68)
Total from distributions (0.02) (0.73)
Net asset value, end of period $ 8.10 $ 7.42
Total return/4/ 9.47% 28.34%
Ratios/supplemental data:
Net assets, end of period (000s) $25,248 $20,419
Ratios to average net assets:
Ratio of expenses to average net
assets 1.15% 1.16%/5/
Ratio of net investment income
(loss) to average net assets 0.56% 0.76%
Portfolio turnover 12% 26%
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/1/ All ratios for the period have been annualized.
/2/ Per share figures calculated using Average Shares Method.
/3/ On November 19, 2001,The Advisors' Inner Circle Fund C&B Large Cap Value
Portfolio (the "AIC Portfolio") acquired the assets of the UAM Funds Inc.
C&B Equity Portfolio (the "UAM Portfolio"). The operations of the AIC
Portfolio prior to the acquisition were those of the predecessor, the UAM
Portfolio.
/4/ Returns are for the period indicated and have not been annualized. Total
Return would have been lower had certain fees not been waived and expenses
assumed by the Advisor during the periods indicated. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of portfolio shares.
/5/ Without waivers and/or reimbursements, for the fiscal years ended October
31, 2003 and 2002, these ratios would have been 1.20% and 1.60%,
respectively.
/6/ As of March 1, 2002, the expense cap changed from 1.00% to 1.25%.
16 Stock Funds Prospectus
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October 31, 2002/2/ October 31, 2001/3/ October 31, 2000 October 31, 1999
--------------------------------------------------------------------------------
$ 7.13 $ 8.71 $ 12.06 $ 13.58
0.05 0.07 0.12 0.16
(0.38) 0.27 0.54 0.72
(0.33) 0.34 0.66 0.88
(0.05) (0.11) (0.09) (0.16)
(0.26) (1.81) (3.92) (2.24)
(0.31) (1.92) (4.01) (2.40)
$ 6.49 $ 7.13 $ 8.71 $ 12.06
(5.14)% 4.50% 10.89% 7.73%
$14,383 $38,850 $35,251 $73,292
1.14%/5, 6/ 1.00% 1.00% 0.89%
0.59% 0.91% 1.16% 1.12%
39% 41% 48% 43%
|
Stock Funds Prospectus 17
Portfolio Managers: A team of investment professionals of the investment sub-adviser, Cooke & Bieler, L.P.
Investment Objective
The C&B Mid Cap Value Fund seeks maximum long-term total return, consistent with minimizing risk to principal.
Investment Strategies
We principally invest in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index. As of December 31, 2003, this range was $500 million to $16 billion, and is expected to change frequently. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions.
We select securities for the portfolio based on an analysis of a company's financial characteristics, an assessment of the quality of a company's management and the implementation of a valuation discipline. In selecting a company, we consider criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. We further narrow the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. We regularly review the investments of the portfolio and sell a portfolio holding when it has achieved its valuation targets, a change in the underlying company's outlook has occurred or more attractive investment alternatives are available.
We hold a smaller number of securities in the portfolio, usually 30 to 50 companies. This strategy enables us to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. We believe our assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while our insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets.
Under normal circumstances, we invest at least 80% of the Fund's assets in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index.
Important Risk Factors
The Fund is primarily subject to the risks described under "Common Risks for the Funds" on page 6. Stocks of medium-sized companies may be more volatile and less liquid, in part because the issuers may be more vulnerable to adverse business or economic events, than the stocks of larger, more established companies.
You should consider these risks along with the "Additional Risks and General Investment Risks" section beginning on page 26.These considerations are all important to your investment choice.
Stock Funds Prospectus 19
The table below shows the financial performance of the Fund's Class D shares. This table is intended to help you understand the Fund's financial performance for the past 5 years. Total returns represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). The information provided for the fiscal years 2003 and 2002 has been audited by KPMG LLP; the information for prior periods has been audited by a predecessor independent registered public accounting firm. The financial statements and the independent auditor's report are included in the annual report of the Funds, a copy of which is available upon request. The information for the six-month period ended April 30, 2004, is unaudited and is contained in the semi-annual report of the Funds, also available upon request.
CLASS D SHARES--
COMMENCED ON FEBRUARY 18, 1998
------------------------------------------
April 30, 2004/1, 2/
For the period ended: (unaudited) October 31, 2003/2/
------------------------------------------
Net asset value, beginning of period $ 17.96 $ 13.15
Income from investment operations:
Net investment income (loss)/7/ -- --
Net realized and unrealized gain (loss)
on investments 1.27 4.83
Total from investment operations 1.27 4.83
Less distributions:
Dividends from net investment income (0.00)/8/ (0.02)
Distributions from net realized gain/7/ (0.17) --
Total from distributions (0.17) (0.02)
Net asset value, end of period $ 19.06 $ 17.96
Total return/4/ 7.14% 36.76%
Ratios/supplemental data:
Net assets, end of period (000s) $477,614 $301,513
Ratios to average net assets:
Ratio of expenses to average net assets 1.07% 1.27%/5/
Ratio of net investment income (loss)
to average net assets 0.02% 0.01%
Portfolio turnover 19% 18%
|
/1/ All ratios for the period have been annualized.
/2/ Per share figures calculated using Average Shares Method.
/3/ On November 19, 2001, The Advisors' Inner Circle Fund C&B Mid Cap Value
Portfolio (the "AIC Portfolio") acquired the assets of the UAM Funds Inc.
C&B Mid Cap Equity Portfolio (the "UAM Portfolio"). The operations of the
AIC Portfolio prior to the acquisition were those of the predecessor, the
UAM Portfolio.
/4/ Returns are for the period indicated and have not been annualized. Total
Return would have been lower had certain fees not been waived and expenses
assumed by the Advisor during the periods indicated. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of portfolio shares.
20 Stock Funds Prospectus
October 31, 2002/2/ October 31, 2001/3/ October 31, 2000 October 31, 1999
-------------------------------------------------------------------------------
$ 14.19 $12.78 $ 9.84 $ 9.69
(0.01) 0.08 0.07 0.06
(0.19) 2.12 3.16 0.15
(0.20) 2.20 3.23 0.21
(0.04) (0.09) (0.08) (0.06)
(0.80) (0.70) (0.21) --
(0.84) (0.79) (0.29) (0.06)
$ 13.15 $14.19 $12.78 $ 9.84
(2.09)% 18.14% 33.78% 2.19%
$81,390 $5,934 $1,520 $1,446
1.37%/5, 6/ 1.00% 1.00% 1.00%
(0.07)% 0.68% 0.66% 0.70%
30% 44% 101% 81%
|
/5/ Without waivers and/or reimbursements, for the fiscal years ended October
31, 2003 and 2002, these ratios would have been 1.27% and 1.54%,
respectively.
/6/ As of March 1, 2002, the expense cap changed from 1.00% to 1.40%.
/7/ Amounts designated as "--" are either $0 or have been rounded to $0.
/8/ Amount is less than $0.01.
Stock Funds Prospectus 21
Portfolio Managers: A team of investment professionals of the investment sub-adviser, Cooke & Bieler, L.P.
Investment Objective
The C&B Tax-Managed Value Fund seeks maximum long-term, after-tax total return, consistent with minimizing risk to principal.
Investment Strategies
We emphasize investment in common stocks of companies with market capitalizations of $1 billion or more. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions. We attempt to minimize adverse federal income tax consequences for the Fund's shareholders by managing the amount of realized gains, through reduced portfolio turnover. We cannot predict the impact of this strategy on the realization of gains or losses for the Fund. We intend to balance these tax considerations with the pursuit of the Fund's objective, and we reserve the right to engage in short-term trading if market conditions warrant such trading.
We select securities for the portfolio based on an analysis of a company's financial characteristics, an assessment of the quality of a company's management and the implementation of a valuation discipline. In selecting a company, we consider criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. We further narrow the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. We regularly review the investments of the portfolio and sell a portfolio holding when it has achieved its valuation targets, a change in the underlying company's outlook has occurred or more attractive investment alternatives are available.
We hold a smaller number of securities in the portfolio, usually 30 to 50 companies. This strategy enables us to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. We believe our assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while our insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets.
Permitted Investments
Under normal circumstances, we invest at least 80% of total assets in equity securities.
Important Risk Factors
The Fund is primarily subject to the risks described under "Common Risks for the Funds" on page 6. The Fund is managed with a focus on after-tax returns; therefore, it may not provide as high a return before taxes as other funds, and as a result may not be suitable for investors who are not subject to current income tax (for example, those investing through a tax-deferred retirement account, such as an IRA or a 401(k) Plan).
You should consider these risks along with the "Additional Strategies and General Investment Risks" section beginning on page 26.These considerations are all important to your investment choice.
Stock Funds Prospectus 23
The table below shows the financial performance of the Fund's Class D shares. This table is intended to help you understand the Fund's financial performance for the past 5 years. Total returns represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). The information provided for the fiscal years 2003 and 2002 has been audited by KPMG LLP; the information for prior periods has been audited by a predecessor independent registered public accounting firm. The financial statements and the independent auditor's report are included in the annual report of the Funds, a copy of which is available upon request. The information for the six-month period ended April 30, 2004, is unaudited and is contained in the semi-annual report of the Funds, also available upon request.
CLASS D SHARES--
COMMENCED ON FEBRUARY 12, 1997
------------------------------------------
April 30, 2004/1, 2/
For the period ended: (unaudited) October 31, 2003/2/
------------------------------------------
Net asset value, beginning of period $ 15.97 $12.94
Income from investment operations:
Net investment income (loss) 0.04 0.09
Net realized and unrealized gain (loss)
on investments 1.33 3.05
Total from investment operations 1.37 3.14
Less distributions:
Dividends from net investment income (0.04) (0.10)
Distributions from net realized gain/7/ -- (0.01)
Total from distributions (0.04) (0.11)
Net asset value, end of period $ 17.30 $15.97
Total return/4/ 8.57% 24.42%
Ratios/supplemental data:
Net assets, end of period (000s) $15,153 $9,147
Ratios to average net assets:
Ratio of expenses to average net assets 1.25% 1.25%/5/
Ratio of net investment income (loss)
to average net assets 0.45% 0.65%
Portfolio turnover 10% 31%
|
/1/ All ratios for the period have been annualized.
/2/ Per share figures calculated using Average Share Method.
/3/ On November 19, 2001, The Advisors' Inner Circle Fund C&B Tax-Managed Value
Portfolio (the "AIC Portfolio") acquired the assets of the UAM Funds Inc.
C&B Equity for Taxable Investors Portfolio (the "UAM Portfolio"). The
operations of the AIC Portfolio prior to the acquisition were those of the
predecessor, the UAM Portfolio.
/4/ Returns are for the period indicated and have not been annualized. Total
Return would have been lower had certain fees not been waived and expenses
assumed by the Advisor during the periods indicated. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of portfolio shares.
24 Stock Funds Prospectus
Financial Highlights
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------
October 31, 2002/2/ October 31, 2001/3/ October 31, 2000 October 31, 1999
-------------------------------------------------------------------------------
$13.63 $15.33 $12.87 $12.23
0.09 0.13 0.15 0.12
(0.69) (0.39) 2.45 0.64
(0.60) (0.26) 2.60 0.76
(0.09) (0.14) (0.14) (0.12)
-- (1.30) -- --
(0.09) (1.44) (0.14) (0.12)
$12.94 $13.63 $15.33 $12.87
(4.45)% (1.96)% 20.32% 6.23%
$4,799 $2,623 $2,253 $3,634
1.19%/5, 6/ 1.00% 1.00% 1.00%
0.66% 0.94% 0.96% 0.96%
32% 16% 9% 20%
|
/5/ Without waivers and/or reimbursements, for the fiscal years ended October
31, 2003 and 2002, these ratios would have been 1.76% and 2.63%,
respectively.
/6/ As of March 1, 2002, the expense cap changed from 1.00% to 1.25%.
/7/ Amounts designated as "--" are either $0 or have been rounded to $0.
Stock Funds Prospectus 25
Investment practices and risk levels are carefully monitored. Every attempt is made to ensure that the risk exposure for each Fund remains within the parameters of its objective and strategies.
Understanding the risks involved in mutual fund investing will help you make an informed decision that takes into account your risk tolerance and preferences. You should carefully consider the risks common to investing in all mutual funds, including the Wells Fargo Funds. Certain common risks are identified in the "Summary of Important Risks" section on page 6. Other risks of mutual fund investing include the following:
. Unlike bank deposits, such as CDs or savings accounts, mutual funds are not insured by the FDIC.
. We cannot guarantee that a Fund will meet its investment objective.
. We do not guarantee the performance of a Fund, nor can we assure you that the market value of your investment will not decline. We will not "make good" on any investment loss you may suffer, nor can anyone we contract with to provide services, such as selling agents or investment advisers, offer or promise to make good on any such losses.
. Share prices--and therefore the value of your investment--will increase and decrease with changes in the value of the underlying securities and other investments. This is referred to as price volatility.
. An investment in a single Fund, by itself, does not constitute a complete investment plan.
. Each Fund holds some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or makes other short-term investments to maintain liquidity. Each Fund may temporarily increase such holdings for short-term defensive purposes when we believe it is in the best interest of shareholders to do so. During these periods, a Fund may not achieve its objective.
. The Funds may invest in various derivative instruments. The term "derivatives" covers a broad range 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.
26 Stock Funds Prospectus
What follows is a general list of the types of risks (some of which have been previously described) that may apply to a given Fund and a table showing some of the additional investment practices that each Fund may use and the key risks associated with them. Additional information about these practices is available in the Statement of Additional Information.
Counter-Party Risk--The risk that the other party in a repurchase agreement or other transaction will not fulfill its contract obligation.
Credit Risk--The risk that the issuer of a debt security will be unable to make interest payments or repay principal on schedule. If an issuer does default, the affected security could lose all of its value, or be renegotiated at a lower interest rate or principal amount. Affected securities might also lose liquidity. Credit risk also includes the risk that a party in a transaction may not be able to complete the transaction as agreed.
Leverage Risk--The risk that an investment practice, such as lending portfolio securities or engaging in forward commitment or when-issued transactions, may increase a Fund's exposure to market risk, interest rate risk or other risks by, in effect, increasing assets available for investment.
Liquidity Risk--The risk that a security cannot be sold at the time desired, or cannot be sold without adversely affecting the price.
Market Risk--The risk that the value of a security will be reduced by market activity. This is a basic risk associated with all securities.
In addition to the general risks discussed above and under "Summary of Important Risks," you should carefully consider and evaluate any special risks that may apply to investing in a particular Fund. See the "Important Risk Factors" in the summary for each Fund. You should also see the Statement of Additional Information for additional information about the investment practices and risks particular to each Fund.
Stock Funds Prospectus 27
Investment Practice/Risk
The following table lists certain regular investment practices of the Funds, including some not disclosed in the Investment Objective and Investment Strategies sections of the Prospectus. The risks indicated after the description of the practice are NOT the only potential risks associated with that practice, but are among the more prominent. Market risk is assumed for each investment practice. See the Statement of Additional Information for more information on these practices.
Remember, each Fund is designed to meet different investment needs and objectives.
------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT PRACTICE PRINCIPAL RISK(S) C&B LARGE CAP VALUE C&B MID CAP VALUE C&B TAX-MANAGED VALUE ------------------------------------------------------------------------------------------------------------------------------------ Borrowing Policies The ability to borrow money for temporary Leverage Risk . . . purposes (e.g. to meet shareholder redemptions). Illiquid Securities A security which may not be sold or disposed Liquidity Risk . of in the ordinary course of business within seven days at the value determined by the Fund. Limited to 15% of net assets. Loans of Portfolio Securities The practice of loaning securities to brokers, Credit, . . . dealers and financial institutions to increase Counter-Party return on those securities. Loans may be made and Leverage Risk up to 1940 Act limits (currently one-third of total assets, including the value of the collateral received). Repurchase Agreements A transaction in which the seller of a Credit and . . . security agrees to buy back the security at an Counter-Party agreed upon time and price, usually with Risk interest. |
28 Stock Funds Prospectus
A number of different entities provide services to the Funds. This section shows how the Funds are organized, lists the entities that perform different services, and explains how these service providers are compensated. Further information is available in the Statement of Additional Information.
About Wells Fargo Funds Trust
The Trust was organized as a Delaware statutory trust on March 10, 1999. The Board of Trustees of the Trust (the "Board") supervises each Fund's activities, monitors its contractual arrangements with various service providers and decides upon matters of general policy.
The Board supervises the Funds' activities and approves the selection of various companies hired to manage the Funds' operation. The major service providers are described in the diagram below. Except for the advisers, which generally may be changed only with shareholder approval, if the Board believes that it is in the best interests of the shareholders, it may change service providers.
--------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
--------------------------------------------------------------------------------
Wells Fargo Funds Management, LLC Wells Fargo Bank, N.A.
525 Market St., San Francisco, CA 6th & Marquette, Minneapolis, MN
Manages the Funds' investment activities Provides safekeeping for the Funds'
assets
--------------------------------------------------------------------------------
|
1700 Market Street
Philadelphia, PA
--------------------------------------------------------------------------------
SHAREHOLDER
TRANSFER SERVICING
ADMINISTRATOR AGENT AGENTS
--------------------------------------------------------------------------------
Wells Fargo Funds Boston Financial Data Various Agents
Management, LLC Services, Inc.
525 Market Street Two Heritage Drive
San Francisco, CA Quincy, MA
Manages the Funds' Maintains records of Provide services to
business activities shares and supervises customers
the payment of dividends
--------------------------------------------------------------------------------
|
Stock Funds Prospectus 29
The Investment Adviser
Funds Management serves as the investment adviser for each of the Funds. Funds Management, an indirect, wholly owned subsidiary of Wells Fargo & Company, was created to succeed to the mutual fund advisory responsibilities of Wells Fargo Bank and is an affiliate of Wells Fargo Bank. Wells Fargo Bank, which was founded in 1852, is the oldest bank in the western United States and is one of the largest banks in the United States. The Funds' adviser is responsible for implementing the investment policies and guidelines for the Funds and for supervising the sub-adviser, who is responsible for the day-to-day portfolio management of the Funds. For providing these services, Funds Management is entitled to receive fees as shown in the table of Annual Fund Operating Expenses under "Management Fees" in the front of this Prospectus. As of March 31, 2004, Funds Management managed over $75 billion in mutual fund assets.
Dormant Multi-Manager Structure
The Board has adopted a dormant "multi-manager" structure for each Fund. Under this structure, a Fund and Funds Management would engage one or more sub-advisers to make day-to-day investment decisions for the Fund's assets. Funds Management would retain ultimate responsibility (subject to the oversight of the Board) for overseeing the sub-advisers and may, at times, recommend to the Board that the Fund: (i) change, add or terminate one or more sub-advisers; (ii) continue to retain a sub-adviser even though the sub-adviser's ownership or corporate structure has changed; or (iii) materially change a sub-advisory agreement with a sub-adviser.
Applicable law generally requires the Fund to obtain shareholder approval of most of these types of recommendations, even if the Board approves the proposed action. Under the dormant "multi-manager" structure approved by the Board, the Fund will seek exemptive relief, if necessary, from the SEC to permit Funds Management (subject to the Board's oversight and approval) to make decisions about the Fund's sub-advisory arrangements without obtaining shareholder approval. The Fund will continue to submit matters to shareholders for their approval to the extent required by applicable law.
The Sub-Adviser
Cooke & Bieler, L.P. ("Cooke & Bieler"), a Pennsylvania limited partnership is located at 1700 Market Street, Philadelphia, PA 19103. Cooke & Bieler is a registered investment adviser that has provided investment management services to corporations, foundations, endowments, pension and profit sharing plans, trusts, estates and other institutions and individuals since 1951. Cooke & Bieler is the sub-adviser for each of the Funds, and thereby responsible for the day-to-day investment management activities of the Funds. As of March 31, 2004, Cooke & Bieler managed over $3.8 billion in assets.
Cooke & Bieler is compensated for its services by Funds Management from the fees Funds Management receives for its services as adviser.
The Administrator
Funds Management provides the Funds with administrative services, including general supervision of each Fund's operation, coordination of the other services provided to each Fund, compilation of information for reports to the SEC and 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. Funds Management also furnishes office space and certain facilities to conduct each Fund's business.
30 Stock Funds Prospectus
Shareholder Servicing Plan
We have a shareholder servicing plan for each Fund. Under this plan, we have agreements with various shareholder servicing agents to process purchase and redemption requests, to service shareholder accounts, and to provide other related services. For these services, each Fund pays an annual fee of 0.25% of its average daily net assets.
The Transfer Agent
Boston Financial Data Services, Inc. ("BFDS") provides transfer agency and dividend disbursing services to the Funds.
Stock Funds Prospectus 31
After choosing a Fund, your next most important choice is which share class to buy. The following classes of shares are available through this Prospectus:
. Class A Shares--with a front-end sales charge, volume reductions and lower ongoing expenses than Class B and Class C shares.
. Class B Shares--with a contingent deferred sales charge ("CDSC") payable upon redemption that diminishes over time, and higher ongoing expenses than Class A shares.
. Class C Shares--with a 1.00% CDSC on redemptions made within one year of purchase, and higher ongoing expenses than Class A shares.
The choice among share classes is largely a matter of preference. You should consider, among other things, the different fees and sales loads assessed on each share class and the length of time you anticipate holding your investment. If you prefer to pay sales charges up front, wish to avoid higher ongoing expenses, or, more importantly, you think you may qualify for volume discounts based on the amount of your investment, then Class A shares may be the choice for you.
You may prefer instead to see "every dollar working" from the moment you invest. If so, then consider Class B or Class C shares, which do not have a front-end sales charge. After seven years, Class B shares convert to Class A shares to avoid the higher ongoing expenses assessed against Class B shares. Please see "Class B Share CDSC Schedule" below for further details. Class C shares are similar to Class B shares in that they have higher ongoing expenses than Class A shares; however, Class C shares do not convert to Class A shares, the higher ongoing expenses will be assessed as long as you hold the shares. The choice whether to purchase Class B or Class C shares may depend on how long you intend to hold the shares before redeeming them.
Orders for Class B shares of $100,000 or more will be refused. For Class C shares, orders of $1,000,000 or more, including orders which because of a right of accumulation or letter of intent would qualify for the purchase of Class A shares without an initial sales charge, also will be either treated as orders for Class A shares or refused.
Please see the expenses listed for each Fund and the following sales charge schedules before making your decision. You should also review the "Reductions and Waivers of Sales Charges" section of the Prospectus beginning on page 34. You may wish to discuss this choice with your financial consultant.
Class A Share Sales Charge Schedule
If you choose to buy Class A shares, you will pay the Public Offering Price ("POP") which is the NAV plus the applicable sales charge. Since sales charges are reduced for Class A share purchases above certain dollar amounts, known as "breakpoint levels," the POP is lower for these purchases.
32 Stock Funds Prospectus
FRONT-END SALES FRONT-END SALES
AMOUNT OF CHARGE AS % OF CHARGE AS % OF NET
PURCHASE PUBLIC OFFERING PRICE AMOUNT INVESTED
---------------------- --------------------- ------------------
Less than $50,000 5.75% 6.10%
$50,000 to $99,999 4.75% 4.99%
$100,000 to $249,999 3.75% 3.90%
$250,000 to $499,999 2.75% 2.83%
$500,000 to $999,999 2.00% 2.04%
$1,000,000 and over/1/ 0.00% 0.00%
|
/1/ We will assess Class A share purchases of $1,000,000 or more a 1.00% CDSC if they are redeemed within one year from the date of purchase unless the dealer of record waived its commission with a Fund's approval. Certain exceptions apply (see "CDSC Waivers" and "Waivers for Certain Parties"). The CDSC percentage you pay is applied to the NAV of the shares on the date of original purchase.
Class B Share CDSC Schedule
If you choose Class B shares, you buy them at NAV and agree that if you redeem your shares within six years of the purchase date, you will pay a CDSC based on how long you have held your shares. Certain exceptions apply (see "CDSC Waivers" and "Waivers for Certain Parties"). The CDSC schedule is as follows:
REDEMPTION WITHIN 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS 7 YEARS 8 YEARS ----------------- ------ ------- ------- ------- ------- ------- ------- ------- CDSC 5.00% 4.00% 3.00% 3.00% 2.00% 1.00% 0.00% A shares |
The CDSC percentage you pay is applied to the NAV of the shares on the date of original purchase. To determine whether the CDSC applies to a redemption, the Fund will first redeem shares acquired by reinvestment of any distributions and then will redeem shares in the order in which they were purchased (such that shares held the longest are redeemed first). After shares are held for six years, the CDSC expires. After shares are held for seven years, the Class B shares are converted to Class A shares to reduce your future ongoing expenses.
Class C Share Sales Charges
If you choose Class C shares, you buy them at NAV and agree that if you redeem your shares within one year of the purchase date, you will pay a CDSC of 1.00%. At the time of purchase, the distributor pays sales commissions of up to 1.00% of the purchase price to selling agents and up to 1.00% annually thereafter. The CDSC percentage you pay is applied to the NAV of the shares on the date of original purchase. To determine whether the CDSC applies to a redemption, the Fund will first redeem shares acquired by reinvestment of any distributions of net investment income and realized capital gain, and then will redeem shares in the order in which they were purchased (such that shares held the longest are redeemed first). Class C shares do not convert to Class A shares, and therefore continue to pay the higher ongoing expenses.
Stock Funds Prospectus 33
Generally, we offer more sales charge reductions or waivers for Class A shares than for Class B and Class C shares, particularly if you intend to invest greater amounts. You should consider whether you are eligible for any of the potential reductions or waivers when you are deciding which share class to buy.
Class A Share Reductions
If you believe you are eligible for any of the following reductions, it is up to you to ask the selling agent or the shareholder servicing agent for the reduction and to provide appropriate proof of eligibility.
. You pay no sales charges on Fund shares you buy with reinvested distributions.
. You pay a lower sales charge if you are investing an amount over a breakpoint level. See the "Class A Share Sales Charge Schedule" above.
. By signing a Letter of Intent ("LOI"), you pay a lower sales charge now in exchange for promising to invest an amount over a specified breakpoint within the next 13 months. We will hold in escrow shares equal to approximately 5% of the amount you intend to buy. If you do not invest the amount specified in the LOI before the expiration date, we will redeem enough escrowed shares to pay the difference between the reduced sales load you paid and the sales load you should have paid. Otherwise, we will release the escrowed shares when you have invested the agreed amount.
. Rights of Accumulation ("ROA") allow you to combine the amount you are
investing and the total value of Class A, Class B, Class C and
WealthBuilder Portfolio shares of any Wells Fargo Fund already owned
(excluding Class A and WealthBuilder Portfolio shares acquired at NAV)
to reach breakpoint levels and to qualify for sales load discounts on
subsequent purchases of Class A or WealthBuilder Portfolio shares.
. You pay no sales charges on Fund shares you purchase with the proceeds of a redemption of either Class A or Class B shares within 120 days of the date of redemption.
. You may reinvest into a Wells Fargo Fund with no sales charge a required distribution from a pension, retirement, benefit or similar plan for which Wells Fargo Bank acts as trustee provided the distribution occurred within the 30 days prior to your reinvestment.
You, or your fiduciary or trustee, also may tell us to extend volume discounts, including the reductions offered for rights of accumulation and letters of intent, to include purchases made by:
. a family unit, including children under the age of twenty-one or single trust estate;
. a trustee or fiduciary purchasing for a single fiduciary relationship; or
. the members of a "qualified group," which consists of a "company" (as defined under the 1940 Act, as amended), and related parties of such a "company," which has been in existence for at least six months and which has a primary purpose other than acquiring Fund shares at a discount.
How a Letter of Intent Can Save You Money!
If you plan to invest, for example, $100,000 in a Wells Fargo Fund in installments over the next year, by signing a letter of intent you would pay only 3.75% sales load on the entire purchase. Otherwise, you might pay 5.75% on the first $49,999, then 4.75% on the next $50,000!
34 Stock Funds Prospectus
CDSC Waivers
. You pay no CDSC on Fund shares you purchase with reinvested distributions.
. We waive the CDSC for all redemptions made because of scheduled
(Internal Revenue Section 72(t) withdrawal schedule) or mandatory
(withdrawals made after age 70 1/2 according to IRS guidelines)
distributions from traditional IRAs and certain retirement plans. (See
your retirement plan information for details.)
. We waive the CDSC for redemptions made in the event of the shareholder's death or for a disability suffered after purchasing shares. ("Disability" is defined by the Internal Revenue Code Section 72(m)(7).)
. We waive the CDSC for redemptions made at the direction of Funds Management, for example, in order to complete a merger.
. We waive the CDSC for Class B and Class C share redemptions if the following criteria are met:
. redemptions are due to participation in the Systematic Withdrawal Program; and
. redemptions do not exceed 10% of your Fund assets (including "free" shares) (limit for Class B shares calculated annually based on your anniversary date in the Systematic Withdrawal Program).
Waivers for Certain Parties
If you are eligible for certain waivers, we will sell you Class A shares so you can avoid higher ongoing expenses. The following people can buy Class A shares at NAV:
. Current and retired employees, directors/trustees and officers of:
. Wells Fargo Funds (including any predecessor funds);
. Wells Fargo & Company and its affiliates; and
. family members of any of the above.
. Current employees of:
. Stephens Inc. and its affiliates;
. broker-dealers who act as selling agents; and
. immediate family members (spouse, sibling, parent or child) of any of the above.
Contact your selling agent for further information.
You also may buy Class A shares at NAV if they are to be included in certain retirement, benefit, pension, trust or investment "wrap accounts" with whom Wells Fargo Funds has reached an agreement, or through an omnibus account maintained with a Fund by a broker-dealer.
We reserve the right to enter into agreements that reduce or eliminate sales charges for groups or classes of shareholders, or for Fund shares included in other investment plans such as "wrap accounts." If you own Fund shares as part of another account or package such as an IRA or a sweep account, you must read the directions for that account. Those directions may supersede the terms and conditions discussed here.
Stock Funds Prospectus 35
Distribution Plan
We have adopted a Distribution Plan ("Plan") pursuant to Rule 12b-1 under the 1940 Act for the Class B and Class C shares of the Funds. The Plan authorizes the payment of all or part of the cost of preparing and distributing prospectuses and distribution-related services, including ongoing compensation to selling agents. The Plan also provides that, if and to the extent any shareholder servicing payments are recharacterized as payments for distribution-related services, they are approved and payable under the Plan. The fees paid under this Plan are as follows:
FUND CLASS B CLASS C ---- ------- ------- C&B Large Cap Value Fund 0.75% 0.75% C&B Mid Cap Value Fund 0.75% 0.75% C&B Tax-Managed Value Fund 0.75% 0.75% |
These fees are paid out of the Funds' assets on an ongoing basis. Over time, these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
36 Stock Funds Prospectus
An exchange between Wells Fargo Funds involves two transactions: a sale of shares of one fund and the purchase of shares of another. In general, the same rules and procedures that apply to sales and purchases apply to exchanges. There are, however, additional factors you should keep in mind while making or considering an exchange:
. You should carefully read the Prospectus for the fund into which you wish to exchange.
. Every exchange involves selling fund shares which may produce a capital gain or loss for tax purposes.
. In general, exchanges may be made between like share classes of any Wells Fargo Fund offered to the general public for investment, with the following exceptions:
. Class A shares of non-money market funds may also be exchanged for Service Class shares of any money market fund;
. Class C shares of non-money market funds may be exchanged for Class A shares of the Wells Fargo Money Market Fund. Such exchanged Class C shares may only be re-exchanged for Class C shares of non-money market funds.
. If you are making an initial investment into a new fund through an exchange, you must exchange at least the minimum first purchase amount for the new fund, unless your balance has fallen below that amount due to market conditions.
. Any exchange between funds you already own must meet the minimum redemption and subsequent purchase amounts for the funds involved.
. Class B and Class C share exchanges will not trigger the CDSC. The new shares will continue to age according to their original schedule while in the new fund and will be charged the CDSC applicable to the original shares upon redemption.
. The C&B Tax-Managed Fund imposes a 1.00% redemption fee on shares that are exchanged within one year of purchase. See page 39 for additional information.
. The Funds actively discourage and take steps to prevent the portfolio disruption and negative effects on long-term shareholders that can result from market timing and excessive trading activity. Funds Management may deem trading activity to be excessive if it determines that such trading activity would likely be disruptive to a Fund by increasing expenses or lowering returns. In this regard, Funds Management monitors available trading information and may temporarily suspend or permanently terminate purchase or exchange privileges from investors who complete more than two exchanges within a three-month period or seem to be following a timing pattern. In determining whether to suspend or terminate purchase or exchange privileges for such investors, Funds Management will consider the extent to which such trading activity is likely to be disruptive to the Fund. The extent to which trading activity may be disruptive would depend on a number of factors including, but not limited to, the number of trades, the size of the trades relative to the size of the Fund and the type of Fund involved.
Generally, we will notify you at least 60 days in advance of any changes in the exchange rules. Contact your account representative for further details.
Stock Funds Prospectus 37
This section tells you how Fund shares are priced, how to open an account and how to buy, sell or exchange Fund shares once your account is open.
Pricing Fund Shares
. As with all mutual fund investments, the price you pay to purchase shares or the price you receive when you redeem shares is not determined until after a request has been received in proper form. The price of Fund shares is based on a Fund's NAV. The price at which a purchase or redemption of Fund shares is effected is based on the next calculation of NAV after the order is placed.
. Each Fund's investments are generally valued at current market prices. Securities are generally valued based on the last sale price during the regular trading session if the security trades on an exchange ("closing price"); and if there is no sale, based on the latest quoted bid price. Securities that are not traded primarily on an exchange generally are valued using latest quoted bid prices obtained by an independent pricing service. Securities listed on the Nasdaq Stock Market, Inc., however, are valued at the Nasdaq Official Closing Price ("NOCP"), and if no NOCP is available, then at the last reported sales price. We are required to depart from these general valuation methods and use fair value pricing methods to determine the value of certain investments if we believe that the closing price or the latest quoted bid price of a security, including securities that trade primarily on a foreign exchange, does not accurately reflect its current value when the Fund calculates its NAV. The closing price or the latest quoted bid price of a security may not reflect its current value if, among other things, a significant event occurs after the closing price or quoted bid price but before a Fund calculates its NAV that materially affects the value of the security. We use various criteria, including a systematic evaluation of U.S. market moves after the close of foreign markets, in deciding whether a market price is still reliable, and if not, what fair value to assign to the security. In light of the judgment involved in fair value decisions, there can be no assurance that a fair value assigned to a particular security is accurate. Such fair value pricing may result in NAVs that are higher or lower than NAVs based on the closing price or latest quoted bid price. See the Statement of Additional Information for further disclosure.
. We determine the NAV of each class of the Funds' shares each business day as of the close of regular trading on the New York Stock Exchange (ONYSEO) at 4:00 p.m. (ET). We determine the NAV by subtracting each Fund class's liabilities from its total assets, and then dividing the result by the total number of outstanding shares of that class. Each Fund's total assets are generally valued at current market prices. See the Statement of Additional Information for further disclosure.
. Requests to buy or sell shares of the Funds are processed each business day as of the close of regular trading on the NYSE, which is usually 4:00 p.m. (ET). If the NYSE closes early, the Funds will close early and will value their shares at such earlier time under these circumstances. Requests received in proper form before this time are processed the same day. Requests received after the cutoff time are processed the next business day.
. The Funds are open for business on each day the NYSE is open for business. NYSE holidays include New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. When any holiday falls on a weekend, the NYSE typically is closed on the weekday immediately before or after such holiday.
38 Stock Funds Prospectus
You Can Buy Fund Shares
. By opening an account directly with the Fund (simply complete and return a Wells Fargo Funds Application with proper payment);
. Through a brokerage account with an approved selling agent; or
. Through certain retirement, benefit and pension plans, or through certain packaged investment products (please see the providers of the plan for instructions).
In addition to payments received from the Funds, selling agents or shareholder servicing agents may receive significant additional payments directly from the adviser, the distributor or their affiliates in connection with the sale of Fund shares. These amounts may include fixed dollar amounts, per account fees or a percentage of sales or assets, and may involve up-front or ongoing payments. Agents may agree to provide a variety of marketing or servicing advantages to the Funds in return for the payments. Selling or shareholder servicing agents, in turn, may pay some or all of these amounts to their employees who recommend or sell Fund shares or make investment decisions on behalf of clients. Payments made with respect to the Funds may differ from those made with respect to other mutual funds available through the agent and could influence the agent's recommendations or decisions. Prospective investors should consult with their selling or shareholder servicing agent if they wish to request further information regarding these matters.
Minimum Investments
. $1,000 per Fund minimum initial investment; or
. $100 per Fund if you use the Systematic Purchase Program; and
. $100 per Fund for all investments after your initial investment.
We may waive the minimum initial investment amount for purchases made through certain retirement, benefit and pension plans, through certain packaged investment products, or for certain classes of shareholders as permitted by the SEC. Check the specific disclosure statements and Applications for the program through which you intend to invest.
Small Account Redemptions
We reserve the right to redeem certain accounts that fall below the minimum initial investment amount as the result of shareholder redemptions (as opposed to market movement). We will notify you approximately 60 days prior to such redemption, and we will provide you with the opportunity to make additional investments that will bring your account above the minimum investment amount. Account redemptions are net of any applicable CDSC. Please contact your selling agent for further details.
Redemption Fee
For the C&B Tax-Managed Value Fund, a 1.00% redemption fee will be assessed on the NAV of Class A shares redeemed or exchanged within one year after purchase and will be deducted from the redemption proceeds otherwise payable to the shareholder. The redemption fee for the Fund is intended to compensate the Fund for the increased expenses to longer-term shareholders and the disruptive effect on the Fund's portfolio caused by short-term investments. This redemption fee is retained by the Fund.
To determine whether the redemption fee applies, the Fund will first redeem shares acquired by reinvestment of any distributions of net investment income and realized capital gain, and then will redeem shares in the order in which they were purchased (such that shares held the longest are redeemed first).
Stock Funds Prospectus 39
The redemption fee will be waived on sales or exchanges of Fund shares made under the following circumstances:
. shares that were purchased with reinvested distributions.
. in order to meet scheduled (Internal Revenue Section 72(t) withdrawal schedule) or mandatory (withdrawals made after age 70 1/2 according to IRS guidelines) distributions from traditional IRAs and certain retirement plans. (See your retirement plan information for details.)
. in the event of the shareholder's death or for a disability suffered after purchasing shares. ("Disability" is defined by Internal Revenue Code Section 72(m)(7).)
. at the direction of Funds Management, for example, in order to complete a merger.
. due to participation in the Systematic Withdrawal Program.
In addition, certain brokers, retirement plan administrators and/or fee-based program sponsors who maintain underlying shareholder accounts do not have the systems capability to track and assess redemption fees. Consequently, the Fund generally will not assess a redemption fee on redemptions of shares held through such accounts.
40 Stock Funds Prospectus
The following section explains how you can buy shares directly from Wells Fargo Funds. For Funds held through brokerage and other types of accounts, please consult your selling agent.
In compliance with the USA PATRIOT Act, all financial institutions (including mutual funds) are required to obtain, verify and record the following information for all registered owners or others who may be authorized to act on an account: full name, date of birth, Social Security number, and permanent street address. Corporate, trust and other entity accounts require additional documentation. This information will be used to verify your true identity. We will return your application if any of this information is missing, and we may request additional information from you for verification purposes. In the rare event that we are unable to verify your identity, the Fund reserves the right to redeem your account at the current day's NAV.
. Complete a Wells Fargo Funds Application. Be sure to indicate the Fund name and the share class into which you intend to invest (If no choice is indicated, Class A shares will be designated). Your account will be credited on the business day that the transfer agent receives your application and payment in proper order. Failure to complete an Application properly may result in a delay in processing your request.
. Enclose a check for at least $1,000 made out in the full name and share class of the Fund. For example, "Wells Fargo C&B Large Cap Value Fund, Class A." Please note that checks made payable to any entity other than the full Fund name or "Wells Fargo Funds" will be returned to you.
. All purchases must be made in U.S. dollars and checks must be drawn on U.S. banks.
. You may start your account with $100 if you elect the Systematic Purchase Plan option on the Application.
. Mail to: Wells Fargo Funds Overnight Mail Only: Wells Fargo Funds
P.O. Box 8266 ATTN: CCSU-Boston Financial
Boston, MA 02266-8266 66 Brooks Drive
Braintree, MA 02184
|
. Make a check payable to the full name and share class of your Fund for at least $100. Be sure to write your account number on the check as well.
. Enclose an investment slip or the payment stub/card from your statement if available. To request a booklet of investment slips, please contact Investor Services at 1-800-222-8222.
. Mail to: Wells Fargo Funds P.O. Box 8266 Boston, MA 02266-8266
Stock Funds Prospectus 41
. You must first call Investor Services at 1-800-222-8222, option 0, to notify them of an incoming wire trade.
. If you do not currently have an account, complete a Wells Fargo Funds Application. You must wire at least $1,000. Be sure to indicate the Fund name and the share class into which you intend to invest.
. All purchases must be made with U.S. dollars.
. Mail the completed application. Your account will be credited on the business day that the transfer agent receives your application and payment in proper order.
. Overnight Application to: Wells Fargo Funds
ATTN: CCSU-Boston Financial
66 Brooks Drive
Braintree, MA 02184
. Wire money to: State Street Bank & Trust Attention:
Boston, MA Wells Fargo Funds (Name
of Fund, Account Number
Bank Routing Number: and Share Class)
ABA 011000028
Account Name:
Wire Purchase Account Number: (Registration Name
9905-437-1 Indicated on Application)
|
. Instruct your wiring bank to transmit at least $100 according to the instructions given below. Be sure to have the wiring bank include your current account number and the name your account is registered in.
. Wire money to: State Street Bank & Trust Attention:
Boston, MA Wells Fargo Funds (Name
of Fund, Account Number
Bank Routing Number: and Share Class)
ABA 011000028
Account Name:
Wire Purchase Account Number: (Registration Name
9905-437-1 Indicated on Account)
|
42 Stock Funds Prospectus
You can only make your first purchase of a Fund by phone if you already have an existing Wells Fargo Funds Account. If you do not currently have an Account, complete a Wells Fargo Fund Application. Refer to the previous section on buying shares for the first time by mail.
To buy into a new Fund, call Investor Services at 1-800-222-8222, option 0 for an Investor Services Representative, or option 1 to use our Automated Voice Response Service to either:
. transfer at least $1,000 from a linked settlement account, or
. exchange at least $1,000 worth of shares from an existing Wells Fargo Funds Account.
To buy additional shares, call Investor Services at 1-800-222-8222, option 0 for an Investor Services Representative, or option 1 to use our Automated Voice Response Service to either:
. transfer at least $100 from a linked settlement account, or
. exchange at least $100 worth of shares from an existing Wells Fargo Funds Account.
You can only make your first purchase of a Fund by Internet if you already have an existing Wells Fargo Funds Account. If you do not currently have an Account, complete a Wells Fargo Fund Application. Refer to the previous section on buying shares for the first time by mail.
To buy into a new Fund, visit our website at www.wellsfargofunds.com, and click on "Wells Fargo FundLink(SM)" to either:
. transfer at least $1,000 from a linked settlement account or,
. exchange at least $1,000 worth of shares from an existing Wells Fargo Funds Account.
To buy additional shares, visit our website at www.wellsfargofunds.com, and click on "Wells Fargo FundLink(SM)" to either:
. transfer at least $100 from a linked settlement account, or
. exchange at least $100 worth of shares from an existing Wells Fargo Funds Account.
Further information is available by calling Investor Services at 1-800-222-8222.
Stock Funds Prospectus 43
The following section explains how you can sell shares held directly through an account with Wells Fargo Funds by mail or telephone. For Fund shares held through brokerage or other types of accounts, please consult your selling agent.
. Write a "Letter of Instruction" stating your name, your account number, the Fund you wish to redeem and the dollar amount ($100 or more) of the redemption you wish to receive (or write "Full Redemption").
. Make sure all the account owners sign the request exactly as their names appear on the account application.
. You may request that redemption proceeds be sent to you by check, by ACH transfer into a bank account, or by wire. Please call Investor Services regarding requirements for linking bank accounts or for wiring funds. We reserve the right to charge a fee for wiring funds although it is not currently our practice to do so. Please contact your bank to verify any charges that they may assess for an incoming wire transfer.
. Signature Guarantees are required for mailed redemption requests if the request is over $50,000, if the address on your account was changed within the last 30 days, or if the redemption is made payable to a third party. You can get a medallion guarantee at a financial institution, such as a bank or brokerage house. We do not accept notarized signatures.
. Mail to: Wells Fargo Funds P.O. Box 8266 Boston, MA 02266-8266
. Call Investor Services at 1-800-222-8222, option 0 for an Investor Service Representative, or option 1 to use our Automated Voice Response Service, to request a redemption of at least $100. Be prepared to provide your account number and Taxpayer Identification Number.
. Unless you have instructed us otherwise, only one account owner needs to call in redemption requests.
. You may request that redemption proceeds be sent to you by check, by transfer into an ACH-linked bank account, or by wire. Please call Investor Services regarding requirements for linking bank accounts or for wiring funds. We reserve the right to charge a fee for wiring funds although it is not currently our practice to do so.
. Telephone privileges are automatically made available to you unless you specifically decline them on your Application or subsequently in writing.
. Telephone privileges allow us to accept transaction instructions by anyone representing themselves as the shareholder and who provides reasonable confirmation of their identity, such as providing the Taxpayer Identification Number on the account. We will not be liable for any losses incurred if we follow telephone instructions we reasonably believe to be genuine.
. We will not mail the proceeds of a telephone redemption request if the address on your account was changed in the last 30 days.
44 Stock Funds Prospectus
. Shareholders with an existing Wells Fargo Funds Account may use the Internet to redeem shares of a Fund via the Internet.
. Visit our website at www.wellsfargofunds.com to process your redemption request. You may request that redemption proceeds (minimum $100 to $50,000) be sent to you by check to your address of record, by ACH transfer into a linked bank account, or by wire. Please call Investor Services regarding requirements for linking bank accounts or wiring funds. We reserve the right to charge a fee for wiring funds although it is not our current practice to do so. Please contact your bank to verify any charges that they may assess for an incoming wire transfer.
Further information is available by calling Investor Services at 1-800-222-8222.
. We will process requests to sell shares at the first NAV calculated after a request in proper form is received. Requests received before the cutoff time are processed on the same business day.
. Your redemptions are net of any applicable CDSC.
. If you purchased shares through a packaged investment product or retirement plan, read the directions for selling shares provided by the product or plan. There may be special requirements that supersede the directions in this Prospectus.
. We reserve the right to delay payment of a redemption so that we may be reasonably certain that investments made by check, through ACH or Systematic Purchase Program, have been collected. Payments of redemptions also may be delayed under extraordinary circumstances or as permitted by the SEC in order to protect remaining shareholders.
. Generally, we pay redemption requests in cash, unless it is determined that the redemption would be to the detriment of a Fund and/or its shareholders. In such case, we may pay all or part of the redemption in securities of equal value. The redeeming shareholder should expect to incur transaction costs upon the disposition of the securities received.
Stock Funds Prospectus 45
Automatic Programs
These programs help you conveniently purchase and/or redeem shares each month. Once you select a Program, tell us the day of the month you would like the transaction to occur. If you do not specify a date, we will process the transaction on or about the 25th day of the month. Call Investor Services at 1-800-222-8222, option 0, for more information.
. Systematic Purchase Program--With this program, you can regularly purchase shares of a Wells Fargo Fund with money automatically transferred from a linked bank account. Simply select the Fund and class you would like to purchase, and specify an amount of at least $100.
. Systematic Exchange Program--With this program, you can regularly exchange shares of a Wells Fargo Fund you own for shares of another Wells Fargo Fund. The exchange amount must be at least $100. See the "Exchanges" section of this Prospectus for the conditions that apply to your shares. This feature may not be available for certain types of accounts.
. Systematic Withdrawal Program--With this program, you can regularly redeem shares and receive the proceeds by check or by transfer to a linked bank account. Simply specify an amount of at least $100. To participate in this program, you:
. must have a Fund account valued at $10,000 or more;
. must have your distributions reinvested; and
. may not simultaneously participate in the Systematic Purchase Program.
It generally takes about ten days to establish a Program once we have received your instructions. It generally takes about five days to change or cancel participation in a Program. We may automatically cancel your program if the linked bank account you specified is closed, or for other reasons.
Income and Gain Distributions
The Funds in this Prospectus make distributions of any net investment income and realized capital gains at least annually.
We offer the following distribution options:
. Automatic Reinvestment Option--Lets you buy new shares of the same class of the Fund that generated the distributions. The new shares are purchased at NAV generally on the day the income is paid. This option is automatically assigned to your account unless you specify another option.
. Check Payment Option--Allows you to receive checks for distributions mailed to your address of record or to another name and address which you have specified in written, medallion guaranteed instructions. If checks remain uncashed for six months or are undeliverable by the Post Office, we will reinvest the distributions at the earliest date possible, and future distributions will be automatically reinvested.
. Bank Account Payment Option--Allows you to receive distributions directly in a checking or savings account through ACH. The bank account must be linked to your Wells Fargo Fund account. In order to establish a new linked bank account, you must send a written medallion guaranteed instruction along with a copy of a voided check or deposit slip. Any distribution returned to us due to an invalid banking instruction will be sent to your address of record by check at the earliest date possible, and future distributions will be automatically reinvested.
. Directed Distribution Purchase Option--Lets you buy shares of a different Wells Fargo Fund of the same share class. The new shares are purchased at NAV generally on the day the income is paid. In order to establish this option, you need to identify the Fund and account the distributions are coming from, and the Fund and account to which the distributions are being directed. You must meet any required minimum purchases in both Funds prior to establishing this option.
Remember, distributions have the effect of reducing NAV per share by the amount distributed.
46 Stock Funds Prospectus
Taxes
The following discussion regarding federal income taxes is based on laws that were in effect as of the date of this Prospectus and summarizes only some of the important federal income tax considerations affecting the Fund and you as a shareholder. It does not apply to foreign or taxexempt shareholders or those holding Fund shares through a tax-advantaged account, such as a 401(k) Plan or IRA. This discussion is not intended as a substitute for careful tax planning. You should consult your tax adviser about your specific tax situation. Please see the Statement of Additional Information for additional federal income tax information.
We will pass on to a Fund's shareholders substantially all of a Fund's net investment income and realized capital gains, if any. Distributions from a Fund's ordinary income and net short-term capital gain, if any, generally will be taxable to you as ordinary income. Distributions from the Fund's net long-term capital gain, if any, generally will be taxable to you as long-term capital gain. Corporate shareholders may be able to deduct a portion of distributions when determining their taxable income.
An individual's net long-term capital gain is subject to a reduced, maximum 15% rate of tax. A Fund's long-term capital gain distributed to individual shareholders generally will qualify for the reduced rate of tax if attributable to the Fund's sales and exchanges after May 5, 2003. Also, if you are an individual Fund shareholder, the portion of your distributions attributable to dividends received by a Fund from certain U.S. and foreign corporations generally will be taxed at a maximum 15% tax rate, as long as certain holding period requirements are met by you with respect to your Fund shares, and by the Fund with respect to the stocks it holds that are producing such dividends. Corporate shareholders may be able to deduct a portion of their distributions when determining their taxable income. Absent further legislation, these reduced rates will expire after December 31, 2008.
Distributions from a Fund normally will be taxable to you when paid, whether you take distributions in cash or automatically reinvest them in additional Fund shares. Following the end of each year, we will notify you of the federal income tax status of your distributions for the year.
If you buy shares of a Fund shortly before it makes a distribution, your distribution will, in effect, be a taxable return of part of your investment. Similarly, if you buy Fund shares when it holds appreciated securities, you will receive a taxable return of part of your investment if and when the Fund sells the appreciated securities and realizes and distributes the gain. The Funds have built up, or the potential to build up, high levels of unrealized appreciation.
Your redemptions (including redemptions in-kind) and exchanges of Fund shares ordinarily will result in a taxable capital gain or loss, depending on the amount you receive for your shares (or are deemed to receive in the case of exchanges) and the amount you paid (or are deemed to have paid) for them. Such capital gain or loss generally will be long-term capital gain or loss if you have held your redeemed or exchanged Fund shares for more than one year at the time of redemption or exchange. In certain circumstances, losses realized on the redemption or exchange of Fund shares may be disallowed.
In certain circumstances, Fund shareholders may be subject to back-up withholding taxes.
Request for Multiple Copies of Shareholder Documents
To help keep fund expenses low, generally we send a single copy of a prospectus or shareholder report to shareholders of the same household. If your household currently receives a single copy of a prospectus or shareholder report and you would prefer to receive multiple copies, please call your selling agent.
Stock Funds Prospectus 47
Glossary
--------------------------------------------------------------------------------
We provide the ACH
following definitions
to assist you in Refers to the "Automated Clearing House" system
reading this maintained by the Federal Reserve Bank, which banks use
Prospectus. For a to process checks, transfer funds and perform other
more complete tasks.
understanding of
these terms you Business Day
should consult your
Investment Any day the New York Stock Exchange is open is a
Professional. business day for the Funds.
Capitalization
When referring to the size of a company, capitalization
means the total number of a company's outstanding shares
of stock multiplied by the price per share. This is one
accepted method of measuring a company's size and is
sometimes referred to as "market capitalization."
Derivatives
Securities whose values are derived in part from the
value of another security or index. An example is a
stock option.
Distributions
Disbursements of net investment income, realized capital
gain and/or capital made by a Fund to its shareholders.
FDIC
The Federal Deposit Insurance Corporation. This is the
company that provides federally sponsored insurance
covering bank deposits, such as savings accounts and
CDs. Mutual funds are not FDIC insured.
Liquidity
The ability to readily sell a security at a fair price.
Medallion Guarantee
A guarantee given by a financial institution that has
verified the identity of the maker of a signature.
Money Market Instruments
High quality, short-term instruments meeting the
requirements of Rule 2a-7 of the 1940 Act, such as
bankers' acceptances, commercial paper, repurchase
agreements, and government obligations. In a money
market fund, average portfolio maturity does not exceed
90 days, and all investments have maturities of 397 days
or less at the time of purchase.
Net Asset Value ("NAV")
The value of a single fund share. It is determined by
adding together all of a fund's assets, subtracting
accrued expenses and other liabilities, then dividing by
the total number of shares.
|
Public Offering Price ("POP")
The NAV with the sales load added.
Repurchase Agreement
An agreement between a buyer and seller of a security in which the seller agrees to repurchase the security at an agreed upon price and time.
Selling Agent
A firm that has an agreement with the Funds' distributor
allowing it to sell a Fund's shares.
48 Stock Funds Prospectus
Shareholder Servicing Agent
Anyone appointed by the Fund to maintain shareholder accounts and records, assist and provide information to shareholders or perform similar functions.
Statement of Additional Information
A document that supplements the disclosure made in the Prospectus.
Taxpayer Identification Number
Usually the social security number for an individual or the Employer Identification Number for a corporation.
Total Return
The annual return on an investment in a mutual fund including capital appreciation and dividends. Total return calculations assume reinvestment of all distributions, reflect fee waivers, and exclude sales loads.
Undervalued
Describes a stock that is believed to be worth more than its current price.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
Stock Funds Prospectus 49
YOU MAY WISH TO REVIEW THE FOLLOWING DOCUMENTS: Write to:
Wells Fargo Funds
STATEMENT OF ADDITIONAL INFORMATION P.O. Box 8266
Boston, MA 02266-8266; or
supplements the disclosures made by this
Prospectus. The Statement of Additional Visit the SEC's website at http://www.sec.gov
Information has been filed with the SEC and
incorporated by reference into this Prospectus REQUEST COPIES FOR A FEE BY WRITING TO:
and is legally part of this Prospectus. SEC Public Reference Room
Washington, DC 20549-6009; or
ANNUAL/SEMI-ANNUAL REPORTS by electronic request at publicinfo@sec.gov
Call: 1-800-SEC-0330 for details
provide certain financial and other important
information, including a discussion of the ADDITIONAL SERVICES QUESTIONS CAN BE
market conditions and investment strategies ANSWERED BY CALLING YOUR INVESTMENT
that significantly affected Fund performance PROFESSIONAL
over the reporting period.
THESE DOCUMENTS ARE AVAILABLE FREE OF CHARGE:
Call: 1-800-222-8222, or visit our website at
www.wellsfargofunds.com.
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P070 (7/04) ICA Reg. No. ------------------------------------------------------ [GRAPHIC] 811-09253 NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE Printed on Recycled Paper #530771 ------------------------------------------------------ |
[LOGO] WELLS FARGO FUNDS
[GRAPHIC]
Wells Fargo Stock Funds
Prospectus
Wells Fargo C&B Large Cap Value Fund(SM)
Wells Fargo C&B Mid Cap Value Fund(SM)
Wells Fargo C&B Tax-Managed Value Fund(SM)
Institutional Class
Please read this Prospectus and keep it for future reference. It is designed to provide you with important information and to help you decide if a Fund's goals match your own.
These securities have not been approved or disapproved by the U.S. Securities and Exchange Commission ("SEC"), nor has the SEC passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
Fund shares are NOT deposits or other obligations of, or issued, endorsed or guaranteed by Wells Fargo Bank, N.A. ("Wells Fargo Bank") or any of its affiliates. Fund shares are NOT insured or guaranteed by the U.S. Government, the Federal Deposit Insurance Corporation ("FDIC") or any other governmental agency. AN INVESTMENT IN A FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
July 26, 2004
(INTENTIONALLY LEFT BLANK)
Table of Contents Stock Funds
--------------------------------------------------------------------------------
Overview Objectives and Principal Strategies 4
Important summary information Summary of Important Risks 6
about the Funds.
Performance History 8
Summary of Expenses 12
--------------------------------------------------------------------------------
The Funds Key Information 14
Important information about C&B Large Cap Value Fund 15
the individual Funds.
C&B Mid Cap Value Fund 19
C&B Tax-Managed Value Fund 23
Additional Strategies and
General Investment Risks 26
Organization and Management
of the Funds 30
--------------------------------------------------------------------------------
Your Investment Your Account 34
How to open an account and How to Buy Shares 35
how to buy, sell and exchange
Fund shares. How to Sell Shares 36
Exchanges 37
--------------------------------------------------------------------------------
Reference Other Information 38
Additional information and Glossary 40
term definitions.
|
Stock Funds Overview -------------------------------------------------------------------------------- |
See the individual Fund descriptions in this Prospectus for further details.
Italicized and colored words appear that way only to denote their inclusion in the Glossary section of this Prospectus.
--------------------------------------------------------------------------------
FUND OBJECTIVE
--------------------------------------------------------------------------------
C&B Large Cap Value Fund Seeks maximum long-term total return,
consistent with minimizing risk to principal.
C&B Mid Cap Value Fund Seeks maximum long-term total return,
consistent with minimizing risk to principal.
C&B Tax-Managed Value Fund Seeks maximum long-term, after-tax total
return, consistent with minimizing risk to
principal.
|
4 Stock Funds Prospectus
We principally invest in large-capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more. We seek total return by targeting companies that we believe are undervalued, possess strong financial positions and have a consistency and predictability in their earnings growth.
We principally invest in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index. As of December 31, 2003, this range was $500 million to $16 billion, and is expected to change frequently. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions.
We emphasize investment in common stocks of companies with market capitalizations of $1 billion or more. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions. We attempt to minimize adverse federal income tax consequences for the Fund's shareholders by managing the amount of realized gains, through reduced portfolio turnover.
Stock Funds Prospectus 5
This section summarizes important risks that relate to an investment in the Funds. All are important to your investment choice. Additional information about these and other risks is included in:
. the individual Fund descriptions beginning on page 15;
. the "Additional Strategies and General Investment Risks" section beginning on page 26; and
. the Statement of Additional Information.
An investment in a Fund is not a deposit of Wells Fargo Bank or any of its affiliates and is not insured or guaranteed by the FDIC or any other government agency. It is possible to lose money by investing in a Fund.
Equity Securities
The Funds invest in equity securities, which are subject to equity market risk. This is the risk that stock prices will fluctuate and can decline and reduce the value of a Fund's portfolio. Certain types of stocks and certain individual stocks selected for a Fund's portfolio may underperform or decline in value more than the overall market. There is no guarantee that stocks selected as undervalued using a value style approach will perform as expected. Generally, stocks of larger companies tend to be less volatile and more liquid than stocks of smaller companies. Because the Funds typically invest in 30 to 50 companies, the value of an investment in one of the Funds will vary more in response to developments or changes affecting the market value of particular stocks than an investment in a mutual fund that is more broadly diversified.
--------------------------------------------------------------------------------
FUND SPECIFIC RISKS
--------------------------------------------------------------------------------
C&B Large Cap Value Fund The Fund is primarily subject to the risks
described above.
C&B Mid Cap Value Fund The Fund is primarily subject to the risks
described above. Stocks of medium-sized companies
may be more volatile and less liquid, in part
because the issuers may be more vulnerable to
adverse business or economic events, than the
stocks of larger, more established companies.
C&B Tax-Managed Value Fund The Fund is primarily subject to the risks
described above. The Fund is managed with a focus
on after-tax returns; therefore, it may not
provide as high a return before taxes as other
funds, and as a result may not be suitable for
investors who are not subject to current income
tax (for example, those investing through a
taxdeferred retirement account, such as an
Individual Retirement Account ("IRA") or a 401(k)
Plan).
6 Stock Funds Prospectus
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Performance History -------------------------------------------------------------------------------- |
The following information shows you how each Fund has performed and illustrates the variability of a Fund's returns over time. Each Fund's average annual returns for one-, five- and ten-year periods (or for the life of the Fund, as applicable) are compared to the performance of an appropriate broadbased index.
Please remember that past performance is no guarantee of future results.
Effective at the close of business on July 23, 2004, the Wells Fargo C&B Large Cap Value Fund, Wells Fargo C&B Mid Cap Value Fund and Wells Fargo C&B Tax-Managed Value Fund were organized as the successor funds to the C&B Large Cap Value Portfolio, C&B Mid Cap Value Portfolio and C&B Tax-Managed Value Portfolio, respectively. The historical performance information shown for each successor fund for periods prior to each fund's reorganization date reflects the historical information for its predecessor.
C&B Large Cap Value Fund Institutional Class Calendar Year Returns*/1/
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 ---- ----- ----- ----- ---- ---- ----- ---- ------ ----- 1.35% 31.91% 20.22% 27.98% 8.04% 2.06% 19.49% 6.59% (10.89)% 33.46% |
Best Qtr.: Q2 '03 . 20.94% Worst Qtr.: Q3 '02 . (17.54)%
* Performance shown reflects the performance of the Fund's Class D shares. The Fund's year-to-date performance through March 31, 2004, was 3.99%.
8 Stock Funds Prospectus
The table below provides average annual total return information, both before and after taxes, for the Fund's Institutional Class shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through taxdeferred arrangements, such as 401(k) plans, or IRAs.
Average Annual Total Returns/1/ for the period ended 12/31/03 1 year 5 years 10 years ------------------------------------------ ------ ------- -------- Institutional Class Returns Before Taxes (Incept. 7/26/2004) 33.46% 9.10% 13.14% Institutional Class Returns After Taxes on Distributions 33.31% 5.67% 9.04% Institutional Class Returns After Taxes on Distributions and Sale of Fund Shares 21.91% 6.31% 9.49% S&P 500 Index/2/ (reflects no deduction for expenses or taxes) 28.69% (0.57)% 11.07% Russell 1000 Value Index (reflects no deduction for expenses or taxes) 30.03% 3.56% 11.88% |
/1/ Performance shown reflects the performance of the Fund's Class D shares, and includes expenses that are not applicable to and are higher than those of this Class. The annual returns of the Class D shares are substantially similar to what this Class's returns would be, because the shares are invested in the same portfolio of securities and the annual returns differ only to the extent that the Classes do not have the same expenses. The Fund's Class D shares incepted on May 15, 1990. /2/ S&P 500 is a registered trademark of Standard & Poor's.
Stock Funds Prospectus 9
C&B Mid Cap Value Fund Institutional Class Calendar Year Returns*/1/
Best Qtr.: Q2 '99 . 20.78% Worst Qtr.: Q3 '02 . (20.75)%
* Performance shown reflects the performance of the Fund's Class D shares. The Fund's year-to-date performance through March 31, 2004, was 3.62%.
The table below provides average annual total return information, both before and after taxes, for the Fund's Institutional Class shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through taxdeferred arrangements, such as 401(k) plans, or IRAs.
Average Annual Total Returns/1/
Life of
for the period ended 12/31/03 1 year 5 years Fund
------------------------------------------ ------ ------- -------
Institutional Class Returns Before Taxes
(Incept. 7/26/2004) 38.99% 17.25% 14.66%
Institutional Class Returns After Taxes
on Distributions 38.77% 15.97% 13.54%
Institutional Class Returns After Taxes on
Distributions and Sale of Fund Shares 25.60% 14.35% 12.19%
Russell Midcap Value Index
(reflects no deduction for expenses
or taxes) 38.07% 8.73% 7.71%
Russell Midcap Index
(reflects no deduction for expenses
or taxes) 40.06% 7.23% 8.17%
|
/1/ Performance shown reflects the performance of the Fund's Class D shares, and includes expenses that are not applicable to and are higher than those of this Class. The annual returns of the Class D shares are substantially similar to what this Class's returns would be, because the shares are invested in the same portfolio of securities and the annual returns differ only to the extent that the Classes do not have the same expenses. The Fund's Class D shares incepted on February 18, 1998.
10 Stock Funds Prospectus
C&B Tax-Managed Value Fund Institutional Class Calendar Year Returns*/1/
'98 '99 '00 '01 '02 '03 ---- ---- ----- ----- ----- ----- 9.38% 5.55% 21.79% (0.97)% (7.28)% 28.10% |
Best Qtr.: Q2 '03 . 19.60% Worst Qtr.: Q3 '02 . (14.88)%
* Performance shown reflects the performance of the Fund's Class D shares. The Fund's year-to-date performance through March 31, 2004, was 3.04%.
The table below provides average annual total return information, both before and after taxes, for the Fund's Institutional Class shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through taxdeferred arrangements, such as 401(k) plans, or IRAs.
Average Annual Total Returns/1/
Life of
for the period ended 12/31/03 1 year 5 years Fund
------------------------------------------ ------ ------- -------
Institutional Class Returns Before Taxes
(Incept. 7/26/2004) 28.10% 8.62% 10.47%
Institutional Class Returns After Taxes
on Distributions 27.97% 7.92% 9.81%
Institutional Class Returns After Taxes on
Distributions and Sale of Fund Shares 18.40% 7.13% 8.85%
S&P 500 Index/2/
(reflects no deduction for expenses or
taxes) 28.69% (0.57)% 6.43%
Russell 1000 Value Index
(reflects no deduction for expenses or
taxes) 30.03% 3.56% 8.35%
|
/1/ Performance shown reflects the performance of the Fund's Class D shares, and includes expenses that are not applicable to and are higher than those of this Class. The annual returns of the Class D shares are substantially similar to what this Class's returns would be, because the shares are invested in the same portfolio of securities and the annual returns differ only to the extent that the Classes do not have the same expenses. The Fund's Class D shares incepted on February 12, 1997. /2/ S&P 500 is a registered trademark of Standard & Poor's.
Stock Funds Prospectus 11
These tables are intended to help you understand the various costs and expenses you will pay as a shareholder in a Fund. These tables do not reflect charges that may be imposed in connection with an account through which you hold Fund shares. A broker-dealer or financial institution maintaining an account through which you hold Fund shares may charge separate account, service or transaction fees on the purchase or sale of Fund shares that would be in addition to the fees and expenses shown here.
All Funds
--------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
purchases
(as a percentage of offering price) None
--------------------------------------------------------------------------------
Maximum deferred sales charge (load)
(as percentage of the Net Asset Value
("NAV") at purchase) None
--------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------
C&B Large Cap C&B Mid Cap C&B Tax-Managed
Value Fund Value Fund Value Fund
------------------------------------------------------------------------------------
Management Fees/1/ 0.75% 0.75% 0.75%
Distribution (12b-1) Fees 0.00% 0.00% 0.00%
Other Expenses/2/ 0.68% 0.41% 0.61%
------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.43% 1.16% 1.36%
------------------------------------------------------------------------------------
Fee Waivers 0.48% 0.01% 0.41%
------------------------------------------------------------------------------------
NET EXPENSES/3/ 0.95% 1.15% 0.95%
------------------------------------------------------------------------------------
|
/1/ Effective August 1, 2004, the Fund's investment adviser will implement a
breakpoint schedule for each Fund's management fee. The management fee
charged to a Fund will decline as the Fund's assets grow and will continue
to be based on a percentage of the Fund's average daily net assets. The
breakpoint schedule for each Fund is as follows: 0.75% for assets from $0
to $499 million; 0.70% for assets from $500 million to $999 million; 0.65%
for assets from $1 billion to $2.99 billion; 0.625% for assets from $3
billion to $4.99 billion; and 0.60% for assets $5 billion and higher.
Please see the Statement of Additional Information for further details.
/2/ Other expenses are based on estimates for the current fiscal year and
include various Fund start-up expenses, which will only be incurred in the
first year of the Fund's operation. Without including these first year
expenses, the Gross Operating Expense ratio for the Wells Fargo C&B Large
Cap Value Fund would be 1.29%, for the Wells Fargo C&B Mid Cap Value Fund
would be 1.15%, and for the Wells Fargo C&B Tax-Managed Value Fund would be
1.21%. Other expenses may include expenses payable to affiliates of Wells
Fargo & Company.
/3/ The adviser has committed through February 28, 2007, to waive fees and/or
reimburse expenses to the extent necessary to maintain the Fund's net
operating expense ratio shown. After this time, the net operating expense
ratio may be increased only with the approval of the Board of Trustees.
12 Stock Funds Prospectus
This example is intended to help you compare the cost of investing in a Fund with the cost of investing in other mutual funds. The example assumes a fixed rate of return and that fund operating expenses remain the same. Your actual costs may be higher or lower than those shown.
You would pay the following expenses on a $10,000 investment assuming a 5% annual return and that you redeem your shares at the end of each period:
--------------------------------------------------------------------------------
C&B Large Cap C&B Mid Cap C&B Tax-Managed
Value Fund Value Fund Value Fund
--------------------------------------------------------------------------------
1 YEAR $ 97 $ 117 $ 97
3 YEARS $ 339 $ 365 $ 331
5 YEARS $ 639 $ 633 $ 612
10 YEARS $1,491 $1,398 $1,415
--------------------------------------------------------------------------------
|
Stock Funds Prospectus 13
In this Prospectus, "we" generally refers to Wells Fargo Funds Trust (the "Trust"), or Wells Fargo Funds Management, LLC ("Funds Management"), the Funds' investment adviser. "We" may also refer to the Funds' other service providers. "You" refers to the shareholder or potential investor.
Important information you should look for as you decide to invest in a Fund:
The summary information on the previous pages is designed to provide you with an overview of each Fund. The sections that follow provide more detailed information about the investments and management of each Fund.
Investment Objective and Investment Strategies
The investment objective of each Fund in this Prospectus is non-fundamental, that is, it can be changed by a vote of the Board of Trustees alone. The objective and strategies description for each Fund tells you:
. what the Fund is trying to achieve;
. how we intend to invest your money; and
. what makes the Fund different from the other Funds offered in this Prospectus.
Permitted Investments
A summary of each Fund's key permitted investments and practices. Unless otherwise indicated, these investment policies and practices apply on an ongoing basis. Percentages of "the Fund's assets" are measured as percentages of net assets plus borrowings for investment purposes. The investment policy of each Fund concerning "80% of the Fund's assets" may be changed by the Board of Trustees without shareholder approval, but shareholders would be given at least 60 days notice.
Important Risk Factors
Describes the key risk factors for each Fund, and includes risks described in the "Summary of Important Risks" and "Additional Strategies and General Investment Risks" sections.
Italicized and colored words appear that way only to denote their inclusion in the Glossary section of this Prospectus.
14 Stock Funds Prospectus
Portfolio Managers: A team of investment professionals of the investment sub-adviser, Cooke & Bieler, L.P.
Investment Objective
The C&B Large Cap Value Fund seeks maximum long-term total return, consistent with minimizing risk to principal.
Investment Strategies
We principally invest in large-capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more. We seek total return by targeting companies that we believe are undervalued, possess strong financial positions and have a consistency and predictability in their earnings growth.
We select securities for the portfolio based on an analysis of a company's financial characteristics, an assessment of the quality of a company's management and the implementation of a valuation discipline. In selecting a company, we consider criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. We further narrow the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. We regularly review the investments of the portfolio and sell a portfolio holding when it has achieved its valuation targets, a change in the underlying company's outlook has occurred or more attractive investment alternatives are available.
We hold a smaller number of securities in the portfolio, usually 30 to 50 companies. This strategy enables us to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. We believe our assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while our insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets.
Permitted Investments
Under normal circumstances, we invest at least 80% of the Fund's assets in large-capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more.
Important Risk Factors
The Fund is primarily subject to the risks described under "Common Risks for the Funds" on page 6.
You should consider these risks along with the "Additional Strategies and General Investment Risks" section beginning on page 26. These considerations are all important to your investment choice.
Stock Funds Prospectus 15
The table below shows the financial performance of the Fund's Class D shares. This table is intended to help you understand the Fund's financial performance for the past 5 years. Total returns represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). The information provided for the fiscal years 2003 and 2002 has been audited by KPMG LLP; the information for prior periods has been audited by a predecessor independent registered public accounting firm. The financial statements and the independent auditor's report are included in the annual report of the Funds, a copy of which is available upon request. The information for the six-month period ended April 30, 2004, is unaudited and is contained in the semi-annual report of the Funds, also available upon request.
CLASS D SHARES--
COMMENCED ON MAY 15, 1990
------------------------------------------
April 30, 2004/1, 2/ October 31, 2003/2/
(unaudited)
------------------------------------------
For the period ended:
Net asset value, beginning of period $ 7.42 $ 6.49
Income from investment operations:
Net investment income (loss) 0.02 0.05
Net realized and unrealized gain (loss)
on investments 0.68 1.61
Total from investment operations 0.70 1.66
Less distributions:
Dividends from net investment income (0.02) (0.05)
Distributions from net realized gain -- (0.68)
Total from distributions (0.02) (0.73)
Net asset value, end of period $ 8.10 $ 7.42
Total return/4/ 9.47% 28.34%
Ratios/supplemental data:
Net assets, end of period (000s) $25,248 $20,419
Ratios to average net assets:
Ratio of expenses to average net assets 1.15% 1.16%/5/
Ratio of net investment income (loss)
to average net assets 0.56% 0.76%
Portfolio turnover 12% 26%
|
/1/ All ratios for the period have been annualized.
/2/ Per share figures calculated using Average Shares Method.
/3/ On November 19, 2001, The Advisors' Inner Circle Fund C&B Large Cap Value
Portfolio (the "AIC Portfolio") acquired the assets of the UAM Funds Inc.
C&B Equity Portfolio (the "UAM Portfolio"). The operations of the AIC
Portfolio prior to the acquisition were those of the predecessor, the UAM
Portfolio.
/4/ Returns are for the period indicated and have not been annualized. Total
Return would have been lower had certain fees not been waived and expenses
assumed by the Advisor during the periods indicated. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of portfolio shares.
/5/ Without waivers and/or reimbursements, for the fiscal years ended October
31, 2003 and 2002, these ratios would have been 1.20% and 1.60%,
respectively.
/6/ As of March 1, 2002, the expense cap changed from 1.00% to 1.25%.
16 Stock Funds Prospectus
-------------------------------------------------------------------------------
October 31, 2002/2/ October 31, 2001/3/ October 31, 2000 October 31, 1999
-------------------------------------------------------------------------------
$ 7.13 $ 8.71 $ 12.06 $ 13.58
0.05 0.07 0.12 0.16
(0.38) 0.27 0.54 0.72
(0.33) 0.34 0.66 0.88
(0.05) (0.11) (0.09) (0.16)
(0.26) (1.81) (3.92) (2.24)
(0.31) (1.92) (4.01) (2.40)
$ 6.49 $ 7.13 $ 8.71 $ 12.06
(5.14)% 4.50% 10.89% 7.73%
$14,383 $38,850 $35,251 $73,292
1.14%/5, 6/ 1.00% 1.00% 0.89%
0.59% 0.91% 1.16% 1.12%
39% 41% 48% 43%
|
Stock Funds Prospectus 17
Portfolio Managers: A team of investment professionals of the investment sub-adviser, Cooke & Bieler, L.P.
Investment Objective
The C&B Mid Cap Value Fund seeks maximum long-term total return, consistent with minimizing risk to principal.
Investment Strategies
We principally invest in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index. As of December 31, 2003, this range was $500 million to $16 billion, and is expected to change frequently. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions.
We select securities for the portfolio based on an analysis of a company's financial characteristics, an assessment of the quality of a company's management and the implementation of a valuation discipline. In selecting a company, we consider criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. We further narrow the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. We regularly review the investments of the portfolio and sell a portfolio holding when it has achieved its valuation targets, a change in the underlying company's outlook has occurred or more attractive investment alternatives are available.
We hold a smaller number of securities in the portfolio, usually 30 to 50 companies. This strategy enables us to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. We believe our assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while our insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets.
Permitted Investments
Under normal circumstances, we invest at least 80% of the Fund's assets in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index.
Important Risk Factors
The Fund is primarily subject to the risks described under "Common Risks for the Funds" on page 6. Stocks of medium-sized companies may be more volatile and less liquid, in part because the issuers may be more vulnerable to adverse business or economic events, than the stocks of larger, more established companies.
You should consider these risks along with the "Additional Risks and General Investment Risks" section beginning on page 26. These considerations are all important to your investment choice.
Stock Funds Prospectus 19
The table below shows the financial performance of the Fund's Class D shares. This table is intended to help you understand the Fund's financial performance for the past 5 years. Total returns represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). The information provided for the fiscal years 2003 and 2002 has been audited by KPMG LLP; the information for prior periods has been audited by a predecessor independent registered public accounting firm. The financial statements and the independent auditor's report are included in the annual report of the Funds, a copy of which is available upon request. The information for the six-month period ended April 30, 2004, is unaudited and is contained in the semi-annual report of the Funds, also available upon request.
CLASS D SHARES--COMMENCED ON
FEBRUARY 18, 1998
------------------------------------------
April 30, 2004/1, 2/ October 31, 2003/2/
(unaudited)
------------------------------------------
For the period ended:
Net asset value, beginning of period $ 17.96 $ 13.15
Income from investment operations:
Net investment income (loss)/7/ -- --
Net realized and unrealized gain (loss)
on investments 1.27 4.83
Total from investment operations 1.27 4.83
Less distributions:
Dividends from net investment income (0.00)/8/ (0.02)
Distributions from net realized gain/7/ (0.17) --
Total from distributions (0.17) (0.02)
Net asset value, end of period $ 19.06 $ 17.96
Total return/4/ 7.14% 36.76%
Ratios/supplemental data:
Net assets, end of period (000s) $477,614 $301,513
Ratios to average net assets:
Ratio of expenses to average net assets 1.07% 1.27%/5/
Ratio of net investment income (loss)
to average net assets 0.02% 0.01%
Portfolio turnover 19% 18%
|
/1/ All ratios for the period have been annualized.
/2/ Per share figures calculated using Average Shares Method.
/3/ On November 19, 2001, The Advisors' Inner Circle Fund C&B Mid Cap Value
Portfolio (the "AIC Portfolio") acquired the assets of the UAM Funds Inc.
C&B Mid Cap Equity Portfolio (the "UAM Portfolio"). The operations of the
AIC Portfolio prior to the acquisition were those of the predecessor, the
UAM Portfolio.
/4/ Returns are for the period indicated and have not been annualized. Total
Return would have been lower had certain fees not been waived and expenses
assumed by the Advisor during the periods indicated. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of portfolio shares.
20 Stock Funds Prospectus
--------------------------------------------------------------------------------
October 31, 2002/2/ October 31, 2001/3/ October 31, 2000 October 31, 1999
--------------------------------------------------------------------------------
$ 14.19 $12.78 $ 9.84 $ 9.69
(0.01) 0.08 0.07 0.06
(0.19) 2.12 3.16 0.15
(0.20) 2.20 3.23 0.21
(0.04) (0.09) (0.08) (0.06)
(0.80) (0.70) (0.21) --
(0.84) (0.79) (0.29) (0.06)
$ 13.15 $14.19 $12.78 $ 9.84
(2.09)% 18.14% 33.78% 2.19%
$81,390 $5,934 $1,520 $1,446
1.37%/5, 6/ 1.00% 1.00% 1.00%
(0.07)% 0.68% 0.66% 0.70%
30% 44% 101% 81%
|
/5/ Without waivers and/or reimbursements, for the fiscal years ended October
31, 2003 and 2002, these ratios would have been 1.27% and 1.54%,
respectively.
/6/ As of March 1, 2002, the expense cap changed from 1.00% to 1.40%.
/7/ Amounts designated as "--" are either $0 or have been rounded to $0.
/8/ Amount is less than $0.01.
Stock Funds Prospectus 21
Portfolio Managers: A team of investment professionals of the investment sub-adviser, Cooke & Bieler, L.P.
Investment Objective
The C&B Tax-Managed Value Fund seeks maximum long term, after-tax total return, consistent with minimizing risk to principal.
Investment Strategies
We emphasize investment in common stocks of companies with market capitalizations of $1 billion or more. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions. We attempt to minimize adverse federal income tax consequences for the Fund's shareholders by managing the amount of realized gains, through reduced portfolio turnover. We cannot predict the impact of this strategy on the realization of gains or losses for the Fund. We intend to balance these tax considerations with the pursuit of the Fund's objective, and we reserve the right to engage in short-term trading if market conditions warrant such trading.
We select securities for the portfolio based on an analysis of a company's financial characteristics, an assessment of the quality of a company's management and the implementation of a valuation discipline. In selecting a company, we consider criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. We further narrow the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. We regularly review the investments of the portfolio and sell a portfolio holding when it has achieved its valuation targets, a change in the underlying company's outlook has occurred or more attractive investment alternatives are available.
We hold a smaller number of securities in the portfolio, usually 30 to 50 companies. This strategy enables us to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. We believe our assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while our insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets.
Permitted Investments
Under normal circumstances, we invest at least 80% of total assets in equity securities.
Important Risk Factors
The Fund is primarily subject to the risks described under "Common Risks for the Funds" on page 6. The Fund is managed with a focus on after-tax returns; therefore, it may not provide as high a return before taxes as other funds, and as a result may not be suitable for investors who are not subject to current income tax (for example, those investing through a tax-deferred retirement account, such as an IRA or a 401(k) Plan).
You should consider these risks along with the "Additional Strategies and General Investment Risks" section beginning on page 26. These considerations are all important to your investment choice.
Stock Funds Prospectus 23
The table below shows the financial performance of the Fund's Class D shares. This table is intended to help you understand the Fund's financial performance for the past 5 years. Total returns represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). The information provided for the fiscal years 2003 and 2002 has been audited by KPMG LLP; the information for prior periods has been audited by a predecessor independent registered public accounting firm. The financial statements and the independent auditor's report are included in the annual report of the Funds, a copy of which is available upon request. The information for the six-month period ended April 30, 2004, is unaudited and is contained in the semi-annual report of the Funds, also available upon request.
April 30, October 31,
2004/1, 2/ 2003/2/
(unaudited)
-------------------------
For the period ended:
Net asset value, beginning of period $ 15.97 $12.94
Income from investment operations:
Net investment income (loss) 0.04 0.09
Net realized and unrealized gain (loss)
on investments 1.33 3.05
Total from investment operations 1.37 3.14
Less distributions:
Dividends from net investment income (0.04) (0.10)
Distributions from net realized gain/7/ -- (0.01)
Total from distributions (0.04) (0.11)
Net asset value, end of period $ 17.30 $15.97
Total return/4/ 8.57% 24.42%
Ratios/supplemental data:
Net assets, end of period (000s) $15,153 $9,147
Ratios to average net assets:
Ratio of expenses to average net assets 1.25% 1.25%/5/
Ratio of net investment income (loss) to
average net assets 0.45% 0.65%
Portfolio turnover 10% 31%
|
/1/ All ratios for the period have been annualized.
/2/ Per share figures calculated using Average Share Method.
/3/ On November 19, 2001, The Advisors' Inner Circle Fund C&B Tax-Managed Value
Portfolio (the "AIC Portfolio") acquired the assets of the UAM Funds Inc.
C&B Equity for Taxable Investors Portfolio (the "UAM Portfolio"). The
operations of the AIC Portfolio prior to the acquisition were those of the
predecessor, the UAM Portfolio.
/4/ Returns are for the period indicated and have not been annualized. Total
Return would have been lower had certain fees not been waived and expenses
assumed by the Advisor during the periods indicated. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of portfolio shares.
24 Stock Funds Prospectus
-------------------------------------------------------
October 31, October 31, October 31, October 31,
2002/2/ 2001/3/ 2000 1999
-------------------------------------------------------
$13.63 $15.33 $12.87 $12.23
0.09 0.13 0.15 0.12
(0.69) (0.39) 2.45 0.64
(0.60) (0.26) 2.60 0.76
(0.09) (0.14) (0.14) (0.12)
-- (1.30) -- --
(0.09) (1.44) (0.14) (0.12)
$12.94 $13.63 $15.33 $12.87
(4.45)% (1.96)% 20.32% 6.23%
$4,799 $2,623 $2,253 $3,634
1.19%/5, 6/ 1.00% 1.00% 1.00%
0.66% 0.94% 0.96% 0.96%
32% 16% 9% 20%
|
/5/ Without waivers and/or reimbursements, for the fiscal years ended October
31, 2003 and 2002, these ratios would have been 1.76% and 2.63%,
respectively.
/6/ As of March 1, 2002, the expense cap changed from 1.00% to 1.25%.
/7/ Amounts designated as "--"are either $0 or have been rounded to $0.
Stock Funds Prospectus 25
Investment practices and risk levels are carefully monitored. Every attempt is made to ensure that the risk exposure for each Fund remains within the parameters of its objective and strategies.
Understanding the risks involved in mutual fund investing will help you make an informed decision that takes into account your risk tolerance and preferences. You should carefully consider the risks common to investing in all mutual funds, including the Wells Fargo Funds. Certain common risks are identified in the "Summary of Important Risks" section on page 6. Other risks of mutual fund investing include the following:
. Unlike bank deposits, such as CDs or savings accounts, mutual funds are not insured by the FDIC.
. We cannot guarantee that a Fund will meet its investment objective.
. We do not guarantee the performance of a Fund, nor can we assure you that the market value of your investment will not decline. We will not "make good" on any investment loss you may suffer, nor can anyone we contract with to provide services, such as investment advisers, offer or promise to make good on any such losses.
. Share prices--and therefore the value of your investment--will increase and decrease with changes in the value of the underlying securities and other investments. This is referred to as price volatility.
. An investment in a single Fund, by itself, does not constitute a complete investment plan.
. Each Fund holds some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or makes other short-term investments to maintain liquidity. Each Fund may temporarily increase such holdings for short-term defensive purposes when we believe it is in the best interest of shareholders to do so. During these periods, a Fund may not achieve its objective.
. The Funds may invest in various derivative instruments. The term "derivatives" covers a broad range 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.
26 Stock Funds Prospectus
What follows is a general list of the types of risks (some of which have been previously described) that may apply to a given Fund and a table showing some of the additional investment practices that each Fund may use and the key risks associated with them. Additional information about these practices is available in the Statement of Additional Information.
Counter-Party Risk--The risk that the other party in a repurchase agreement or other transaction will not fulfill its contract obligation.
Credit Risk--The risk that the issuer of a debt security will be unable to make interest payments or repay principal on schedule. If an issuer does default, the affected security could lose all of its value, or be renegotiated at a lower interest rate or principal amount. Affected securities might also lose liquidity. Credit risk also includes the risk that a party in a transaction may not be able to complete the transaction as agreed.
Leverage Risk--The risk that an investment practice, such as lending portfolio securities or engaging in forward commitment or when-issued transactions, may increase a Fund's exposure to market risk, interest rate risk or other risks by, in effect, increasing assets available for investment.
Liquidity Risk--The risk that a security cannot be sold at the time desired, or cannot be sold without adversely affecting the price.
Market Risk--The risk that the value of a security will be reduced by market activity. This is a basic risk associated with all securities.
In addition to the general risks discussed above and under "Summary of Important Risks", you should carefully consider and evaluate any special risks that may apply to investing in a particular Fund. See the "Important Risk Factors" in the summary for each Fund. You should also see the Statement of Additional Information for additional information about the investment practices and risks particular to each Fund.
Stock Funds Prospectus 27
Investment Practice/Risk
The following table lists certain regular investment practices of the Funds, including some not disclosed in the Investment Objective and Investment Strategies sections of the Prospectus. The risks indicated after the description of the practice are NOT the only potential risks associated with that practice, but are among the more prominent. Market risk is assumed for each investment practice. See the Statement of Additional Information for more information on these practices.
Remember, each Fund is designed to meet different investment needs and objectives.
--------------------------------------------------------------------------------------------------------------
C&B LARGE C&B MID C&B TAX-MANAGED
INVESTMENT PRACTICE PRINCIPAL RISK(S) CAP VALUE CAP VALUE VALUE
--------------------------------------------------------------------------------------------------------------
Borrowing Policies
The ability to borrow money for Leverage Risk . . .
temporary purposes (e.g. to meet
shareholder redemptions).
Illiquid Securities
A security which may not be sold or Liquidity Risk .
disposed of in the ordinary course of
business within seven days at the value
determined for it by the Fund. Limited
to 15% of net assets.
Loans of Portfolio Securities
The practice of loaning securities to Credit, Counter-Party and . . .
brokers, dealers and financial Leverage Risk
institutions to increase return on
those securities. Loans may be made up
to 1940 Act limits (currently one third
of total assets, including the value
of collateral received).
Repurchase Agreements
A transaction in which the seller of a Credit and Counter- . . .
security agrees to buy back the Party Risk
security at an agreed upon time and
price, usually with interest.
|
28 Stock Funds Prospectus
A number of different entities provide services to the Funds. This section shows how the Funds are organized, lists the entities that perform different services, and explains how these service providers are compensated. Further information is available in the Statement of Additional Information.
About Wells Fargo Funds Trust
The Trust was organized as a Delaware statutory trust on March 10, 1999. The Board of Trustees of the Trust (the "Board") supervises each Fund's activities, monitors its contractual arrangements with various service providers and decides upon matters of general policy.
The Board supervises the Funds' activities and approves the selection of various companies hired to manage the Funds' operation. The major service providers are described in the diagram below. Except for the advisers, which generally may be changed only with shareholder approval, if the Board believes that it is in the best interests of the shareholders, it may change service providers.
--------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
--------------------------------------------------------------------------------
Wells Fargo Funds Management, LLC Wells Fargo Bank, N.A.
525 Market Street, San Francisco, CA 6th & Marquette, Minneapolis, MN
Manages the Funds' investment Provides safekeeping for the Funds'
activities assets
|
1700 Market Street
Philadelphia, PA
--------------------------------------------------------------------------------
SHAREHOLDERS
TRANSFER SERVICING
ADMINISTRATOR AGENT AGENTS
--------------------------------------------------------------------------------
Wells Fargo Funds Boston Financial Data Various Agents
Management, LLC Services, Inc.
525 Market Street Two Heritage Drive
San Francisco, CA Quincy, MA
Manages the Maintains records Provide services
Funds' business of shares and to customers
activities supervises the payment
of dividends
--------------------------------------------------------------------------------
|
30 Stock Funds Prospectus
The Investment Adviser
Funds Management serves as the investment adviser for each of the Funds. Funds Management, an indirect, wholly owned subsidiary of Wells Fargo & Company, was created to succeed the mutual fund advisory responsibilities of Wells Fargo Bank and is an affiliate of Wells Fargo Bank. Wells Fargo Bank, which was founded in 1852, is the oldest bank in the western United States and is one of the largest banks in the United States. The Fund's adviser is responsible for implementing the investment policies and guidelines for the Funds, and for supervising the sub-adviser, who is responsible for the day-to-day portfolio management of the Funds. For providing these services, Funds Management is entitled to receive fees as shown in the table of Annual Fund Operating Expenses under "Management Fees" in the front of this Prospectus. As of March 31, 2004, Funds Management managed over $75 billion in mutual fund assets.
Dormant Multi-Manager Structure
The Board has adopted a dormant "multi-manager" structure for each Fund. Under this structure, a Fund and Funds Management would engage one or more sub-advisers to make day-to-day investment decisions for the Fund's assets. Funds Management would retain ultimate responsibility (subject to the oversight of the Board) for overseeing the sub-advisers and may, at times, recommend to the Board that the Fund: (i) change, add or terminate one or more sub-advisers; (ii) continue to retain a sub-adviser even though the sub-adviser's ownership or corporate structure has changed; or (iii) materially change a sub-advisory agreement with a sub-adviser.
Applicable law generally requires the Fund to obtain shareholder approval of most of these types of recommendations, even if the Board approves the proposed action. Under the dormant "multimanager" structure approved by the Board, the Fund will seek exemptive relief, if necessary, from the SEC to permit Funds Management (subject to the Board's oversight and approval) to make decisions about the Fund's sub-advisory arrangements without obtaining shareholder approval. The Fund will continue to submit matters to shareholders for their approval to the extent required by applicable law.
The Sub-Adviser
Cooke & Bieler, L.P. ("Cooke & Bieler"), a Pennsylvania limited partnership is located at 1700 Market Street, Philadelphia, PA 19103. Cooke & Bieler is a registered investment adviser that has provided investment management services to corporations, foundations, endowments, pension and profit sharing plans, trusts, estates and other institutions and individuals since 1951. Cooke & Bieler is the sub-adviser for each of the Funds, and thereby responsible for the day-to-day investment management activities of the Funds. As of March 31, 2004, Cooke & Bieler managed over $3.8 billion in assets.
Cooke & Bieler is compensated for its services by Funds Management from the fees Funds Management receives for its services as adviser.
The Administrator
Funds Management provides the Funds with administrative services, including general supervision of each Fund's operation, coordination of the other services provided to each Fund, compilation of information for reports to the SEC and 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. Funds Management also furnishes office space and certain facilities to conduct each Fund's business.
Stock Funds Prospectus 31
Shareholder Servicing Plan
We have a shareholder servicing plan for the C&B Large Cap Value Fund and the C&B Mid Cap Value Fund. Under this plan, we have agreements with various shareholder servicing agents to process purchase and redemption requests, to service shareholder accounts, and to provide other related services. For these services, each of these Funds pays an annual fee of 0.10% of its average daily net assets.
The Transfer Agent
Boston Financial Data Services, Inc., ("BFDS") provides transfer agency and dividend disbursing services to the Funds.
32 Stock Funds Prospectus
This section tells you how Fund shares are priced, how to open an account and how to buy, sell or exchange Fund shares once your account is open.
Pricing Fund Shares
. As with all mutual fund investments, the price you pay to purchase shares or the price you receive when you redeem shares is not determined until after a request has been received in proper form. The price of Fund shares is based on a Fund's NAV. The price at which a purchase or redemption of Fund shares is effected is based on the next calculation of NAV after the order is placed.
. Each Fund's investments are generally valued at current market prices. Securities are generally valued based on the last sale price during the regular trading session if the security trades on an exchange ("closing price"); and if there is no sale, based on latest quoted bid price. Securities that are not traded primarily on an exchange generally are valued using latest quoted bid prices obtained by an independent pricing service. Securities listed on the Nasdaq Stock Market, Inc., however, are valued at the Nasdaq Official Closing Price ("NOCP"), and if no NOCP is available, then at the last reported sales price. We are required to depart from these general valuation methods and use fair value pricing methods to determine the value of certain investments if we believe that the closing price or the latest quoted bid price of a security, including securities that trade primarily on a foreign exchange, does not accurately reflect its current value when the Fund calculates its NAV. The closing price or the latest quoted bid price of a security may not reflect its current value if, among other things, a significant event occurs after the closing price or quoted bid price but before a Fund calculates its NAV that materially affects the value of the security. We use various criteria, including a systematic evaluation of U.S. market moves after the close of foreign markets, in deciding whether a market price is still reliable, and if not, what fair value to assign to the security. In light of the judgment involved in fair value decisions, there can be no assurance that a fair value assigned to a particular security is accurate. Such fair value pricing may result in NAVs that are higher or lower than NAVs based on the closing price or latest quoted bid price. See the Statement of Additional Information for further disclosure.
. We determine the NAV of each Fund's shares each business day as of the close of regular trading on the New York Stock Exchange ("NYSE") at 4:00 p.m. (ET). We determine the NAV by subtracting each Fund class's liabilities from its total assets, and then dividing the result by the total number of outstanding shares of that class. Each Fund's total assets are generally valued at current market prices. See the Statement of Additional Information for further disclosure.
. Requests to buy or sell shares of the Funds are processed each business day as of the close of regular trading on the NYSE, which is usually 4:00 p.m. (Eastern time). If the NYSE closes early, the Funds will close early and will value their shares at such earlier times under these circumstances. Requests received in proper form before this time are processed the same day. Requests received after the cutoff time are processed the next business day.
. The Funds are open for business on each day the NYSE is open for business. NYSE holidays include New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. When any holiday falls on a weekend, the NYSE typically is closed on the weekday immediately before or after such holiday.
Minimum Investments:
Institutions are required to make a minimum initial investment of $2,000,000 per Fund. There are no minimum subsequent investment requirements so long as your Institution maintains account balances at or above the minimum initial investment amount. Certain former Cooke & Bieler Portfolio shareholders who received Class D shares in the reorganization were converted to Institutional Class shares at a reduced minimum investment limit of $1,000.000. Please see the Statement of Additional Information for further details.
34 Stock Funds Prospectus
Typically, Institutional Class shares are bought and held on your behalf by the Institution through which you are investing. Investors interested in purchasing Institutional Class shares of the Funds should contact an account representative at their Institution and should understand the following:
. Share purchases are made through a Customer Account at an Institution in accordance with the terms of the Customer Account involved;
. Institutions are usually the holders of record for Institutional Class shares held through Customer Accounts and maintain records reflecting their customers' beneficial ownership of the shares;
. Institutions are responsible for transmitting their customers' purchase and redemption orders to the Funds and for delivering required payment on a timely basis;
. Institutions are responsible for delivering shareholder communications and voting information from the Funds, and for transmitting shareholder voting instructions to the Funds;
. Institutions may charge their customers account fees and may receive significant fees from us with respect to investments their customers have made with the Funds;
. All purchases must be made in U.S. dollars and all checks must be drawn on U.S. banks; and
. In compliance with the USA PATRIOT Act, all financial institutions (including mutual funds) are required to obtain, verify and record the following information for all registered owners or others who may be authorized to act on an account: full name, date of birth, Social Security number, and permanent street address. Corporate, trust and other entity accounts require additional documentation. This information will be used to verify your true identity. We will return your application if any of this information is missing, and we may request additional information from you for verification purposes. In the rare event that we are unable to verify your identity, the Fund reserves the right to redeem your account at the current day's NAV.
Stock Funds Prospectus 35
Institutional Class shares must be redeemed in accordance with the account agreement governing your Customer Account at the Institution. Please read the Customer Account agreement with your Institution for rules governing selling shares.
. We will process requests to sell shares at the first NAV calculated after a request and payment in proper form is received. Requests received before the cutoff time are processed on the same business day.
. Redemption proceeds are usually wired to the redeeming Institution the following business day.
. If you purchased shares through a packaged investment product or retirement plan, read the directions for selling shares provided by the product or plan. There may be special requirements that supersede the directions in this Prospectus.
. We reserve the right to delay payment of a redemption so that we may be reasonably certain that investments made by check or through ACH have been collected. Payments of redemptions also may be delayed under extraordinary circumstances or as permitted by the SEC in order to protect remaining shareholders.
. Generally, we pay redemption requests in cash, unless it is determined that the redemption would be to the detriment of a Fund and/or its shareholders. In such case, we may pay all or part of the redemption in securities of equal value. The redeeming shareholder should expect to incur transaction costs upon the disposition of the securities received.
36 Stock Funds Prospectus
An exchange between Wells Fargo Funds involves two transactions: a sale of shares of one Fund and the purchase of shares of another. In general, the same rules and procedures that apply to sales and purchases apply to exchanges. There are, however, additional factors you should keep in mind while making or considering an exchange:
. You should carefully read the prospectus for the Fund into which you wish to exchange.
. Every exchange involves selling Fund shares, which may produce a capital gain or loss for tax purposes.
. If you are making an initial investment in a Fund through an exchange, you must exchange at least the minimum first purchase amount for the new Fund, unless your balance has fallen below that amount due to market conditions.
. In general, exchanges may be made between like share classes of any Wells Fargo Fund offered to the general public for investment.
. The Funds actively discourage and take steps to prevent the portfolio disruption and negative effects on long-term shareholders that can result from market timing and excessive trading activity. Funds Management may deem trading activity to be excessive if it determines that such trading activity would likely be disruptive to a Fund by increasing expenses or lowering returns. In this regard, Funds Management monitors available trading information and may temporarily suspend or permanently terminate purchase or exchange privileges from investors who complete more than two exchanges within a three-month period or seem to be following a timing pattern. In determining whether to suspend or terminate purchase or exchange privileges for such investors, Funds Management will consider the extent to which such trading activity is likely to be disruptive to the Fund. The extent to which trading activity may be disruptive would depend on a number of factors including, but not limited to, the number of trades, the size of the trades relative to the size of the Fund and the type of Fund involved.
Contact your account representative for further details.
Generally, we will notify you at least 60 days in advance of any changes in the exchange rules.
Stock Funds Prospectus 37
Income and Gain Distributions
The Funds in this Prospectus make distributions of any net investment income and realized capital gains at least annually. Contact your Institution for distribution options.
Remember, distributions have the effect of reducing NAV per share by the amount distributed.
Taxes
The following discussion regarding federal income taxes is based on laws that were in effect as of the date of this Prospectus and summarizes only some of the important federal income tax considerations affecting the Funds and you as a shareholder. It does not apply to foreign or tax-exempt shareholders or those holding Fund shares through a tax-advantaged account, such as a 401(k) Plan or IRA. This discussion is not intended as a substitute for careful tax planning. You should consult your tax adviser about your specific tax situation. Please see the Statement of Additional Information for additional federal income tax information.
We will pass on to a Fund's shareholders substantially all of a Fund's net investment income and realized capital gains, if any. Distributions from a Fund's ordinary income and net short-term capital gain, if any, generally will be taxable to you as ordinary income. Distributions from a Fund's net long-term capital gain, if any, generally will be taxable to you as long-term capital gain. Corporate shareholders may be able to deduct a portion of distributions when determining their taxable income.
An individual's net long-term capital gain is subject to a reduced, maximum 15% rate of tax. A Fund's long-term capital gain distributed to individual shareholders generally will qualify for the reduced rate of tax if attributable to the Fund's sales and exchanges after May 5, 2003. Also, if you are an individual Fund shareholder, the portion of your distributions attributable to dividends received by a Fund from certain U.S. and foreign corporations generally will be taxed at a maximum 15% tax rate, as long as certain holding period requirements are met by you with respect to your Fund shares, and by the Fund with respect to the stocks it holds that are producing such dividends. Corporate shareholders may be able to deduct a portion of their distributions when determining their taxable income. Absent further legislation, these reduced rates will expire after December 31, 2008.
Distributions from a Fund normally will be taxable to you when paid, whether you take distributions in cash or automatically reinvest them in additional Fund shares. Following the end of each year, we will notify you of the federal income tax status of your distributions for the year.
If you buy Fund shares shortly before it makes a distribution, your distribution will, in effect, be a taxable return of part of your investment. Similarly, if you buy Fund shares when it holds appreciated securities, you will receive a taxable return of part of your investment if and when the Fund sells the appreciated securities and realizes and distributes the gain. The Funds have built up, or the potential to build up, high levels of unrealized appreciation.
Your redemptions (including redemptions in-kind) and exchanges of Fund shares ordinarily will result in a taxable capital gain or loss, depending on the amount you receive for your shares (or are deemed to receive in the case of exchanges) and the amount you paid (or are deemed to have paid) for them. Such capital gain or loss generally will be long-term capital gain or loss if you have held your redeemed or exchanged Fund shares for more than one year at the time of redemption or exchange. In certain circumstances, losses realized on the redemption or exchange of Fund shares may be disallowed.
In certain circumstances, Fund shareholders may be subject to back-up withholding taxes.
38 Stock Funds Prospectus
Request for Multiple Copies of Shareholder Documents
To help keep fund expenses low, generally we send a single copy of a prospectus or shareholder report to shareholders of the same household. If your household currently receives a single copy of a prospectus or shareholder report and you would prefer to receive multiple copies, please call your customer account representative.
Stock Funds Prospectus 39
Glossary
--------------------------------------------------------------------------------
We provide the ACH
following definitions
to assist you in Refers to the "Automated Clearing House" system
reading this maintained by the Federal Reserve Bank, which banks use
Prospectus. For a to process checks, transfer funds and perform other
more complete tasks.
understanding of
these terms you Business Day
should consult your
investment Any day the New York Stock Exchange is open is a
professional. business day for the Funds.
Capitalization
When referring to the size of a company, capitalization
means the total number of a company's outstanding shares
of stock multiplied by the price per share. This is one
accepted method of measuring a company's size and is
sometimes referred to as "market capitalization."
Derivatives
Securities whose values are derived in part from the
value of another security or index. An example is a
stock option.
Distributions
Disbursements of net investment income, realized capital
gain and/or capital made by a Fund to its shareholders.
FDIC
The Federal Deposit Insurance Corporation. This is the
company that provides federally sponsored insurance
covering bank deposits such as savings accounts and CDs.
Mutual funds are not FDIC insured.
Institution
Institutional investors acting for themselves or on
behalf of their customers in a fiduciary, advisory,
agency, custodial or similar capacity. Institutional
investors include, but are not limited to, banks,
pension funds, insurance companies, foundations, trusts,
broker-dealers and registered investment advisers.
Liquidity
The ability to readily sell a security at a fair price.
Money Market Instruments
High-quality, short-term instruments meeting the
requirements of Rule 2a-7 of the 1940 Act, such as
bankers' acceptances, commercial paper, repurchase
agreements, and government obligations. In a money
market fund, average portfolio maturity does not exceed
90 days, and all investments have maturities of 397 days
or less at the time of purchase.
Net Asset Value ("NAV")
The value of a single fund share. It is determined by
adding together all of a fund's assets, subtracting
accrued expenses and other liabilities, then dividing by
the total number of shares.
Repurchase Agreement
An agreement between a buyer and seller of a security in
which the seller agrees to repurchase the security at an
agreed upon price and time.
40 Stock Funds Prospectus
|
Glossary -------------------------------------------------------------------------------- |
Shareholder Servicing Agent
Anyone appointed by the Fund to maintain shareholder accounts and records, assist and provide information to shareholders or perform similar functions.
Statement of Additional Information
A document that supplements the disclosure made in the Prospectus.
Total Return
The annual return on an investment in a mutual fund including capital appreciation and dividends. Total return calculations assume reinvestment of all distributions, reflect fee waivers, and exclude sales loads.
Undervalued
Describes a stock that is believed to be worth more than its current price.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
Stock Funds Prospectus 41
YOU MAY WISH TO REVIEW THE FOLLOWING DOCUMENTS: Write to:
Wells Fargo Funds
STATEMENT OF ADDITIONAL INFORMATION P.O. Box 8266
Boston, MA 02266-8266; or
supplements the disclosures made by this
Prospectus. The Statement of Additional Visit the SEC's website at http://www.sec.gov
Information has been filed with the SEC and
incorporated by reference into this Prospectus REQUEST COPIES FOR A FEE BY WRITING TO:
and is legally part of this Prospectus. SEC Public Reference Room
Washington, DC 20549-6009; or
ANNUAL/SEMI-ANNUAL REPORTS by electronic request at publicinfo@sec.gov
Call: 1-800-SEC-0330 for details
provide certain financial and other important
information, including a discussion of the ADDITIONAL SERVICES QUESTIONS CAN BE
market conditions and investment strategies ANSWERED BY CALLING YOUR INVESTMENT
that significantly affected Fund performance PROFESSIONAL
over the reporting period.
THESE DOCUMENTS ARE AVAILABLE FREE OF CHARGE:
Call: 1-800-222-8222, or visit our website at
www.wellsfargofunds.com.
|
P072 (7/04) ICA Reg. No. ----------------------------------------------------- [GRAPHIC] 811-09253 NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE Printed on Recycled Paper #530773 ----------------------------------------------------- |
[LOGO] WELLS FARGO FUNDS
[GRAPHIC]
Wells Fargo Stock Funds
Prospectus
Wells Fargo C&B Large Cap Value Fund(SM)
Wells Fargo C&B Mid Cap Value Fund(SM)
Wells Fargo C&B Tax-Managed Value Fund(SM)
Class D
Please read this Prospectus and keep it for future reference. It is designed to provide you with important information and to help you decide if a Fund's goals match your own.
These securities have not been approved or disapproved by the U.S. Securities and Exchange Commission ("SEC"), nor has the SEC passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
Fund shares are NOT deposits or other obligations of, or issued, endorsed or guaranteed by Wells Fargo Bank, N.A. ("Wells Fargo Bank") or any of its affiliates. Fund shares are NOT insured or guaranteed by the U.S. Government, the Federal Deposit Insurance Corporation ("FDIC") or any other governmental agency. AN INVESTMENT IN A FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
July 26, 2004
(INTENTIONALLY LEFT BLANK)
Table of Contents Stock Funds
--------------------------------------------------------------------------------
Overview Objectives and Principal Strategies 4
Important summary information Summary of Important Risks 6
about the Funds.
Performance History 8
Summary of Expenses 12
--------------------------------------------------------------------------------
The Funds Key Information 14
Important information about C&B Large Cap Value Fund 15
the individual Funds.
C&B Mid Cap Value Fund 19
C&B Tax-Managed Value Fund 23
Additional Strategies and
General Investment Risks 26
Organization and Management
of the Funds 29
--------------------------------------------------------------------------------
Your Investment Your Account 32
How to open an account and How to Buy Shares 33
how to buy, sell and exchange
Fund shares. How to Sell Shares 34
Exchanges 35
--------------------------------------------------------------------------------
Reference Other Information 36
Additional information and
term definitions. Glossary 37
|
Stock Funds Overview -------------------------------------------------------------------------------- |
See the individual Fund descriptions in this Prospectus for further details.
Italicized and colored words appear that way only to denote their inclusion in the Glossary section of this Prospectus.
--------------------------------------------------------------------------------
FUND OBJECTIVE
--------------------------------------------------------------------------------
C&B Large Cap Value Fund Seeks maximum long-term total return, consistent
with minimizing risk to principal.
C&B Mid Cap Value Fund Seeks maximum long-term total return, consistent
with minimizing risk to principal.
C&B Tax-Managed Value Fund Seeks maximum long-term, after-tax total return,
consistent with minimizing risk to principal.
|
4 Stock Funds Prospectus
We principally invest in large-capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more. We seek total return by targeting companies that we believe are undervalued, possess strong financial positions and have a consistency and predictability in their earnings growth.
We principally invest in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index. As of December 31, 2003, this range was $500 million to $16 billion, and is expected to change frequently. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions.
We emphasize investment in common stocks of companies with market capitalizations of $1 billion or more. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions. We attempt to minimize adverse federal income tax consequences for the Fund's shareholders by managing the amount of realized gains, through reduced portfolio turnover.
Stock Funds Prospectus 5
This section summarizes important risks that relate to an investment in the Funds. All are important to your investment choice. Additional information about these and other risks is included in:
. the individual Fund descriptions beginning on page 15;
. the "Additional Strategies and General Investment Risks" section beginning on page 26; and
. the Statement of Additional Information.
An investment in a Fund is not a deposit of Wells Fargo Bank or any of its affiliates and is not insured or guaranteed by the FDIC or any other government agency. It is possible to lose money by investing in a Fund.
Equity Securities
The Funds invest in equity securities, which are subject to equity market risk. This is the risk that stock prices will fluctuate and can decline and reduce the value of a Fund's portfolio. Certain types of stocks and certain individual stocks selected for a Fund's portfolio may underperform or decline in value more than the overall market. There is no guarantee that stocks selected as undervalued using a value style approach will perform as expected. Generally, stocks of larger companies tend to be less volatile and more liquid than stocks of smaller companies. Because the Funds typically invest in 30 to 50 companies, the value of an investment in one of the Funds will vary more in response to developments or changes affecting the market value of particular stocks than an investment in a mutual fund that is more broadly diversified.
---------------------------------------------------------------------------
FUND SPECIFIC RISKS
---------------------------------------------------------------------------
C&B Large Cap Value Fund The Fund is primarily subject to the risks
described above.
C&B Mid Cap Value Fund The Fund is primarily subject to the risks
described above. Stocks of medium-sized
companies may be more volatile and less
liquid, in part because the issuers may be
more vulnerable to adverse business or
economic events, than the stocks of larger,
more established companies.
C&B Tax-Managed Value Fund The Fund is primarily subject to the risks
described above. The Fund is managed with a
focus on after-tax returns; therefore, it
may not provide as high a return before
taxes as other funds, and as a result may
not be suitable for investors who are not
subject to current income tax (for example,
those investing through a tax-deferred
retirement account, such as an Individual
Retirement Account ("IRA") or a 401(k)
Plan).
6 Stock Funds Prospectus
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The following information shows you how each Fund has performed and illustrates the variability of a Fund's returns over time. Each Fund's average annual returns for one-, five- and ten-year periods (or for the life of the Fund, as applicable) are compared to the performance of an appropriate broad-based index.
Please remember that past performance is no guarantee of future results.
Effective at the close of business on July 23, 2004, the Wells Fargo C&B Large Cap Value Fund, Wells Fargo C&B Mid Cap Value Fund and Wells Fargo C&B Tax-Managed Value Fund were organized as the successor funds to the C&B Large Cap Value Portfolio, C&B Mid Cap Value Portfolio and C&B Tax-Managed Value Portfolio, respectively. The historical performance information shown for each successor fund for periods prior to each fund's reorganization date reflects the historical information for its predecessor.
C&B Large Cap Value Fund Class D Calendar Year Returns*/1/
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 ---- ----- ----- ----- ---- ---- ----- ---- ------ ----- 1.35% 31.91% 20.22% 27.98% 8.04% 2.06% 19.49% 6.59% (10.89)% 33.46% |
Best Qtr.: Q2 '03 . 20.94% Worst Qtr.: Q3 '02 . (17.54)%
* The Fund's year-to-date performance through March 31, 2004, was 3.99%.
8 Stock Funds Prospectus
The table below provides average annual total return information for the Fund's Class D shares, and includes both before- and after-tax returns for the Class D shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans, or IRAs.
Average Annual Total Returns/1/
for the period ended 12/31/03 1 year 5 years 10 years
------ ------- --------
Class D Returns Before Taxes (Incept. 5/15/1990) 33.46% 9.10% 13.14%
Class D Returns After Taxes on Distributions 33.31% 5.67% 9.04%
Class D Returns After Taxes on Distributions
and Sale of Fund Shares 21.91% 6.31% 9.49%
S&P 500 Index/2/
(reflects no deduction for expenses or taxes) 28.69% (0.57)% 11.07%
Russell 1000 Value Index
(reflects no deduction for expenses or taxes) 30.03% 3.56% 11.88%
|
/1/ Performance shown reflects the performance of the predecessor fund's
single class of shares.
/2/ S&P 500 is a registered trademark of Standard & Poor's.
Stock Funds Prospectus 9
C&B Mid Cap Value Fund Class D Calendar Year Returns*/1/
'99 '00 '01 '02 '03 ----- ----- ----- ----- ----- (0.19)% 41.03% 25.16% (9.50)% 38.99% |
Best Qtr.: Q2 '99 . 20.78% Worst Qtr.: Q3 '02 . (20.75)%
* The Fund's year-to-date performance through March 31, 2004, was 3.62%.
The table below provides average annual total return information for the Fund's Class D shares, and includes both before- and after-tax returns for the Class D shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans, or IRAs.
Average Annual Total Returns/1/ Life of
for the period ended 12/31/03 1 year 5 years Fund
------ ------- -------
Class D Returns Before Taxes (Incept. 2/18/1998) 38.99% 17.25% 14.66%
Class D Returns After Taxes on Distributions 38.77% 15.97% 13.54%
Class D Returns After Taxes on Distributions
and Sale of Fund Shares 25.60% 14.35% 12.19%
Russell Midcap Value Index
(reflects no deduction for expenses or taxes) 38.07% 8.73% 7.71%
Russell Midcap Index
(reflects no deduction for expenses or taxes) 40.06% 7.23% 8.17%
|
/1/ Performance shown reflects the performance of the predecessor fund's single class of shares.
10 Stock Funds Prospectus
C&B Tax-Managed Value Fund Class D Calendar Year Returns/*1/
'98 '99 '00 '01 '02 '03 ---- ---- ----- ------ ------ ----- 9.38% 5.55% 21.79% (0.97)% (7.28)% 28.10% |
Best Qtr.: Q2 '03 . 19.60% Worst Qtr.: Q3 '02 . (14.88)%
* The Fund's year-to-date performance through March 31, 2004, was 3.04%.
The table below provides average annual total return information for the Fund's Class D shares, and includes both before- and after-tax returns for the Class D shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans, or IRAs.
Average Annual Total Returns/1/
Life of
for the period ended 12/31/03 1 year 5 years Fund
------------------------------------------------ ------ ------- -------
Class D Returns Before Taxes (Incept. 2/12/1997) 28.10% 8.62% 10.47%
Class D Returns After Taxes on Distributions 27.97% 7.92% 9.81%
Class D Returns After Taxes on Distributions
and Sale of Fund Shares 18.40% 7.13% 8.85%
S&P 500 Index/2/
(reflects no deduction for expenses or taxes) 28.69% (0.57)% 6.43%
Russell 1000 Value Index
(reflects no deduction for expenses or taxes) 30.03% 3.56% 8.35%
|
/1/ Performance shown reflects the performance of the predecessor fund's
single class of shares.
/2/ S&P 500 is a registered trademark of Standard & Poor's.
Stock Funds Prospectus 11
These tables are intended to help you understand the various costs and expenses you will pay as a shareholder in a Fund. These tables do not reflect charges that may be imposed in connection with an account through which you hold Fund shares. A broker-dealer or financial institution maintaining an account through which you hold Fund shares may charge separate account, service or transaction fees on the purchase or sale of Fund shares that would be in addition to the fees and expenses shown here.
---------------------------------------------------------------------------------------------------
C&B Large Cap Value Fund and C&B Tax-Managed
C&B Mid Cap Value Fund Value Fund
---------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
purchases (as a percentage of offering price) None None
Maximum deferred sales charge (load)
(as a percentage of the Net Asset Value ("NAV") None None
at purchase)
Redemption Fee None 1.00%/1/
---------------------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------
C&B Large Cap C&B Mid Cap C&B Tax-Managed
Value Fund Value Fund Value Fund
------------------------------------------------------------------------------------
Management Fees/2/ 0.75% 0.75% 0.75%
Distribution (12b-1) Fees 0.00% 0.00% 0.00%
Other Expenses/3/ 0.91% 0.64% 0.94%
------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.66% 1.39% 1.69%
------------------------------------------------------------------------------------
Fee Waivers 0.46% 0.14% 0.49%
------------------------------------------------------------------------------------
NET EXPENSES/4/ 1.20% 1.25% 1.20%
------------------------------------------------------------------------------------
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/1/ Deducted from the net proceeds of shares redeemed or exchanged within one
year after purchase. This fee is retained by the Fund. Please see
"Redemption Fee" on page 34 for further information.
/2/ Effective August 1, 2004, the Fund's investment adviser will implement a
breakpoint schedule for each Fund's management fee. The management fee
charged to a Fund will decline as the Fund's assets grow and will continue
to be based on a percentage of the Fund's average daily net assets. The
breakpoint schedule for each Fund is as follows: 0.75% for assets from $0
to $499 million; 0.70% for assets from $500 million to $999 million; 0.65%
for assets from $1 billion to $2.99 billion; 0.625% for assets from $3
billion to $4.99 billion; and 0.60% for assets $5 billion and higher.
Please see the Statement of Additional Information for further details.
/3/ Other expenses are based on estimates for the current fiscal year and
include various Fund start-up expenses, which will only be incurred in the
first year of the Fund's operation. Without including these first year
expenses, the Gross Operating Expense ratio for the Wells Fargo C&B Large
Cap Value Fund would be 1.52%, for the Wells Fargo C&B Mid Cap Value Fund
would be 1.38%, and for the Wells Fargo C&B Tax-Managed Value Fund would be
1.54%. Other expenses may include expenses payable to affiliates of Wells
Fargo & Company.
/4/ The adviser has committed through February 28, 2007, to waive fees and/or
reimburse expenses to the extent necessary to maintain the Fund's net
operating expense ratio shown. After this time, the net operating expense
ratio may be increased only with the approval of the Board of Trustees.
12 Stock Funds Prospectus
These examples are intended to help you compare the cost of investing in a Fund with the cost of investing in other mutual funds. The examples assume a fixed rate of return and that fund operating expenses remain the same. Your actual costs may be higher or lower than those shown.
You would pay the following expenses on a $10,000 investment assuming a 5% annual return and that you redeem your shares at the end of each period:
--------------------------------------------------------------------------------
C&B Large Cap C&B Mid Cap C&B Tax-Managed
Value Fund Value Fund Value Fund
--------------------------------------------------------------------------------
1 YEAR $ 122 $ 127 $ 222
3 YEARS $ 415 $ 410 $ 417
5 YEARS $ 765 $ 729 $ 771
10 YEARS $1,751 $1,632 $1,770
--------------------------------------------------------------------------------
|
You would pay the following expenses on a $10,000 investment assuming a 5% annual return and that you do NOT redeem your shares at the end of each period:
--------------------------------------------------------------------------------
C&B Large Cap C&B Mid Cap C&B Tax-Managed
Value Fund Value Fund Value Fund
--------------------------------------------------------------------------------
1 YEAR $ 122 $ 127 $ 122
3 YEARS $ 415 $ 410 $ 417
5 YEARS $ 765 $ 729 $ 771
10 YEARS $1,751 $1,632 $1,770
--------------------------------------------------------------------------------
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Stock Funds Prospectus 13
In this Prospectus, "we" generally refers to Wells Fargo Funds Trust (the "Trust"), or Wells Fargo Funds Management, LLC ("Funds Management"), the Funds' investment adviser. "We" may also refer to the Funds' other service providers. "You" refers to the shareholder or potential investor.
The summary information on the previous pages is designed to provide you with an overview of each Fund. The sections that follow provide more detailed information about the investments and management of each Fund.
Investment Objective and Investment Strategies
The investment objective of each Fund in this Prospectus is non-fundamental, that is, it can be changed by a vote of the Board of Trustees alone. The objective and strategies description for each Fund tells you:
. what the Fund is trying to achieve;
. how we intend to invest your money; and
. what makes the Fund different from the other Funds offered in this Prospectus.
A summary of each Fund's key permitted investments and practices. Unless otherwise indicated, these investment policies and practices apply on an ongoing basis. Percentages of "the Fund's assets" are measured as percentages of net assets plus borrowings for investment purposes. The investment policy of each Fund concerning "80% of the Fund's assets" may be changed by the Board of Trustees without shareholder approval, but shareholders would be given at least 60 days notice.
Important Risk Factors
Describes the key risk factors for each Fund, and includes risks described in the "Summary of Important Risks" and "Additional Strategies and General Investment Risks" sections.
Italicized and colored words appear that way only to denote their inclusion in the Glossary section of this Prospectus.
14 Stock Funds Prospectus
Portfolio Managers: A team of investment professionals of the investment sub-adviser, Cooke & Bieler, L.P.
Investment Objective
The C&B Large Cap Value Fund seeks maximum long-term total return, consistent with minimizing risk to principal.
Investment Strategies
We principally invest in large capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more. We seek total return by targeting companies that we believe are undervalued, possess strong financial positions and have a consistency and predictability in their earnings growth.
We select securities for the portfolio based on an analysis of a company's financial characteristics, an assessment of the quality of a company's management and the implementation of a valuation discipline. In selecting a company, we consider criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. We further narrow the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. We regularly review the investments of the portfolio and sell a portfolio holding when it has achieved its valuation targets, a change in the underlying company's outlook has occurred or more attractive investment alternatives are available.
We hold a smaller number of securities in the portfolio, usually 30 to 50 companies. This strategy enables us to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. We believe our assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while our insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets.
Under normal circumstances, we invest at least 80% of the Fund's assets in large-capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more.
Important Risk Factors
The Fund is primarily subject to the risks described under "Common Risks for the Funds" on page 6.
You should consider these risks along with the "Additional Strategies and General Investment Risks" section beginning on page 26. These considerations are all important to your investment choice.
Stock Funds Prospectus 15
This table is intended to help you understand the Fund's financial performance for the past 5 years. Total returns represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). The information provided for the fiscal years 2003 and 2002 has been audited by KPMG LLP; the information for prior periods has been audited by a predecessor independent registered public accounting firm. The financial statements and the independent auditor's report are included in the annual report of the Funds, a copy of which is available upon request. The information for the six-month period ended April 30, 2004, is unaudited and is contained in the semi-annual report of the Funds, also available upon request.
PREDECESSOR FUND'S SINGLE SHARE CLASS--COMMENCED
ON MAY 15, 1990
------------------------------------------------
April 30, 2004/1, 2/ October 31, 2003/2/
For the period ended: (unaudited)
------------------------------------------------
Net asset value, beginning of period $ 7.42 $ 6.49
Income from investment operations:
Net investment income (loss) 0.02 0.05
Net realized and unrealized gain (loss) on investments 0.68 1.61
Total from investment operations 0.70 1.66
Less distributions:
Dividends from net investment income (0.02) (0.05)
Distributions from net realized gain -- (0.68)
Total from distributions (0.02) (0.73)
Net asset value, end of period $ 8.10 $ 7.42
Total return/4/ 9.47% 28.34%
Ratios/supplemental data:
Net assets, end of period (000s) $25,248 $20,419
Ratios to average net assets:
Ratio of expenses to average net assets 1.15% 1.16%/5/
Ratio of net investment income (loss) to average
net assets 0.56% 0.76%
Portfolio turnover 12% 26%
|
/1/ All ratios for the period have been annualized.
/2/ Per share figures calculated using Average Shares Method.
/3/ On November 19, 2001, The Advisors' Inner Circle Fund C&B Large Cap Value
Portfolio (the "AIC Portfolio") acquired the assets of the UAM Funds Inc.
C&B Equity Portfolio (the "UAM Portfolio"). The operations of the AIC
Portfolio prior to the acquisition were those of the predecessor, the UAM
Portfolio.
/4/ Returns are for the period indicated and have not been annualized. Total
Return would have been lower had certain fees not been waived and expenses
assumed by the Advisor during the periods indicated. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of portfolio shares.
/5/ Without waivers and/or reimbursements, for the fiscal years ended October
31, 2003 and 2002, these ratios would have been 1.20% and 1.60%,
respectively.
/6/ As of March 1, 2002, the expense cap changed from 1.00% to 1.25%.
16 Stock Funds Prospectus
October 31, 2002/2/ October 31, 2001/3/ October 31, 2000 October 31, 1999
--------------------------------------------------------------------------------
$ 7.13 $ 8.71 $ 12.06 $ 13.58
0.05 0.07 0.12 0.16
(0.38) 0.27 0.54 0.72
(0.33) 0.34 0.66 0.88
(0.05) (0.11) (0.09) (0.16)
(0.26) (1.81) (3.92) (2.24)
(0.31) (1.92) (4.01) (2.40)
$ 6.49 $ 7.13 $8.71 $ 12.06
(5.14)% 4.50% 10.89% 7.73%
$14,383 $38,850 $35,251 $73,292
1.14%/5, 6/ 1.00% 1.00% 0.89%
0.59% 0.91% 1.16% 1.12%
39% 41% 48% 43%
|
Stock Funds Prospectus 17
Portfolio Managers: A team of investment professionals of the investment sub-adviser, Cooke & Bieler, L.P.
Investment Objective
The C&B Mid Cap Value Fund seeks maximum long-term total return, consistent with minimizing risk to principal.
Investment Strategies
We principally invest in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index. As of December 31, 2003, this range was $500 million to $16 billion, and is expected to change frequently. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions.
We select securities for the portfolio based on an analysis of a company's financial characteristics, an assessment of the quality of a company's management and the implementation of a valuation discipline. In selecting a company, we consider criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. We further narrow the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. We regularly review the investments of the portfolio and sell a portfolio holding when it has achieved its valuation targets, a change in the underlying company's outlook has occurred or more attractive investment alternatives are available.
We hold a smaller number of securities in the portfolio, usually 30 to 50 companies. This strategy enables us to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. We believe our assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while our insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets.
Under normal circumstances, we invest at least 80% of the Fund's assets in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index.
Important Risk Factors
The Fund is primarily subject to the risks described under "Common Risks for the Funds" on page 6. Stocks of medium-sized companies may be more volatile and less liquid, in part because the issuers may be more vulnerable to adverse business or economic events, than the stocks of larger, more established companies.
You should consider these risks along with the "Additional Risks and General Investment Risks" section beginning on page 26. These considerations are all important to your investment choice.
Stock Funds Prospectus 19
This table is intended to help you understand the Fund's financial performance for the past 5 years. Total returns represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). The information provided for the fiscal years 2003 and 2002 has been audited by KPMG LLP; the information for prior periods has been audited by a predecessor independent registered public accounting firm. The financial statements and the independent auditor's report are included in the annual report of the Funds, a copy of which is available upon request. The information for the six-month period ended April 30, 2004, is unaudited and is contained in the semi-annual report of the Funds, also available upon request.
PREDECESSOR FUND'S SINGLE SHARE CLASS--COMMENCED
ON FEBRUARY 18, 1998
------------------------------------------------
April 30, 2004/1, 2/ October 31, 2003/2/
For the period ended: (unaudited)
------------------------------------------------
Net asset value, beginning of period $ 17.96 $ 13.15
Income from investment operations:
Net investment income (loss)/7/ -- --
Net realized and unrealized gain (loss)
on investments 1.27 4.83
Total from investment operations 1.27 4.83
Less distributions:
Dividends from net investment income (0.00)/8/ (0.02)
Distributions from net realized gain/7/ (0.17) --
Total from distributions (0.17) (0.02)
Net asset value, end of period $ 19.06 $ 17.96
Total return/4/ 7.14% 36.76%
Ratios/supplemental data:
Net assets, end of period (000s) $477,614 $301,513
Ratios to average net assets:
Ratio of expenses to average net assets 1.07% 1.27%/5/
Ratio of net investment income (loss) to
average net assets 0.02% 0.01%
Portfolio turnover 19% 18%
|
/1/ All ratios for the period have been annualized.
/2/ Per share figures calculated using Average Shares Method.
/3/ On November 19, 2001, The Advisors' Inner Circle Fund C&B Mid Cap Value
Portfolio (the "AIC Portfolio") acquired the assets of the UAM Funds Inc.
C&B Mid Cap Equity Portfolio (the "UAM Portfolio"). The operations of the
AIC Portfolio prior to the acquisition were those of the predecessor, the
UAM Portfolio.
/4/ Returns are for the period indicated and have not been annualized. Total
Return would have been lower had certain fees not been waived and expenses
assumed by the Advisor during the periods indicated. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of portfolio shares.
20 Stock Funds Prospectus
--------------------------------------------------------------------------------
October 31, 2002/2/ October 31, 2001/3/ October 31, 2000 October 31, 1999
--------------------------------------------------------------------------------
$ 14.19 $12.78 $ 9.84 $ 9.69
(0.01) 0.08 0.07 0.06
(0.19) 2.12 3.16 0.15
(0.20) 2.20 3.23 0.21
(0.04) (0.09) (0.08) (0.06)
(0.80) (0.70) (0.21) --
(0.84) (0.79) (0.29) (0.06)
$ 13.15 $14.19 $12.78 $ 9.84
(2.09)% 18.14% 33.78% 2.19%
$81,390 $5,934 $1,520 $1,446
1.37%/5, 6/ 1.00% 1.00% 1.00%
(0.07)% 0.68% 0.66% 0.70%
30% 44% 101% 81%
|
/5/ Without waivers and/or reimbursements, for the fiscal years ended October
31, 2003 and 2002, these ratios would have been 1.27% and 1.54%,
respectively.
/6/ As of March 1, 2002, the expense cap changed from 1.00% to 1.40%.
/7/ Amounts designated as "--" are either $0 or have been rounded to $0.
/8/ Amount is less than $0.01.
Stock Funds Prospectus 21
Portfolio Managers: A team of investment professionals of the investment sub-adviser, Cooke & Bieler, L.P.
Investment Objective
The C&B Tax-Managed Value Fund seeks maximum long-term, after-tax total return, consistent with minimizing risk to principal.
Investment Strategies
We emphasize investment in common stocks of companies with market capitalizations of $1 billion or more. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions. We attempt to minimize adverse federal income tax consequences for the Fund's shareholders by managing the amount of realized gains, through reduced portfolio turnover. We cannot predict the impact of this strategy on the realization of gains or losses for the Fund. We intend to balance these tax considerations with the pursuit of the Fund's objective, and we reserve the right to engage in short-term trading if market conditions warrant such trading.
We select securities for the portfolio based on an analysis of a company's financial characteristics, an assessment of the quality of a company's management and the implementation of a valuation discipline. In selecting a company, we consider criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. We further narrow the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. We regularly review the investments of the portfolio and sell a portfolio holding when it has achieved its valuation targets, a change in the underlying company's outlook has occurred or more attractive investment alternatives are available.
We hold a smaller number of securities in the portfolio, usually 30 to 50 companies. This strategy enables us to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. We believe our assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while our insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets.
Under normal circumstances, we invest at least 80% of total assets in equity securities.
Important Risk Factors
The Fund is primarily subject to the risks described under "Common Risks for the Funds" on page 6. The Fund is managed with a focus on after-tax returns; therefore, it may not provide as high a return before taxes as other funds, and as a result may not be suitable for investors who are not subject to current income tax (for example, those investing through a tax-deferred retirement account, such as an IRA or a 401(k) Plan).
You should consider these risks along with the "Additional Strategies and General Investment Risks" section beginning on page 26. These considerations are all important to your investment choice.
Stock Funds Prospectus 23
This table is intended to help you understand the Fund's financial performance for the past 5 years. Total returns represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). The information provided for the fiscal years 2003 and 2002 has been audited by KPMG LLP; the information for prior periods has been audited by a predecessor independent registered public accounting firm. The financial statements and the independent auditor's report are included in the annual report of the Funds, a copy of which is available upon request. The information for the six-month period ended April 30, 2004, is unaudited and is contained in the semi-annual report of the Funds, also available upon request.
PREDECESSOR FUND'S SINGLE SHARE CLASS--COMMENCED
ON FEBRUARY 12, 1997
------------------------------------------------
April 30, 2004/1, 2/ October 31, 2003/2/
For the period ended: (unaudited)
------------------------------------------------
Net asset value, beginning of period $ 15.97 $12.94
Income from investment operations:
Net investment income (loss) 0.04 0.09
Net realized and unrealized gain
(loss) on investments 1.33 3.05
Total from investment operations 1.37 3.14
Less distributions:
Dividends from net investment income (0.04) (0.10)
Distributions from net realized gain/7/ -- (0.01)
Total from distributions (0.04) (0.11)
Net asset value, end of period $ 17.30 $15.97
Total return/4/ 8.57% 24.42%
Ratios/supplemental data:
Net assets, end of period (000s) $15,153 $9,147
Ratios to average net assets:
Ratio of expenses to average net assets 1.25% 1.25%/5/
Ratio of net investment income (loss) to
average net assets 0.45% 0.65%
Portfolio turnover 10% 31%
|
/1/ All ratios for the period have been annualized.
/2/ Per share figures calculated using Average Share Method.
/3/ On November 19, 2001, The Advisors' Inner Circle Fund C&B Tax-Managed Value
Portfolio (the "AIC Portfolio") acquired the assets of the UAM Funds Inc.
C&B Equity for Taxable Investors Portfolio (the "UAM Portfolio"). The
operations of the AIC Portfolio prior to the acquisition were those of the
predecessor, the UAM Portfolio.
/4/ Returns are for the period indicated and have not been annualized. Total
Return would have been lower had certain fees not been waived and expenses
assumed by the Advisor during the periods indicated. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of portfolio shares.
24 Stock Funds Prospectus
--------------------------------------------------------------------------------
October 31, 2002/2/ October 31, 2001/3/ October 31, 2000 October 31, 1999
--------------------------------------------------------------------------------
$13.63 $15.33 $12.87 $12.23
0.09 0.13 0.15 0.12
(0.69) (0.39) 2.45 0.64
(0.60) (0.26) 2.60 0.76
(0.09) (0.14) (0.14) (0.12)
-- (1.30) -- --
(0.09) (1.44) (0.14) (0.12)
$12.94 $13.63 $15.33 $12.87
(4.45)% (1.96)% 20.32% 6.23%
$4,799 $2,623 $2,253 $3,634
1.19%/5, 6/ 1.00% 1.00% 1.00%
0.66% 0.94% 0.96% 0.96%
32% 16% 9% 20%
|
/5/ Without waivers and/or reimbursements, for the fiscal years ended October
31, 2003 and 2002, these ratios would have been 1.76% and 2.63%,
respectively.
/6/ As of March 1, 2002, the expense cap changed from 1.00% to 1.25%.
/7/ Amounts designated as "--" are either $0 or have been rounded to $0.
Stock Funds Prospectus 25
Investment practices and risk levels are carefully monitored. Every attempt is made to ensure that the risk exposure for each Fund remains within the parameters of its objective and strategies.
Understanding the risks involved in mutual fund investing will help you make an informed decision that takes into account your risk tolerance and preferences. You should carefully consider the risks common to investing in all mutual funds, including the Wells Fargo Funds. Certain common risks are identified in the "Summary of Important Risks" section on page 6. Other risks of mutual fund investing include the following:
. Unlike bank deposits, such as CDs or savings accounts, mutual funds are not insured by the FDIC.
. We cannot guarantee that a Fund will meet its investment objective.
. We do not guarantee the performance of a Fund, nor can we assure you that the market value of your investment will not decline. We will not "make good" on any investment loss you may suffer, nor can anyone we contract with to provide services, such as selling agents or investment advisers, offer or promise to make good on any such losses.
. Share prices--and therefore the value of your investment--will increase and decrease with changes in the value of the underlying securities and other investments. This is referred to as price volatility.
. An investment in a single Fund, by itself, does not constitute a complete investment plan.
. Each Fund holds some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or makes other short-term investments to maintain liquidity. Each Fund may temporarily increase such holdings for short-term defensive purposes when we believe it is in the best interest of shareholders to do so. During these periods, a Fund may not achieve its objective.
. The Funds may invest in various derivative instruments. The term "derivatives" covers a broad range 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.
26 Stock Funds Prospectus
What follows is a general list of the types of risks (some of which have been previously described) that may apply to a given Fund and a table showing some of the additional investment practices that each Fund may use and the key risks associated with them. Additional information about these practices is available in the Statement of Additional Information.
Counter-Party Risk--The risk that the other party in a repurchase agreement or other transaction will not fulfill its contract obligation.
Credit Risk--The risk that the issuer of a debt security will be unable to make interest payments or repay principal on schedule. If an issuer does default, the affected security could lose all of its value, or be renegotiated at a lower interest rate or principal amount. Affected securities might also lose liquidity. Credit risk also includes the risk that a party in a transaction may not be able to complete the transaction as agreed.
Leverage Risk--The risk that an investment practice, such as lending portfolio securities or engaging in forward commitment or when-issued transactions, may increase a Fund's exposure to market risk, interest rate risk or other risks by, in effect, increasing assets available for investment.
Liquidity Risk--The risk that a security cannot be sold at the time desired, or cannot be sold without adversely affecting the price.
Market Risk--The risk that the value of a security will be reduced by market activity. This is a basic risk associated with all securities.
In addition to the general risks discussed above and under "Summary of Important Risks," you should carefully consider and evaluate any special risks that may apply to investing in a particular Fund. See the "Important Risk Factors" in the summary for each Fund. You should also see the Statement of Additional Information for additional information about the investment practices and risks particular to each Fund.
Stock Funds Prospectus 27
Investment Practice/Risk
The following table lists certain regular investment practices of the Funds, including some not disclosed in the Investment Objective and Investment Strategies sections of the Prospectus. The risks indicated after the description of the practice are NOT the only potential risks associated with that practice, but are among the more prominent. Market risk is assumed for each investment practice. See the Statement of Additional Information for more information on these practices.
Remember, each Fund is designed to meet different investment needs and objectives.
-----------------------------------------------------------------------------------------------
C&B LARGE C&B MID C&B TAX-MANAGED
INVESTMENT PRACTICE PRINCIPAL RISK(S) CAP VALUE CAP VALUE VALUE
-----------------------------------------------------------------------------------------------
Borrowing Policies
The ability to borrow money Leverage Risk . . .
for temporary purposes (e.g.
to meet shareholder
redemptions).
Illiquid Securities
A security which may not be Liquidity Risk .
sold or disposed of in the
ordinary course of business
within seven days at the
value determined by the Fund.
Limited to 15% of net assets.
Loans of Portfolio Securities
The practice of loaning Credit, Counter-Party . . .
securities to brokers, and Leverage Risk
dealers and financial
institutions to increase
return on those securities.
Loans may be made up to 1940
Act limits (currently
one-third of total assets,
including the value of the
collateral received).
Repurchase Agreements
A transaction in which the Credit and . . .
seller of a security agrees Counter-Party Risk
to buy back the security at
an agreed upon time and
price, usually with interest.
|
28 Stock Funds Prospectus
A number of different entities provide services to the Funds. This section shows how the Funds are organized, lists the entities that perform different services, and explains how these service providers are compensated. Further information is available in the Statement of Additional Information.
About Wells Fargo Funds Trust
The Trust was organized as a Delaware statutory trust on March 10, 1999. The Board of Trustees of the Trust (the "Board") supervises each Fund's activities, monitors its contractual arrangements with various service providers and decides upon matters of general policy.
The Board supervises the Funds' activities and approves the selection of various companies hired to manage the Funds' operation. The major service providers are described in the diagram below. Except for the advisers, which generally may be changed only with shareholder approval, if the Board believes that it is in the best interests of the shareholders, it may change service providers.
--------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
--------------------------------------------------------------------------------
Wells Fargo Funds Management, LLC Wells Fargo Bank, N.A.
525 Market St. San Francisco, CA 6th & Marquette, Minneapolis, MN
Manages the Funds' investment Provides safekeeping for the Funds'
activities assets
|
--------------------------------------------------------------------------------
SHAREHOLDER
TRANSFER SERVICING
ADMINISTRATOR AGENT AGENTS
--------------------------------------------------------------------------------
Wells Fargo Funds Boston Financial Data Various Agents
Management, LLC Services, Inc.
525 Market Street Two Heritage Drive
San Francisco, CA Quincy, MA
Manages the Funds' Maintains records of Provide services to
business activities shares and supervises customers
the payment of dividends
--------------------------------------------------------------------------------
|
Stock Funds Prospectus 29
The Investment Adviser
Funds Management serves as the investment adviser for each of the Funds. Funds Management, an indirect, wholly owned subsidiary of Wells Fargo & Company, was created to succeed to the mutual fund advisory responsibilities of Wells Fargo Bank and is an affiliate of Wells Fargo Bank. Wells Fargo Bank, which was founded in 1852, is the oldest bank in the western United States and is one of the largest banks in the United States. The Funds' adviser is responsible for implementing the investment policies and guidelines for the Funds and for supervising the sub-adviser, who is responsible for the day-to-day portfolio management of the Funds. For providing these services, Funds Management is entitled to receive fees as shown in the table of Annual Fund Operating Expenses under "Management Fees" in the front of this Prospectus. As of March 31, 2004, Funds Management managed over $75 billion in mutual fund assets.
Dormant Multi-Manager Structure
The Board has adopted a dormant "multi-manager" structure for each Fund. Under this structure, a Fund and Funds Management would engage one or more sub-advisers to make day-to-day investment decisions for the Fund's assets. Funds Management would retain ultimate responsibility (subject to the oversight of the Board) for overseeing the sub-advisers and may, at times, recommend to the Board that the Fund: (i) change, add or terminate one or more sub-advisers; (ii) continue to retain a sub-adviser even though the sub-adviser's ownership or corporate structure has changed; or (iii) materially change a sub-advisory agreement with a sub-adviser.
Applicable law generally requires the Fund to obtain shareholder approval of most of these types of recommendations, even if the Board approves the proposed action. Under the dormant "multi-manager" structure approved by the Board, the Fund will seek exemptive relief, if necessary, from the SEC to permit Funds Management (subject to the Board's oversight and approval) to make decisions about the Fund's sub-advisory arrangements without obtaining shareholder approval. The Fund will continue to submit matters to shareholders for their approval to the extent required by applicable law.
The Sub-Adviser
Cooke & Bieler, L.P. ("Cooke & Bieler"), a Pennsylvania limited partnership is located at 1700 Market Street, Philadelphia, PA 19103. Cooke & Bieler is a registered investment adviser that has provided investment management services to corporations, foundations, endowments, pension and profit sharing plans, trusts, estates and other institutions and individuals since 1951. Cooke & Bieler is the sub-adviser for each of the Funds, and thereby responsible for the day-to-day investment management activities of the Funds. As of March 31, 2004, Cooke & Bieler managed over $3.8 billion in assets.
Cooke & Bieler is compensated for its services by Funds Management from the fees Funds Management receives for its services as adviser.
The Administrator
Funds Management provides the Funds with administrative services, including general supervision of each Fund's operation, coordination of the other services provided to each Fund, compilation of information for reports to the SEC and 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. Funds Management also furnishes office space and certain facilities to conduct each Fund's business.
30 Stock Funds Prospectus
Shareholder Servicing Plan
We have a shareholder servicing plan for each Fund. Under this plan, we have agreements with various shareholder servicing agents to process purchase and redemption requests, to service shareholder accounts, and to provide other related services. For these services, each Fund pays an annual fee of 0.25% of its average daily net assets.
The Transfer Agent
Boston Financial Data Services, Inc. ("BFDS") provides transfer agency and dividend disbursing services to the Funds.
Stock Funds Prospectus 31
Pricing Fund Shares
. As with all mutual fund investments, the price you pay to purchase shares or the price you receive when you redeem shares is not determined until after a request has been received in proper form. The price of Fund shares is based on a Fund's NAV. The price at which a purchase or redemption of Fund shares is effected is based on the next calculation of NAV after the order is placed.
. Each Fund's investments are generally valued at current market prices. Securities are generally valued based on the last sale price during the regular trading session if the security trades on an exchange ("closing price"); and if there is no sale, based on the latest quoted bid price. Securities that are not traded primarily on an exchange generally are valued using latest quoted bid prices obtained by an independent pricing service. Securities listed on the Nasdaq Stock Market, Inc., however, are valued at the Nasdaq Official Closing Price ("NOCP"), and if no NOCP is available, then at the last reported sales price. We are required to depart from these general valuation methods and use fair value pricing methods to determine the value of certain investments if we believe that the closing price or the latest quoted bid price of a security, including securities that trade primarily on a foreign exchange, does not accurately reflect its current value when the Fund calculates its NAV. The closing price or the latest quoted bid price of a security may not reflect its current value if, among other things, a significant event occurs after the closing price or quoted bid price but before a Fund calculates its NAV that materially affects the value of the security. We use various criteria, including a systematic evaluation of U.S. market moves after the close of foreign markets, in deciding whether a market price is still reliable, and if not, what fair value to assign to the security. In light of the judgment involved in fair value decisions, there can be no assurance that a fair value assigned to a particular security is accurate. Such fair value pricing may result in NAVs that are higher or lower than NAVs based on the closing price or latest quoted bid price. See the Statement of Additional Information for further disclosure.
. We determine the NAV of each class of the Funds' shares each business day as of the close of regular trading on the New York Stock Exchange ("NYSE") at 4:00 p.m. (ET). We determine the NAV by subtracting each Fund class's liabilities from its total assets, and then dividing the result by the total number of outstanding shares of that class. Each Fund's total assets are generally valued at current market prices. See the Statement of Additional Information for further disclosure.
. Requests to buy or sell shares of the Funds are processed each business day as of the close of regular trading on the NYSE, which is usually 4:00 p.m. (ET). If the NYSE closes early, the Funds will close early and will value their shares at such earlier time under these circumstances. Requests received in proper form before this time are processed the same day. Requests received after the cutoff time are processed the next business day.
. The Funds are open for business on each day the NYSE is open for business. NYSE holidays include New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. When any holiday falls on a weekend, the NYSE typically is closed on the weekday immediately before or after such holiday.
32 Stock Funds Prospectus
This section provides information on how to open an account, and how to purchase, sell and exchange Fund shares. Former Cooke & Bieler Portfolio shareholders who received Class D shares in the reorganization and do not hold their shares through an Institution should contact Investor Services at 1-800-222-8222 for assistance with purchasing, selling or exchanging Fund shares.
How to Buy Shares
Class D shares are available for purchase by or through Institutions. Individuals interested in purchasing Class D shares of the Funds should contact a customer service representative at an Institution and should understand the following:
. Share purchases are made through a customer account at an Institution in accordance with the terms of the customer account involved;
. Institutions are usually the holders of record of Class D shares held through customer accounts and maintain records reflecting their customers' beneficial ownership of the shares;
. Institutions are responsible for transmitting their customers' purchase and redemption orders to the Funds and for delivering required payment on a timely basis; and
. Institutions are responsible for delivering shareholder communications and voting information from the Funds, and for transmitting shareholder voting instructions to the Funds.
Investors who are interested in purchasing shares directly from a Fund should refer to information on other share classes offered by the Funds.
All purchases must be made in U.S. dollars and all checks must be drawn on U.S. banks.
In compliance with the USA PATRIOT Act all financial institutions (including mutual funds) are required to obtain, verify and record the following information for all registered owners or others who may be authorized to act on an account: full name, date of birth, Social Security number and permanent street address. Corporate, trust and other entity accounts require additional documentation. This information will be used to verify your true identity. We will return you application if any of this information is missing, and we may request additional information from you for verification purposes. In the rare event that we are unable to verify your identity, the Fund reserves the right to redeem your account at the current day's NAV.
In addition to payments received from the Funds, selling or shareholder servicing agents may receive significant additional payments directly from the adviser, the distributor or their affiliates in connection with the sale of Fund shares. These amounts may include fixed dollar amounts, per account fees or a percentage of sales or assets, and may involve up-front or ongoing payments. Agents may agree to provide a variety of marketing or servicing advantages to the Funds in return for the payments. Selling or shareholder servicing agents, in turn, may pay some or all of these amounts to their employees who recommend or sell Fund shares or make investment decisions on behalf of clients. Payments made with respect to the Funds may differ from those made with respect to other mutual funds available through the agent and could influence the agent's recommendations or decisions. Prospective investors should consult with their selling or shareholder servicing agent if they wish to request further information regarding these matters.
Minimum Investments
Investors are required to make a minimum initial investment of $2,500 per Fund, and $100 for each investment after the initial investment. An Institution may require different minimum investment amounts. Please consult a customer service representative from your Institution for details.
Stock Funds Prospectus 33
How to Sell Shares
Class D shares held through an Institution must be redeemed in accordance with the account agreement governing your customer account at such firm. Please read the account agreement with your Institution for rules governing selling shares.
General Notes for Selling Shares:
. We will process requests to sell shares at the first NAV calculated after a request in proper form is received. Requests received before the cutoff times listed in the "Pricing Fund Shares" section are processed on the same business day.
. Redemption proceeds are usually wired to the redeeming Institution the following business day.
. If you purchased shares through a packaged investment product or retirement plan, read the directions for selling shares provided by the product or plan. There may be special requirements that supersede the directions in this Prospectus.
. We reserve the right to delay payment of a redemption so that we may be reasonably certain that investments made by check or through ACH have been collected. Payments of redemptions also may be delayed under extraordinary circumstances or as permitted by the SEC in order to protect remaining shareholders.
. Generally, we pay redemption requests in cash, unless the redemption request is for more than the lesser of $250,000 or 1% of the net assets of the Fund by a single shareholder over a ninety-day period. If a request for a redemption is over these limits, it may be to the detriment of existing shareholders to pay such redemption in cash. Therefore, we may pay all or part of the redemption in securities of equal value.
Redemption Fee
For the C&B Tax-Managed Value Fund, a 1.00% redemption fee will be assessed on the NAV of Class D shares redeemed or exchanged within one year after purchase and will be deducted from the redemption proceeds otherwise payable to the shareholder. The redemption fee for the Fund is intended to compensate the Fund for the increased expenses to longer-term shareholders and the disruptive effect on the Fund's portfolio caused by short-term investments. This redemption fee is retained by the Fund.
To determine whether the redemption fee applies, the Fund will first redeem shares acquired by reinvestment of any distributions of net investment income and realized capital gain, and then will redeem shares in the order in which they were purchased (such that shares held the longest are redeemed first).
The redemption fee will be waived on sales or exchanges of Fund shares made under the following circumstances:
. shares that were purchased with reinvested distributions.
. in order to meet scheduled (Internal Revenue Section 72(t) withdrawal schedule) or mandatory (withdrawals made after age 70 1/2 according to IRS guidelines) distributions from traditional IRAs and certain retirement plans. (See your retirement plan information for details.)
. in the event of the shareholder's death or for a disability suffered after purchasing shares. ("Disability" is defined by Internal Revenue Code Section 72(m)(7).)
. at the direction of Funds Management, for example, in order to complete a merger.
. due to participation in the Systematic Withdrawal Program.
34 Stock Funds Prospectus
In addition, certain brokers, retirement plan administrators and/or fee-based program sponsors who maintain underlying shareholder accounts do not have the systems capability to track and assess redemption fees. Consequently, the Fund generally will not assess a redemption fee on redemptions of shares held through such accounts.
Exchanges
Exchanges between Wells Fargo Funds involve two transactions: a sale of shares of one fund and the purchase of shares of another. In general, the same rules and procedures that apply to sales and purchases apply to exchanges. There are, however, additional factors you should keep in mind while making or considering an exchange:
. You should carefully read the Prospectus for the fund into which you wish to exchange.
. Every exchange involves selling fund shares which may produce a capital gain or loss for tax purposes.
. In general, exchanges may be made between like share classes of any Wells Fargo Fund offered to the general public for investment, with the following exceptions:
. Class D shares may be exchanged for Class A shares of the Money Market Fund;
. Class D shares may be exchanged for Class A shares of a non-money market fund; you will pay the Public Offering Price ("POP") for the new shares, unless you are otherwise eligible to buy such shares at NAV.
. If you are making an initial investment into a new fund through an exchange, you must exchange at least the minimum first purchase amount for the new fund, unless your balance has fallen below that amount due to market conditions.
. Any exchange between funds you already own must meet the minimum redemption and subsequent purchase amounts for the funds involved.
. The C&B Tax-Managed Value Fund imposes a 1.00% redemption fee on shares that are exchanged within one year of purchase. See page 34 for additional information.
. The Funds actively discourage and take steps to prevent the portfolio disruption and negative effects on long-term shareholders that can result from market timing and excessive trading activity. Funds Management may deem trading activity to be excessive if it determines that such trading activity would likely be disruptive to a Fund by increasing expenses or lowering returns. In this regard, Funds Management monitors available trading information and may temporarily suspend or permanently terminate purchase or exchange privileges from investors who complete more than two exchanges within a three-month period or seem to be following a timing pattern. In determining whether to suspend or terminate purchase or exchange privileges for such investors, Funds Management will consider the extent to which such trading activity is likely to be disruptive to the Fund. The extent to which trading activity may be disruptive would depend on a number of factors including, but not limited to, the number of trades, the size of the trades relative to the size of the Fund and the type of Fund involved.
Generally, we will notify you at least 60 days in advance of any changes in the exchange rules. Contact your account representative for further details.
Stock Funds Prospectus 35
Income and Gain Distributions
The Funds in this Prospectus make distributions of any net investment income and realized capital gains at least annually. Contact your Institution for distribution options. Remember, distributions have the effect of reducing NAV per share by the amount distributed.
Taxes
The following discussion regarding federal income taxes is based on laws that were in effect as of the date of this Prospectus and summarizes only some of the important federal income tax considerations affecting the Fund and you as a shareholder. It does not apply to foreign or tax-exempt shareholders or those holding Fund shares through a tax-advantaged account, such as a 401(k) plan or IRA. This discussion is not intended as a substitute for careful tax planning. You should consult your tax adviser about your specific tax situation. Please see the Statement of Additional Information for additional federal income tax information.
We will pass on to a Fund's shareholders substantially all of a Fund's net investment income and realized capital gains, if any. Distributions from a Fund's ordinary income and net short-term capital gain, if any, generally will be taxable to you as ordinary income. Distributions from the Fund's net long-term capital gain, if any, generally will be taxable to you as long-term capital gain. Corporate shareholders may be able to deduct a portion of distributions when determining their taxable income.
An individual's net long-term capital gain is subject to a reduced, maximum 15% rate of tax. A Fund's long-term capital gain distributed to individual shareholders generally will qualify for the reduced rate of tax if attributable to the Fund's sales and exchanges after May 5, 2003. Also, if you are an individual shareholder, the portion of your distributions attributable to dividends received by a Fund from certain U.S. and certain foreign corporations generally will be taxed at a maximum 15% tax rate, as long as certain holding period requirements are met by you with respect to your Fund shares, and by the Fund with respect to the stocks it holds that are producing such dividends. Corporate shareholders may be able to deduct a portion of their distributions when determining their taxable income. Absent further legislation, these reduced rates will expire after December 31, 2008.
Distributions from a Fund normally will be taxable to you when paid, whether you take distributions in cash or automatically reinvest them in additional Fund shares. Following the end of each year, we will notify you of the federal income tax status of your distributions for the year.
If you buy shares of a Fund shortly before it makes a distribution, your distribution will, in effect, be a taxable return of part of your investment. Similarly, if you buy Fund shares when it holds appreciated securities, you will receive a taxable return of part of your investment if and when the Fund sells the appreciated securities and realizes and distributes the gain. The Funds have built up, or the potential to build up, high levels of unrealized appreciation.
Your redemptions (including redemptions in-kind) and exchanges of Fund shares ordinarily will result in a taxable capital gain or loss, depending on the amount you receive for your shares (or are deemed to receive in the case of exchanges) and the amount you paid (or are deemed to have paid) for them. Such capital gain or loss generally will be long-term capital gain or loss if you have held your redeemed or exchanged Fund shares for more than one year at the time of redemption or exchange. In certain circumstances, losses realized on the redemption or exchange of Fund shares may be disallowed.
In certain circumstances, Fund shareholders may be subject to back-up withholding taxes.
Request for Multiple Copies of Shareholder Documents
To help keep fund expenses low, generally we send a single copy of a prospectus or shareholder report to shareholders of the same household. If your household currently receives a single copy of a prospectus or shareholder report and you would prefer to receive multiple copies, please call your selling agent.
36 Stock Funds Prospectus
Glossary
--------------------------------------------------------------------------------
We provide the ACH
following definitions
to assist you in Refers to the "Automated Clearing House" system
reading this maintained by the Federal Reserve Bank, which banks
Prospectus. For a use to process checks, transfer funds and perform
more complete other tasks.
understanding of
these terms you Business Day
should consult your
Investment Any day the New York Stock Exchange is open is a
Professional. business day for the Funds.
Capitalization
When referring to the size of a company,
capitalization means the total number of a company's
outstanding shares of stock multiplied by the price
per share. This is one accepted method of measuring a
company's size and is sometimes referred to as
"market capitalization."
Derivatives
Securities whose values are derived in part from the
value of another security or index. An example is a
stock option.
Distributions
Distributions of net investment income, realized
capital gain and/or capital made by a Fund to its
shareholders.
FDIC
The Federal Deposit Insurance Corporation. This is
the company that provides federally sponsored
insurance covering bank deposits, such as savings
accounts and CDs. Mutual funds are not FDIC insured.
Institution
Institutional investors acting for themselves or on
behalf of their customers in a fiduciary, advisory,
agency, custodial or similar capacity. Institutional
investors include, but are not limited to, banks,
pension funds, insurance companies, foundations,
trusts, etc., and broker-dealers and registered
investment advisers that have an agreement with the
Distributor to offer a Fund's shares through a
particular investment product, program or account for
which such broker-dealer or adviser may charge a fee.
Liquidity
The ability to readily sell a security at a fair
price.
Money Market Instruments
High quality, short-term instruments meeting the
requirements of Rule 2a-7 of the 1940 Act, such as
bankers' acceptances, commercial paper, repurchase
agreements, and government obligations. In a money
market fund, average portfolio maturity does not
exceed 90 days, and all investments have maturities
of 397 days or less at the time of purchase.
Net Asset Value ("NAV")
The value of a single fund share. It is determined by
adding together all of a fund's assets, subtracting
accrued expenses and other liabilities, then dividing
by the total number of shares.
Public Offering Price ("POP")
The NAV with the sales load added.
Repurchase Agreement
An agreement between a buyer and seller of a security
in which the seller agrees to repurchase the security
at an agreed upon price and time.
|
Stock Funds Prospectus 37
Selling Agent
A firm that has an agreement with the Funds'
distributor allowing it to sell a Fund's shares.
Shareholder Servicing Agent
Anyone appointed by the Fund to maintain shareholder accounts and records, assist and provide information to shareholders or perform similar functions.
Signature Guarantee
A guarantee given by a financial institution that has
verified the identity of the maker of the signature.
Statement of Additional Information
A document that supplements the disclosure made in
the Prospectus.
Total Return
The annual return on an investment in a mutual fund including capital appreciation and dividends. Total return calculations assume reinvestment of all distributions, reflect fee waivers, and exclude sales loads.
Undervalued
Describes a stock that is believed to be worth more
than its current price.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
38 Stock Funds Prospectus
YOU MAY WISH TO REVIEW THE FOLLOWING DOCUMENTS: Write to:
Wells Fargo Funds
STATEMENT OF ADDITIONAL INFORMATION P.O. Box 8266
Boston, MA 02266-8266; or
supplements the disclosures made by this
Prospectus. The Statement of Additional Visit the SEC's website at http://www.sec.gov
Information has been filed with the SEC and
incorporated by reference into this Prospectus REQUEST COPIES FOR A FEE BY WRITING TO:
and is legally part of this Prospectus. SEC Public Reference Room
Washington, DC 20549-6009; or
ANNUAL/SEMI-ANNUAL REPORTS by electronic request at publicinfo@sec.gov
Call: 1-800-SEC-0330 for details
provide certain financial and other important
information, including a discussion of the ADDITIONAL SERVICES QUESTIONS CAN BE
market conditions and investment strategies ANSWERED BY CALLING YOUR INVESTMENT
that significantly affected Fund performance PROFESSIONAL
over the reporting period.
THESE DOCUMENTS ARE AVAILABLE FREE OF CHARGE:
Call: 1-800-222-8222, or visit our website at
www.wellsfargofunds.com.
|
P071 (7/04) ----------------------------------------------------- [GRAPHIC] ICA Reg. No. NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE Printed on Recycled Paper 811-09253 ----------------------------------------------------- |
[LOGO] WELLS FARGO FUNDS
[GRAPHIC]
Wells Fargo Stock Funds
Prospectus
Wells Fargo C&B Large Cap Value Fund(SM)
Wells Fargo C&B Mid Cap Value Fund(SM)
Select Class
Please read this Prospectus and keep it for future reference. It is designed to provide you with important information and to help you decide if a Fund's goals match your own.
These securities have not been approved or disapproved by the U.S. Securities and Exchange Commission ("SEC"), nor has the SEC passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
Fund shares are NOT deposits or other obligations of, or issued, endorsed or guaranteed by Wells Fargo Bank, N.A. ("Wells Fargo Bank") or any of its affiliates. Fund shares are NOT insured or guaranteed by the U.S. Government, the Federal Deposit Insurance Corporation ("FDIC") or any other governmental agency. AN INVESTMENT IN A FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
July 26, 2004
(INTENTIONALLY LEFT BLANK)
Table of Contents Stock Funds
--------------------------------------------------------------------------------
Overview Objectives and Principal Strategies 4
Important summary information Summary of Important Risks 6
about the Funds.
Performance History 7
Summary of Expenses 10
--------------------------------------------------------------------------------
The Funds Key Information 12
Important information about the C&B Large Cap Value Fund 13
individual Funds.
C&B Mid Cap Value Fund 17
Additional Strategies and
General Investment Risks 20
Organization and Management
of the Funds 24
--------------------------------------------------------------------------------
Your Investment Your Account 26
How to open an account and How to Buy Shares 27
how to buy, sell and exchange
Fund shares. How to Sell Shares 28
Exchanges 29
--------------------------------------------------------------------------------
Reference Other Information 30
Additional information and term Glossary 32
definitions.
|
Stock Funds Overview -------------------------------------------------------------------------------- |
See the individual Fund descriptions in this Prospectus for further details.
Italicized and colored words appear that way only to denote their inclusion in the Glossary section of this Prospectus.
--------------------------------------------------------------------------------
FUND OBJECTIVE
--------------------------------------------------------------------------------
C&B Large Cap Value Fund Seeks maximum long-term total return, consistent
with minimizing risk to principal.
C&B Mid Cap Value Fund Seeks maximum long-term total return, consistent
with minimizing risk to principal.
|
4 Stock Funds Prospectus
We principally invest in large-capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more. We seek total return by targeting companies that we believe are undervalued, possess strong financial positions, and have a consistency and predictability in their earnings growth.
We principally invest in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index. As of December 31, 2003, this range was $500 million to $16 billion, and is expected to change frequently. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions.
Stock Funds Prospectus 5
This section summarizes important risks that relate to an investment in the Funds. All are important to your investment choice. Additional information about these and other risks is included in:
. the individual Fund descriptions beginning on page 13;
. the "Additional Strategies and General Investment Risks" section beginning on page 20; and
. the Statement of Additional Information.
An investment in a Fund is not a deposit of Wells Fargo Bank or any of its affiliates and is not insured or guaranteed by the FDIC or any other government agency. It is possible to lose money by investing in a Fund.
Equity Securities
The Funds invest in equity securities, which are subject to equity market risk. This is the risk that stock prices will fluctuate and can decline and reduce the value of a Fund's portfolio. Certain types of stocks and certain individual stocks selected for a Fund's portfolio may underperform or decline in value more than the overall market. There is no guarantee that stocks selected as undervalued using a value style approach will perform as expected. Generally, stocks of larger companies tend to be less volatile and more liquid than stocks of smaller companies. Because the Funds typically invest in 30 to 50 companies, the value of an investment in one of the Funds will vary more in response to developments or changes affecting the market value of particular stocks than an investment in a mutual fund that is more broadly diversified.
--------------------------------------------------------------------------------
FUND SPECIFIC RISKS
--------------------------------------------------------------------------------
C&B Large Cap Value Fund The Fund is primarily subject to the risks
described above.
C&B Mid Cap Value Fund The Fund is primarily subject to the risks
described above. Stocks of medium-sized companies
may be more volatile and less liquid, in part
because the issuers may be more vulnerable to
adverse business or economic events, than the
stocks of larger, more established companies.
6 Stock Funds Prospectus
|
Performance History -------------------------------------------------------------------------------- |
The following information shows you how each Fund has performed and illustrates the variability of a Fund's returns over time. Each Fund's average annual returns for one-, five- and ten-year periods (or for the life of the Fund, as applicable) are compared to the performance of an appropriate broad-based index.
Please remember that past performance is no guarantee of future results.
Effective at the close of business on July 23, 2004, the Wells Fargo C&B Large Cap Value Fund and the Wells Fargo C&B Mid Cap Value Fund were organized as the successor funds to the C&B Large Cap Value Portfolio and the C&B Mid Cap Value Portfolio, respectively. The historical performance information shown for each successor fund for periods prior to each fund's reorganization date reflects the historical information for its predecessor.
C&B Large Cap Value Fund Select Class Calendar Year Returns*/1/
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 ---- ----- ----- ----- ---- ---- ----- ---- ------ ----- 1.35% 31.91% 20.22% 27.98% 8.04% 2.06% 19.49% 6.59% (10.89)% 33.46% |
Best Qtr.: Q2 '03 . 20.94% Worst Qtr.: Q3 '02 . (17.54)%
* Performance shown reflects the performance of the Fund's Class D shares. The Fund's year-to-date performance through March 31, 2004, was 3.99%.
Stock Funds Prospectus 7
The table below provides average annual total return information, both before and after taxes, for the Fund's Select Class shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans, or IRAs.
Average Annual Total Returns/1/ for the period ended 12/31/03 1 year 5 years 10 years ----------------------------------------------------- ------ ------- -------- Select Class Returns Before Taxes (Incept. 7/26/2004) 33.46% 9.10% 13.14% Select Class Returns After Taxes on Distributions 33.31% 5.67% 9.04% Select Class Returns After Taxes on Distributions and Sale of Fund Shares 21.91% 6.31% 9.49% S&P 500 Index/2/ (reflects no deduction for expenses or taxes) 28.69% (0.57)% 11.07% Russell 1000 Value Index (reflects no deduction for expenses or taxes) 30.03% 3.56% 11.88% |
/1/ Performance shown reflects the performance of the Fund's Class D shares, and includes expenses that are not applicable to and are higher than those of this Class. The annual returns of the Class D shares are substantially similar to what this Class's returns would be, because the shares are invested in the same portfolio of securities and the annual returns differ only to the extent that the Classes do not have the same expenses. The Fund's Class D shares incepted May 15, 1990.
/2/ S&P 500 is a registered trademark of Standard & Poor's.
8 Stock Funds Prospectus
C&B Mid Cap Value Fund Select Class Calendar Year Returns*/1/
'99 '00 '01 '02 '03 ----- ----- ----- ----- ----- (0.19)% 41.03% 25.16% (9.50)% 38.99% |
Best Qtr.: Q2 '99 . 20.78% Worst Qtr.: Q3 '02 . (20.75)%
* Performance shown reflects the performance of the Fund's Class D shares. The Fund's year-to-date performance through March 31, 2004, was 3.62%.
The table below provides average annual total return information, both before and after taxes, for the Fund's Select Class shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans, or IRAs.
Average Annual Total Returns/1/ Life of for the period ended 12/31/03 1 year 5 years Fund ----------------------------------------------------- ------ ------- ------- Select Class Returns Before Taxes (Incept. 7/26/2004) 38.99% 17.25% 14.66% Select Class Returns After Taxes on Distributions 38.77% 15.97% 13.54% Select Class Returns After Taxes on Distributions and Sale of Fund Shares 25.60% 14.35% 12.19% Russell Midcap Value Index (reflects no deduction for expenses or taxes) 38.07% 8.73% 7.71% Russell Midcap Index (reflects no deduction for expenses or taxes) 40.06% 7.23% 8.17% |
/1/ Performance shown reflects the performance of the Fund's Class D shares, and includes expenses that are not applicable to and are higher than those of this Class. The annual returns of the Class D shares are substantially similar to what this Class's returns would be, because the shares are invested in the same portfolio of securities and the annual returns differ only to the extent that the Classes do not have the same expenses. The Fund's Class D shares incepted on February 18, 1998.
Stock Funds Prospectus 9
These tables are intended to help you understand the various costs and expenses you will pay as a shareholder in a Fund. These tables do not reflect charges that may be imposed in connection with an account through which you hold Fund shares. A broker-dealer or financial institution maintaining an account through which you hold Fund shares may charge separate account, service or transaction fees on the purchase or sale of Fund shares that would be in addition to the fees and expenses shown here.
All Funds
--------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) None
|
--------------------------------------------------------------------------------
C&B Large Cap C&B Mid Cap
Value Fund Value Fund
--------------------------------------------------------------------------------
Management Fees/1/ 0.75% 0.75%
Distribution (12b-1) Fees 0.00% 0.00%
Other Expenses/2/ 0.48% 0.21%
--------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.23% .96%
--------------------------------------------------------------------------------
Fee Waivers 0.53% 0.06%
--------------------------------------------------------------------------------
NET EXPENSES/3/ 0.70% 0.90%
--------------------------------------------------------------------------------
|
/1/ Effective August 1, 2004, the Fund's investment adviser will implement a
breakpoint schedule for each Fund's management fee. The management fee
charged to a Fund will decline as the Fund's assets grow and will continue
to be based on a percentage of the Fund's average daily net assets. The
breakpoint schedule for each Fund is as follows: 0.75% for assets from $0
to $499 million; 0.70% for assets from $500 million to $999 million; 0.65%
for assets from $1 billion to $2.99 billion; 0.625% for assets from $3
billion to $4.99 billion; and 0.60% for assets $5 billion and higher.
Please see the Statement of Additional Information for further details.
/2/ Other expenses are based on estimates for the current fiscal year and
include various Fund start-up expenses, which will only be incurred in the
first year of the Fund's operation. Without including these first year
expenses, the Gross Operating Expense ratio for the Wells Fargo C&B Large
Cap Value Fund would be 1.09%, and for the Wells Fargo C&B Mid Cap Value
Fund would be 0.95%. Other expenses may include expenses payable to
affiliates of Wells Fargo & Company.
/3/ The adviser has committed through February 28, 2007, to waive fees and/or
reimburse expenses to the extent necessary to maintain the Fund's net
operating expense ratio shown. After this time, the net operating expense
ratio may be increased only with the approval of the Board of Trustees.
10 Stock Funds Prospectus
This example is intended to help you compare the cost of investing in a Fund with the cost of investing in other mutual funds. The example assumes a fixed rate of return and that fund operating expenses remain the same. Your actual costs may be higher or lower than those shown.
You would pay the following expenses on a $10,000 investment assuming a 5% annual return and that you redeem your shares at the end of each period:
--------------------------------------------------------------------------------
C&B Large Cap C&B Mid Cap
Value Fund Value Fund
--------------------------------------------------------------------------------
1 YEAR $ 72 $ 92
3 YEARS $ 266 $ 292
5 YEARS $ 522 $ 515
10 YEARS $1,252 $1,157
--------------------------------------------------------------------------------
|
Stock Funds Prospectus 11
In this Prospectus, "we" generally refers to Wells Fargo Funds Trust (the "Trust"), or Wells Fargo Funds Management, LLC ("Funds Management"), the Funds' investment adviser. "We" may also refer to the Funds' other service providers. "You" refers to the shareholder or potential investor.
Important information you should look for as you decide to invest in a Fund:
The summary information on the previous pages is designed to provide you with an overview of each Fund. The sections that follow provide more detailed information about the investments and management of each Fund.
Investment Objective and Investment Strategies
The investment objective of each Fund in this Prospectus is non-fundamental, that is, it can be changed by a vote of the Board of Trustees alone. The objective and strategies description for each Fund tells you:
. what the Fund is trying to achieve;
. how we intend to invest your money; and
. what makes the Fund different from the other Funds offered in this Prospectus.
Permitted Investments
A summary of each Fund's key permitted investments and practices. Unless otherwise indicated, these investment policies and practices apply on an ongoing basis. Percentages of "the Fund's assets" are measured as percentages of net assets plus borrowings for investment purposes. The investment policy of each Fund concerning "80% of the Fund's assets" may be changed by the Board of Trustees without shareholder approval, but shareholders would be given at least 60 days notice.
Important Risk Factors
Describes the key risk factors for each Fund, and includes risks described in the "Summary of Important Risks" and "Additional Strategies and General Investment Risks" sections.
Italicized and colored words appear that way only to denote their inclusion in the Glossary section of this Prospectus.
12 Stock Funds Prospectus
Portfolio Managers: A team of investment professionals of the investment sub-adviser, Cooke & Bieler, L.P.
Investment Objective
The C&B Large Cap Value Fund seeks maximum long-term total return, consistent with minimizing risk to principal.
Investment Strategies
We principally invest in large-capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more. We seek total return by targeting companies that we believe are undervalued, possess strong financial positions and have a consistency and predictability in their earnings growth.
We select securities for the portfolio based on an analysis of a company's financial characteristics, an assessment of the quality of a company's management and the implementation of a valuation discipline. In selecting a company, we consider criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. We further narrow the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. We regularly review the investments of the portfolio and sell a portfolio holding when it has achieved its valuation targets, a change in the underlying company's outlook has occurred or more attractive investment alternatives are available.
We hold a smaller number of securities in the portfolio, usually 30 to 50 companies. This strategy enables us to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. We believe our assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while our insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets.
Permitted Investments
Under normal circumstances, we invest at least 80% of the Fund's assets in large-capitalization securities, which we define as securities of companies with market capitalizations of $1 billion or more.
Important Risk Factors
The Fund is primarily subject to the risks described under "Common Risks for the Funds" on page 6.
You should consider these risks along with the "Additional Strategies and General Investment Risks" section beginning on page 20. These considerations are all important to your investment choice.
Stock Funds Prospectus 13
The table below shows the financial performance of the Fund's Class D shares. This table is intended to help you understand the Fund's financial performance for the past 5 years. Total returns represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). The information provided for the fiscal years 2003 and 2002 has been audited by KPMG LLP; the information for prior periods has been audited by a predecessor independent registered public accounting firm. The financial statements and the independent auditor's report are included in the annual report of the Funds, a copy of which is available upon request. The information for the six-month period ended April 30, 2004, is unaudited and is contained in the semi-annual report of the Funds, also available upon request.
CLASS D SHARES--
COMMENCED ON MAY 15, 1990
-----------------------------------------
April 30, 2004/1,2/
(unaudited) October 31, 2003/2/
-----------------------------------------
For the period ended:
Net asset value, beginning of period $ 7.42 $ 6.49
Income from investment operations:
Net investment income (loss) 0.02 0.05
Net realized and unrealized gain
(loss) on investments 0.68 1.61
Total from investment operations 0.70 1.66
Less distributions:
Dividends from net investment income (0.02) (0.05)
Distributions from net realized gain -- (0.68)
Total from distributions (0.02) (0.73)
Net asset value, end of period $ 8.10 $ 7.42
Total return/4/ 9.47% 28.34%
Ratios/supplemental data:
Net assets, end of period (000s) $25,248 $20,419
Ratios to average net assets:
Ratio of expenses to average net
assets 1.15% 1.16%/5/
Ratio of net investment income
(loss) to average net assets 0.56% 0.76%
Portfolio turnover 12% 26%
|
/1/ All ratios for the period have been annualized.
/2/ Per share figures calculated using Average Shares Method.
/3/ On November 19, 2001, The Advisors' Inner Circle Fund C&B Large Cap Value
Portfolio (the "AIC Portfolio") acquired the assets of the UAM Funds Inc.
C&B Equity Portfolio (the "UAM Portfolio"). The operations of the AIC
Portfolio prior to the acquisition were those of the predecessor, the UAM
Portfolio.
/4/ Returns are for the period indicated and have not been annualized. Total
Return would have been lower had certain fees not been waived and expenses
assumed by the Advisor during the periods indicated. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of portfolio shares.
/5/ Without waivers and/or reimbursements, for the fiscal years ended October
31, 2003 and 2002, these ratios would have been 1.20% and 1.60%,
respectively.
/6/ As of March 1, 2002, the expense cap changed from 1.00% to 1.25%.
14 Stock Funds Prospectus
--------------------------------------------------------------------------------
October 31, 2002/2/ October 31, 2001/3/ October 31, 2000 October 31, 1999
--------------------------------------------------------------------------------
$ 7.13 $ 8.71 $ 12.06 $ 13.58
0.05 0.07 0.12 0.16
(0.38) 0.27 0.54 0.72
(0.33) 0.34 0.66 0.88
(0.05) (0.11) (0.09) (0.16)
(0.26) (1.81) (3.92) (2.24)
(0.31) (1.92) (4.01) (2.40)
$ 6.49 $ 7.13 $ 8.71 $ 12.06
(5.14)% 4.50% 10.89% 7.73%
$14,383 $38,850 $35,251 $73,292
1.14%/5,6/ 1.00% 1.00% 0.89%
0.59% 0.91% 1.16% 1.12%
39% 41% 48% 43%
|
Stock Funds Prospectus 15
Portfolio Managers: A team of investment professionals of the investment sub-adviser, Cooke & Bieler, L.P.
Investment Objective
The C&B Mid Cap Value Fund seeks maximum long-term total return, consistent with minimizing risk to principal.
Investment Strategies
We principally invest in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index. As of December 31, 2003, this range was $500 million to $16 billion, and as is expected to change frequently. We seek total return by selecting companies that we believe are undervalued and possess strong financial positions.
We select securities for the portfolio based on an analysis of a company's financial characteristics, an assessment of the quality of a company's management and the implementation of a valuation discipline. In selecting a company, we consider criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. We further narrow the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. We regularly review the investments of the portfolio and sell a portfolio holding when it has achieved its valuation targets, a change in the underlying company's outlook has occurred or more attractive investment alternatives are available.
We hold a smaller number of securities in the portfolio, usually 30 to 50 companies. This strategy enables us to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. We believe our assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while our insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets.
Permitted Investments
Under normal circumstances, we invest at least 80% of the Fund's assets in mid-capitalization securities, which we define as securities of companies with market capitalizations within the range of companies comprising the Russell Midcap Value Index.
Important Risk Factors
The Fund is primarily subject to the risks described under "Common Risks for the Funds" on page 6. Stocks of medium-sized companies may be more volatile and less liquid, in part because the issuers may be more vulnerable to adverse business or economic events, than the stocks of larger, more established companies.
You should consider these risks along with the "Additional Risks and General Investment Risks" section beginning on page 20. These considerations are all important to your investment choice.
Stock Funds Prospectus 17
The table below shows the financial performance of the Fund's Class D shares. This table is intended to help you understand the Fund's financial performance for the past 5 years. Total returns represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all distributions). The information provided for the fiscal years 2003 and 2002 has been audited by KPMG LLP; the information for prior periods has been audited by a predecessor independent registered public accounting firm. The financial statements and the independent auditor's report are included in the annual report of the Funds, a copy of which is available upon request. The information for the six-month period ended April 30, 2004, is unaudited and is contained in the semi-annual report of the Funds, also available upon request.
CLASS D SHARES--
COMMENCED ON FEBRUARY 18, 1998
-----------------------------------------
April 30, 2004/1,2/
(unaudited) October 31, 2003/2/
-----------------------------------------
For the period ended:
Net asset value, beginning of period $ 17.96 $ 13.15
Income from investment operations:
Net investment income (loss)/7/ -- --
Net realized and unrealized gain (loss)
on investments 1.27 4.83
Total from investment operations 1.27 4.83
Less distributions:
Dividends from net investment income (0.00)/8/ (0.02)
Distributions from net realized gain/7/ (0.17) --
Total from distributions (0.17) (0.02)
Net asset value, end of period $ 19.06 $ 17.96
Total return/4/ 7.14% 36.76%
Ratios/supplemental data:
Net assets, end of period (000s) $477,614 $301,513
Ratios to average net assets:
Ratio of expenses to average net assets 1.07% 1.27%/5/
Ratio of net investment income (loss) to average
net assets 0.02% 0.01%
Portfolio turnover 19% 18%
|
/1/ All ratios for the period have been annualized.
/2/ Per share figures calculated using Average Shares Method.
/3/ On November 19, 2001, The Advisors' Inner Circle Fund C&B Mid Cap Value
Portfolio (the "AIC Portfolio") acquired the assets of the UAM Funds Inc.
C&B Mid Cap Equity Portfolio (the "UAM Portfolio"). The operations of the
AIC Portfolio prior to the acquisition were those of the predecessor, the
UAM Portfolio.
/4/ Returns are for the period indicated and have not been annualized. Total
Return would have been lower had certain fees not been waived and expenses
assumed by the Advisor during the periods indicated. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of portfolio shares.
18 Stock Funds Prospectus
October 31, 2002/2/ October 31, 2001/3/ October 31, 2000 October 31, 1999
-------------------------------------------------------------------------------
$ 14.19 $12.78 $ 9.84 $ 9.69
(0.01) 0.08 0.07 0.06
(0.19) 2.12 3.16 0.15
(0.20) 2.20 3.23 0.21
(0.04) (0.09) (0.08) (0.06)
(0.80) (0.70) (0.21) --
(0.84) (0.79) (0.29) (0.06)
$ 13.15 $14.19 $12.78 $ 9.84
(2.09)% 18.14% 33.78% 2.19%
$81,390 $5,934 $1,520 $1,446
1.37%/5,6/ 1.00% 1.00% 1.00%
(0.07)% 0.68% 0.66% 0.70%
30% 44% 101% 81%
|
/5/ Without waivers and/or reimbursements, for the fiscal years ended October
31, 2003 and 2002, these ratios would have been 1.27% and 1.54%,
respectively.
/6/ As of March 1, 2002, the expense cap changed from 1.00% to 1.40%.
/7/ Amounts designated as "--" are either $0 or have been rounded to $0.
/8/ Amount is less than $0.01.
Stock Funds Prospectus 19
Investment practices and risk levels are carefully monitored. Every attempt is made to ensure that the risk exposure for each Fund remains within the parameters of its objective and strategies.
Understanding the risks involved in mutual fund investing will help you make an informed decision that takes into account your risk tolerance and preferences. You should carefully consider the risks common to investing in all mutual funds, including the Wells Fargo Funds. Certain common risks are identified in the "Summary of Important Risks" section on page 6. Other risks of mutual fund investing include the following:
. Unlike bank deposits, such as CDs or savings accounts, mutual funds are not insured by the FDIC.
. We cannot guarantee that a Fund will meet its investment objective.
. We do not guarantee the performance of a Fund, nor can we assure you that the market value of your investment will not decline. We will not "make good" on any investment loss you may suffer, nor can anyone we contract with to provide services, such as investment advisers, offer or promise to make good on any such losses.
. Share prices--and therefore the value of your investment--will increase and decrease with changes in the value of the underlying securities and other investments. This is referred to as price volatility.
. An investment in a single Fund, by itself, does not constitute a complete investment plan.
. Each Fund holds some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or makes other short-term investments to maintain liquidity. Each Fund may temporarily increase such holdings for short-term defensive purposes when we believe it is in the best interest of shareholders to do so. During these periods, a Fund may not achieve its objective.
. The Funds may invest in various derivative instruments. The term "derivatives" covers a broad range 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.
20 Stock Funds Prospectus
What follows is a general list of the types of risks (some of which have been previously described) that may apply to a given Fund and a table showing some of the additional investment practices that each Fund may use and the key risks associated with them. Additional information about these practices is available in the Statement of Additional Information.
Counter-Party Risk--The risk that the other party in a repurchase agreement or other transaction will not fulfill its contract obligation.
Credit Risk--The risk that the issuer of a debt security will be unable to make interest payments or repay principal on schedule. If an issuer does default, the affected security could lose all of its value, or be renegotiated at a lower interest rate or principal amount. Affected securities might also lose liquidity. Credit risk also includes the risk that a party in a transaction may not be able to complete the transaction as agreed.
Leverage Risk--The risk that an investment practice, such as lending portfolio securities or engaging in forward commitment or when-issued transactions, may increase a Fund's exposure to market risk, interest rate risk or other risks by, in effect, increasing assets available for investment.
Liquidity Risk--The risk that a security cannot be sold at the time desired, or cannot be sold without adversely affecting the price.
Market Risk--The risk that the value of a security will be reduced by market activity. This is a basic risk associated with all securities.
In addition to the general risks discussed above and under "Summary of Important Risks", you should carefully consider and evaluate any special risks that may apply to investing in a particular Fund. See the "Important Risk Factors" in the summary for each Fund. You should also see the Statement of Additional Information for additional information about the investment practices and risks particular to each Fund.
Stock Funds Prospectus 21
Investment Practice/Risk
The following table lists certain regular investment practices of the Funds, including some not disclosed in the Investment Objective and Investment Strategies sections of the Prospectus. The risks indicated after the description of the practice are NOT the only potential risks associated with that practice, but are among the more prominent. Market risk is assumed for each investment practice. See the Statement of Additional Information for more information on these practices.
Remember, each Fund is designed to meet different investment needs and objectives.
------------------------------------------------------------------------------------------------------------- INVESTMENT PRACTICE PRINCIPAL RISK(S) C&B LARGE CAP VALUE C&B MID CAP VALUE ------------------------------------------------------------------------------------------------------------- Borrowing Policies The ability to borrow money for Leverage Risk . . temporary purposes (e.g. to meet shareholder redemptions). Illiquid Securities A security which may not be sold or disposed Liquidity Risk . of in the ordinary course of business within seven days at the value determined for it by the Fund. Limited to 15% of net assets. Loans of Portfolio Securities The practice of loaning securities to Credit, Counter- . . brokers, dealers and financial institutions Party and to increase return on those securities. Loans Leverage Risk may be made up to 1940 Act limits (currently one third of total assets, including the value of collateral received). Repurchase Agreements A transaction in which the seller of a Credit and Counter- . . security agrees to buy back the security at Party Risk an agreed upon time and price, usually with interest. |
22 Stock Funds Prospectus
A number of different entities provide services to the Funds. This section shows how the Funds are organized, lists the entities that perform different services, and explains how these service providers are compensated. Further information is available in the Statement of Additional Information.
About Wells Fargo Funds Trust
The Trust was organized as a Delaware statutory trust on March 10, 1999. The Board of Trustees of the Trust (the "Board") supervises each Fund's activities, monitors its contractual arrangements with various service providers and decides upon matters of general policy.
The Board supervises the Funds' activities and approves the selection of various companies hired to manage the Funds' operation. The major service providers are described in the diagram below. Except for the advisers, which generally may be changed only with shareholder approval, if the Board believes that it is in the best interests of the shareholders, it may change service providers.
INVESTMENT ADVISER CUSTODIAN
--------------------------------------------------------------------------------
Wells Fargo Funds Management, LLC Wells Fargo Bank, N.A. 6th &
525 Market Street, San Francisco, CA Marquette, Minneapolis, MN Provides
Manages the Funds' investment safekeeping for the Funds' assets
activities
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
TRANSFER
ADMINISTRATOR AGENT
--------------------------------------------------------------------------------
Wells Fargo Funds Management, LLC Boston Financial Data Services, Inc.
525 Market Street Two Heritage Drive
San Francisco, CA Quincy, MA
Manages the Maintains records
Funds' business of shares and
activities supervises the payment
of dividends
--------------------------------------------------------------------------------
|
24 Stock Funds Prospectus
The Investment Adviser
Funds Management serves as the investment adviser for each of the Funds. Funds Management, an indirect, wholly owned subsidiary of Wells Fargo & Company, was created to succeed the mutual fund advisory responsibilities of Wells Fargo Bank and is an affiliate of Wells Fargo Bank. Wells Fargo Bank, which was founded in 1852, is the oldest bank in the western United States and is one of the largest banks in the United States. The Fund's adviser is responsible for implementing the investment policies and guidelines for the Funds, and for supervising the sub-adviser, who is responsible for the day-to-day portfolio management of the Funds. For providing these services, Funds Management is entitled to receive fees as shown in the table of Annual Fund Operating Expenses under "Management Fees" in the front of this Prospectus. As of March 31, 2004, Funds Management managed over $75 billion in mutual fund assets.
Dormant Multi-Manager Structure
The Board has adopted a dormant "multi-manager" structure for each Fund. Under this structure, a Fund and Funds Management would engage one or more sub-advisers to make day-to-day investment decisions for the Fund's assets. Funds Management would retain ultimate responsibility (subject to the oversight of the Board) for overseeing the sub-advisers and may, at times, recommend to the Board that the Fund: (i) change, add or terminate one or more sub-advisers; (ii) continue to retain a sub-adviser even though the sub-adviser's ownership or corporate structure has changed; or (iii) materially change a sub-advisory agreement with a sub-adviser.
Applicable law generally requires the Fund to obtain shareholder approval of most of these types of recommendations, even if the Board approves the proposed action. Under the dormant "multimanager" structure approved by the Board, the Fund will seek exemptive relief, if necessary, from the SEC to permit Funds Management (subject to the Board's oversight and approval) to make decisions about the Fund's sub-advisory arrangements without obtaining shareholder approval. The Fund will continue to submit matters to shareholders for their approval to the extent required by applicable law.
The Sub-Adviser
Cooke & Bieler, L.P. ("Cooke & Bieler"), a Pennsylvania limited partnership is located at 1700 Market Street, Philadelphia, PA 19103. Cooke & Bieler is a registered investment adviser that has provided investment management services to corporations, foundations, endowments, pension and profit sharing plans, trusts, estates and other institutions and individuals since 1951. Cooke & Bieler is the sub-adviser for each of the Funds, and thereby responsible for the day-to-day investment management activities of the Funds. As of March 31, 2004, Cooke & Bieler managed over 3.8 billion in assets.
Cooke & Bieler is compensated for its services by Funds Management from the fees Funds Management receives for its services as adviser.
The Administrator
Funds Management provides the Funds with administrative services, including general supervision of each Fund's operation, coordination of the other services provided to each Fund, compilation of information for reports to the SEC and 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. Funds Management also furnishes office space and certain facilities to conduct each Fund's business.
The Transfer Agent
Boston Financial Data Services, Inc., ("BFDS") provides transfer agency and dividend disbursing services to the Funds.
Stock Funds Prospectus 25
This section tells you how Fund shares are priced, how to open an account and how to buy, sell or exchange Fund shares once your account is open.
Pricing Fund Shares
. As with all mutual fund investments, the price you pay to purchase shares or the price you receive when you redeem shares is not determined until after a request has been received in proper form. The price of Fund shares is based on a Fund's NAV. The price at which a purchase or redemption of Fund shares is effected is based on the next calculation of NAV after the order is placed.
. Each Fund's investments are generally valued at current market prices. Securities are generally valued based on the last sale price during the regular trading session if the security trades on an exchange ("closing price"); and if there is no sale, based on latest quoted bid price. Securities that are not traded primarily on an exchange generally are valued using latest quoted bid prices obtained by an independent pricing service. Securities listed on the Nasdaq Stock Market, Inc., however, are valued at the Nasdaq Official Closing Price ("NOCP"), and if no NOCP is available, then at the last reported sales price. We are required to depart from these general valuation methods and use fair value pricing methods to determine the value of certain investments if we believe that the closing price or the latest quoted bid price of a security, including securities that trade primarily on a foreign exchange, does not accurately reflect its current value when the Fund calculates its NAV. The closing price or the latest quoted bid price of a security may not reflect its current value if, among other things, a significant event occurs after the closing price or quoted bid price but before a Fund calculates its NAV that materially affects the value of the security. We use various criteria, including a systematic evaluation of U.S. market moves after the close of foreign markets, in deciding whether a market price is still reliable, and if not, what fair value to assign to the security. In light of the judgment involved in fair value decisions, there can be no assurance that a fair value assigned to a particular security is accurate. Such fair value pricing may result in NAVs that are higher or lower than NAVs based on the closing price or latest quoted bid price. See the Statement of Additional Information for further disclosure.
. We determine the NAV of each Fund's shares each business day as of the close of regular trading on the New York Stock Exchange ("NYSE") at 4:00 p.m. (ET). We determine the NAV by subtracting each Fund class's liabilities from its total assets, and then dividing the result by the total number of outstanding shares of that class. Each Fund's total assets are generally valued at current market prices. See the Statement of Additional Information for further disclosure.
. Requests to buy or sell shares of the Funds are processed each business day as of the close of regular trading on the NYSE, which is usually 4:00 p.m. (ET). If the NYSE closes early, the Funds will close early and will value their shares at such earlier times under these circumstances. Requests received in proper form before this time are processed the same day. Requests received after the cutoff time are processed the next business day.
. The Funds are open for business on each day the NYSE is open for business. NYSE holidays include New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. When any holiday falls on a weekend, the NYSE typically is closed on the weekday immediately before or after such holiday.
Minimum Investments:
Institutions are required to make a minimum initial investment of $5,000,000 per Fund. There are no minimum subsequent investment requirements so long as your Institution maintains account balances at or above the minimum initial investment amount.
26 Stock Funds Prospectus
Typically, Select Class shares are bought and held on your behalf by the Institution through which you are investing. Investors interested in purchasing Select Class shares of the Funds should contact an account representative at their Institution and should understand the following:
. Share purchases are made through a Customer Account at an Institution in accordance with the terms of the Customer Account involved;
. Institutions are usually the holders of record for Select Class shares held through Customer Accounts and maintain records reflecting their customers' beneficial ownership of the shares;
. Institutions are responsible for transmitting their customers' purchase and redemption orders to the Funds and for delivering required payment on a timely basis;
. Institutions are responsible for delivering shareholder communications and voting information from the Funds, and for transmitting shareholder voting instructions to the Funds;
. Institutions may charge their customers account fees and may receive significant fees from us with respect to investments their customers have made with the Funds;
. All purchases must be made in U.S. dollars and all checks must be drawn on U.S. banks; and
. In compliance with the USA PATRIOT Act, all financial institutions (including mutual funds) are required to obtain, verify and record the following information for all registered owners or others who may be authorized to act on an account: full name, date of birth, Social Security number, and permanent street address. Corporate, trust and other entity accounts require additional documentation. This information will be used to verify your true identity. We will return your application if any of this information is missing, and we may request additional information from you for verification purposes. In the rare event that we are unable to verify your identity, the Fund reserves the right to redeem your account at the current day's NAV.
Stock Funds Prospectus 27
Select Class shares must be redeemed in accordance with the account agreement governing your Customer Account at the Institution. Please read the Customer Account agreement with your Institution for rules governing selling shares.
. We will process requests to sell shares at the first NAV calculated after a request and payment in proper form is received. Requests received before the cutoff time are processed on the same business day.
. Redemption proceeds are usually wired to the redeeming Institution the following business day.
. If you purchased shares through a packaged investment product or retirement plan, read the directions for selling shares provided by the product or plan. There may be special requirements that supersede the directions in this Prospectus.
. We reserve the right to delay payment of a redemption so that we may be reasonably certain that investments made by check or through ACH have been collected. Payments of redemptions also may be delayed under extraordinary circumstances or as permitted by the SEC in order to protect remaining shareholders.
. Generally, we pay redemption requests in cash, unless it is determined that the redemption would be to the detriment of a Fund and/or its shareholders. In such case, we may pay all or part of the redemption in securities of equal value. The redeeming shareholder should expect to incur transaction costs upon the disposition of the securities received.
28 Stock Funds Prospectus
An exchange between Wells Fargo Funds involves two transactions: a sale of shares of one Fund and the purchase of shares of another. In general, the same rules and procedures that apply to sales and purchases apply to exchanges. There are, however, additional factors you should keep in mind while making or considering an exchange:
. You should carefully read the prospectus for the Fund into which you wish to exchange.
. Every exchange involves selling Fund shares, which may produce a capital gain or loss for tax purposes.
. If you are making an initial investment in a Fund through an exchange, you must exchange at least the minimum first purchase amount for the new Fund, unless your balance has fallen below that amount due to market conditions.
. In general, exchanges may be made between like share classes of any Wells Fargo Fund offered to the general public for investment. In addition, Select Class shares may be exchanged for Institutional Class shares of money market funds.
. The Funds actively discourage and take steps to prevent the portfolio disruption and negative effects on long-term shareholders that can result from market timing and excessive trading activity. Funds Management may deem trading activity to be excessive if it determines that such trading activity would likely be disruptive to a Fund by increasing expenses or lowering returns. In this regard, Funds Management monitors available trading information and may temporarily suspend or permanently terminate purchase or exchange privileges from investors who complete more than two exchanges within a three-month period or seem to be following a timing pattern. In determining whether to suspend or terminate purchase or exchange privileges for such investors, Funds Management will consider the extent to which such trading activity is likely to be disruptive to the Fund. The extent to which trading activity may be disruptive would depend on a number of factors including, but not limited to, the number of trades, the size of the trades relative to the size of the Fund and the type of Fund involved.
Contact your account representative for further details.
Generally, we will notify you at least 60 days in advance of any changes in the exchange rules.
Stock Funds Prospectus 29
Income and Gain Distributions
The Funds in this Prospectus make distributions of any net investment income and realized capital gains at least annually. Contact your Institution for distribution options.
Remember, distributions have the effect of reducing NAV per share by the amount distributed.
Taxes
The following discussion regarding federal income taxes is based on laws that were in effect as of the date of this Prospectus and summarizes only some of the important federal income tax considerations affecting the Funds and you as a shareholder. It does not apply to foreign or taxexempt shareholders or those holding Fund shares through a tax-advantaged account, such as a 401(k) Plan or IRA. This discussion is not intended as a substitute for careful tax planning. You should consult your tax adviser about your specific tax situation. Please see the Statement of Additional Information for additional federal income tax information.
We will pass on to a Fund's shareholders substantially all of a Fund's net investment income and realized capital gains, if any. Distributions from a Fund's ordinary income and net short-term capital gain, if any, generally will be taxable to you as ordinary income. Distributions from a Fund's net longterm capital gain, if any, generally will be taxable to you as long-term capital gain. Corporate shareholders may be able to deduct a portion of distributions when determining their taxable income.
An individual's net long-term capital gain is subject to a reduced, maximum 15% rate of tax. A Fund's long-term capital gain distributed to individual shareholders generally will qualify for the reduced rate of tax if attributable to the Fund's sales and exchanges after May 5, 2003. Also, if you are an individual Fund shareholder, the portion of your distributions attributable to dividends received by a Fund from certain U.S. and foreign corporations generally will be taxed at a maximum 15% tax rate, as long as certain holding period requirements are met by you with respect to your Fund shares, and by the Fund with respect to the stocks it holds that are producing such dividends. Corporate shareholders may be able to deduct a portion of their distributions when determining their taxable income. Absent further legislation, these reduced rates will expire after December 31, 2008.
Distributions from a Fund normally will be taxable to you when paid, whether you take distributions in cash or automatically reinvest them in additional Fund shares. Following the end of each year, we will notify you of the federal income tax status of your distributions for the year.
If you buy Fund shares shortly before it makes a distribution, your distribution will, in effect, be a taxable return of part of your investment. Similarly, if you buy Fund shares when it holds appreciated securities, you will receive a taxable return of part of your investment if and when the Fund sells the appreciated securities and realizes and distributes the gain. The Funds have built up, or the potential to build up, high levels of unrealized appreciation.
Your redemptions (including redemptions in-kind) and exchanges of Fund shares ordinarily will result in a taxable capital gain or loss, depending on the amount you receive for your shares (or are deemed to receive in the case of exchanges) and the amount you paid (or are deemed to have paid) for them. Such capital gain or loss generally will be long-term capital gain or loss if you have held your redeemed or exchanged Fund shares for more than one year at the time of redemption or exchange. In certain circumstances, losses realized on the redemption or exchange of Fund shares may be disallowed.
30 Stock Funds Prospectus
In certain circumstances, Fund shareholders may be subject to back-up withholding taxes.
Request for Multiple Copies of Shareholder Documents
To help keep fund expenses low, generally we send a single copy of a prospectus or shareholder report to shareholders of the same household. If your household currently receives a single copy of a prospectus or shareholder report and you would prefer to receive multiple copies, please call your customer account representative.
Stock Funds Prospectus 31
Glossary
--------------------------------------------------------------------------------
We provide the ACH
following definitions
to assist you in Refers to the "Automated Clearing House" system
reading this maintained by the Federal Reserve Bank, which banks use
Prospectus. For a to process checks, transfer funds and perform other
more complete tasks.
understanding of
these terms you Business Day
should consult your
investment Any day the New York Stock Exchange is open is a
professional. business day for the Funds.
Capitalization
When referring to the size of a company, capitalization
means the total number of a company's outstanding shares
of stock multiplied by the price per share. This is one
accepted method of measuring a company's size and is
sometimes referred to as "market capitalization."
Derivatives
Securities whose values are derived in part from the
value of another security or index. An example is a
stock option.
Distributions
Disbursements of net investment income, realized capital
gain and/or capital made by a Fund to its shareholders.
FDIC
The Federal Deposit Insurance Corporation. This is the
company that provides federally sponsored insurance
covering bank deposits such as savings accounts and CDs.
Mutual funds are not FDIC insured.
Institution
Institutional investors acting for themselves or on
behalf of their customers in a fiduciary, advisory,
agency, custodial or similar capacity. Institutional
investors include, but are not limited to, banks,
pension funds, insurance companies, foundations, trusts,
broker-dealers and registered investment advisers.
Liquidity
The ability to readily sell a security at a fair price.
Money Market Instruments
High-quality, short-term instruments meeting the
requirements of Rule 2a-7 of the 1940 Act, such as
bankers' acceptances, commercial paper, repurchase
agreements, and government obligations. In a money
market fund, average portfolio maturity does not exceed
90 days, and all investments have maturities of 397 days
or less at the time of purchase.
Net Asset Value ("NAV")
The value of a single fund share. It is determined by
adding together all of a fund's assets, subtracting
accrued expenses and other liabilities, then dividing by
the total number of shares.
Repurchase Agreement
An agreement between a buyer and seller of a security in
which the seller agrees to repurchase the security at an
agreed upon price and time.
Statement of Additional Information
A document that supplements the disclosure made in the
Prospectus.
32 Stock Funds Prospectus
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Total Return
The annual return on an investment in a mutual fund including capital appreciation and dividends. Total return calculations assume reinvestment of all distributions, reflect fee waivers, and exclude sales loads.
Undervalued
Describes a stock that is believed to be worth more than its current price.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
Stock Funds Prospectus 33
YOU MAY WISH TO REVIEW THE FOLLOWING DOCUMENTS: Write to:
Wells Fargo Funds
STATEMENT OF ADDITIONAL INFORMATION P.O. Box 8266
Boston, MA 02266-8266; or
supplements the disclosures made by this
Prospectus. The Statement of Additional Visit the SEC's website at http://www.sec.gov
Information has been filed with the SEC and
incorporated by reference into this Prospectus REQUEST COPIES FOR A FEE BY WRITING TO:
and is legally part of this Prospectus. SEC Public Reference Room
Washington, DC 20549-6009; or
ANNUAL/SEMI-ANNUAL REPORTS by electronic request at publicinfo@sec.gov
Call: 1-800-SEC-0330 for details
provide certain financial and other important
information, including a discussion of the ADDITIONAL SERVICES QUESTIONS CAN BE
market conditions and investment strategies ANSWERED BY CALLING YOUR INVESTMENT
that significantly affected Fund performance PROFESSIONAL
over the reporting period.
THESE DOCUMENTS ARE AVAILABLE FREE OF CHARGE:
Call: 1-800-222-8222, or visit our website at
www.wellsfargofunds.com.
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PO73 (7/04) ICA Reg. No. ----------------------------------------------------- [GRAPHIC] 811-09253 NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE Printed on Recycled Paper #530772 ----------------------------------------------------- |
WELLS FARGO FUNDS TRUST
Telephone: 1-800-222-8222
STATEMENT OF ADDITIONAL INFORMATION
July 26, 2004
WELLS FARGO C&B LARGE CAP VALUE FUND /SM/
WELLS FARGO C&B MID CAP VALUE FUND /SM/
WELLS FARGO C&B TAX-MANAGED VALUE FUND /SM/
CLASS A, CLASS B, CLASS C, CLASS D, INSTITUTIONAL CLASS AND SELECT CLASS
Wells Fargo Funds Trust (the "Trust") is an open-end, management investment company. This Statement of Additional Information ("SAI") contains additional information about three funds in the Wells Fargo Funds Trust family of funds (each, a "Fund," collectively, the "Funds") -- the C&B Large Cap Value Fund, the C&B Mid Cap Value Fund and the C&B Tax-Managed Value Fund. The Funds are considered diversified under the Investment Company Act of 1940, as amended (the "1940 Act"). The Funds offer Class A, Class B, Class C, Class D and Institutional Class shares. The C&B Large Cap Value and C&B Mid Cap Value Funds also offer Select Class shares. This SAI relates to all such classes of shares.
This SAI is not a prospectus and should be read in conjunction with the Funds' Class A, Class B, Class C, Class D, Institutional Class and Select Class Prospectuses, dated July 26, 2004. All terms used in this SAI that are defined in the Prospectuses have the meanings assigned in the Prospectuses. The audited financial statements for the Funds, which include the portfolios of investments and independent auditors' report for the year ended October 31, 2003 are hereby incorporated by reference to the Annual Report. The Prospectuses and Annual Report 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
Page
----
HISTORICAL FUND INFORMATION...............................................1
INVESTMENT POLICIES.......................................................1
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES AND ASSOCIATED RISKS...........4
MANAGEMENT...............................................................17
PERFORMANCE CALCULATIONS.................................................28
DETERMINATION OF NET ASSET VALUE.........................................30
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...........................31
PORTFOLIO TRANSACTIONS...................................................33
FUND EXPENSES............................................................35
FEDERAL INCOME TAXES.....................................................35
PROXY VOTING POLICIES AND PROCEDURES.....................................43
CAPITAL STOCK............................................................45
OTHER....................................................................47
COUNSEL..................................................................47
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM............................47
FINANCIAL INFORMATION....................................................48
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HISTORICAL FUND INFORMATION
On February 18, 2004, the Board of Trustees of The Advisors' Inner Circle Fund ("AIC Trust") approved an Agreement and Plan of Reorganization providing for, among other things, the transfer of the assets and stated liabilities of various predecessor AIC Trust portfolios into various Funds of the Trust. The effective date of the reorganization is July 26, 2004.
The Funds described in this SAI were created as part of the reorganization of certain of the portfolios of AIC Trust into certain of the Funds of the Trust. The reorganization between AIC Trust and the Trust followed the Funds' adviser entering into an agreement with the predecessor portfolios' adviser to "adopt"/support a reorganization of the predecessor portfolios with and into the Funds. The chart below indicates the predecessor portfolios that are the accounting survivors of the Funds.
WELLS FARGO FUNDS PREDECESSOR FUNDS
----------------------------------- -----------------------------------
C&B Large Cap Value Fund C&B Large Cap Value Portfolio
C&B Mid Cap Value Fund C&B Mid Cap Value Portfolio
C&B Tax-Managed Value Fund C&B Tax-Managed Value Portfolio
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The C&B Large Cap Value Fund commenced operations on July 26, 2004, as successor to the C&B Large Cap Value Portfolio. The predecessor fund was organized on November 19, 2001, as the successor-in-interest to the UAM Cooke & Bieler, Inc.'s C&B Equity Portfolio, which commenced operations on May 15, 1990.
The C&B Mid Cap Value Fund commenced operations on July 26, 2004, as successor to the C&B Mid Cap Value Portfolio. The predecessor fund was organized on November 19, 2001, as the successor-in-interest to the UAM Cooke & Bieler, Inc.'s C&B Mid Cap Equity Portfolio, which commenced operations on February 18, 1998.
The C&B Tax-Managed Value Fund commenced operations on July 26, 2004, as successor to the C&B Tax-Managed Value Portfolio. The predecessor fund was organized on November 19, 2001, as the successor-in-interest to the UAM Cooke & Bieler, Inc.'s C&B Equity Portfolio for Taxable Investors, which commenced operations on February 12, 1997.
INVESTMENT POLICIES
FUNDAMENTAL INVESTMENT POLICIES
Each Fund has adopted the following investment policies, all of which are fundamental policies; that is, they may not be changed without approval by the holders of a majority (as defined under the 1940 Act) of the outstanding voting securities of such Fund.
The Funds may not:
(1) purchase the securities of issuers conducting their principal business activity in the same industry if, immediately after the purchase and as a result thereof, the value of a Fund's investments in that industry would equal or exceed 25% of the current value of the Fund's total assets, provided that this restriction does not limit a Fund's investments in (i) securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities, (ii) securities of other investment companies, or (iii) repurchase agreements;
(2) purchase securities of any issuer if, as a result, with respect to 75% of a Fund's total assets, either more than 5% of the value of its total assets would be invested in the securities of any one issuer, or the Fund's ownership would be more than 10% of the outstanding voting securities of such issuer, provided that this restriction does not limit a Fund'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 any orders obtained thereunder;
(4) issue senior securities, except to the extent permitted under the 1940 Act, including the rules, regulations and any orders obtained thereunder;
(5) make loans to other parties if, as a result, the aggregate value of such loans would exceed one-third of a Fund's total assets. For the purposes of this limitation, entering into repurchase agreements, lending securities and acquiring any debt securities are not deemed to be the making of loans;
(6) underwrite securities of other issuers, except to the extent that the purchase of permitted investments directly from the issuer thereof or from an underwriter for an issuer and the later disposition of such securities in accordance with a Fund's investment program may be deemed to be an underwriting;
(7) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent a Fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); nor
(8) purchase or sell 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 Fund has adopted the following non-fundamental policies, which may be changed by the Trustees of the Trust at any time without approval of such Fund's shareholders.
(1) Each Fund may invest in shares of other investment companies to the extent permitted under the 1940 Act, including the rules, regulations and any exemptive orders obtained thereunder, provided however, that no Fund that has knowledge that its shares 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 Fund that has knowledge that its shares 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 Fund may not invest or hold more than 15% of the Fund's net assets in illiquid securities. For this purpose, illiquid securities include, among others, (a) securities that are illiquid by virtue of the
absence of a readily available market or legal or contractual restrictions on resale, (b) fixed time deposits that are subject to withdrawal penalties and that have maturities of more than seven days, and (c) repurchase agreements not terminable within seven days.
(3) Each Fund may invest in futures or options contracts regulated by the 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 Fund's net assets would be invested in initial margin and premiums (excluding amounts "in-the-money") required to establish the contracts.
(4) Each Fund may lend securities from its portfolio to approved brokers, dealers and financial institutions, to the extent permitted under the 1940 Act, including the rules, regulations and exemptions thereunder, which currently limit such activities to one-third of the value of a Fund's total assets (including the value of the collateral received). Any such loans of portfolio securities will be fully collateralized based on values that are marked-to-market daily.
(5) Each Fund may not make investments for the purpose of exercising control or management, provided that this restriction does not limit a Fund's investments in securities of other investment companies or investments in entities created under the laws of foreign countries to facilitate investment in securities of that country.
(6) Each Fund may not purchase securities on margin (except for short-term credits necessary for the clearance of transactions).
(7) Each Fund may not sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short (short sales "against the box"), and provided that transactions in futures contracts and options are not deemed to constitute selling securities short.
(8) Each Fund that is subject to Rule 35d-1 (the "Names Rule") under the 1940 Act, and that has a non-fundamental policy or policies in place to comply with the Names Rule, has adopted the following policy:
Shareholders will receive at least 60 days' notice of any change to a Fund's non-fundamental policy complying with the Names Rule. The notice will be provided in Plain English in a separate written document, and will contain the following prominent statement or similar statement in bold-face type: "Important Notice Regarding Change in Investment Policy." This statement will appear on both the notice and the envelope in which it is delivered, unless it is delivered separately from other communications to investors, in which case the statement will appear either on the notice or the envelope in which the notice is delivered.
GENERAL
Notwithstanding the foregoing policies, any other investment company in which the Funds may invest has adopted its own investment policies, which may be more or less restrictive than those listed above, thereby allowing a Fund to participate in certain investment strategies indirectly that are prohibited under the fundamental and non-fundamental investment policies listed above.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
AND ASSOCIATED RISKS
Set forth below are descriptions of certain investments and additional investment policies for the Funds. For purposes of monitoring the investment policies and restrictions of the Funds (with the exception of the loans of portfolio securities policy described below), the amount of any securities lending collateral held by a Fund will be excluded in calculating total assets.
Bank Obligations
The Funds may invest in bank obligations, including certificates of deposit, time deposits, bankers' acceptances and other short-term obligations of domestic banks, foreign subsidiaries of domestic banks, foreign branches of domestic banks, and domestic and foreign branches of foreign banks, domestic savings and loan associations and other banking institutions. With respect to such obligations issued by foreign branches of domestic banks, foreign subsidiaries of domestic banks, and domestic and foreign branches of foreign banks, a Fund may be subject to additional investment risks that are different in some respects from those incurred by a Fund which invests only in debt obligations of domestic issuers. Such risks include possible future political and economic developments, the possible imposition of foreign withholding (potentially confiscatory) and other taxes on amounts realized on such obligations, 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 obligations 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 that may be held by a Fund will not benefit from insurance from the Bank Insurance Fund or the Savings Association Insurance Fund administered by the Federal Deposit Insurance Corporation ("FDIC"). Bankers' acceptances are credit instruments evidencing the obligation of a bank to pay a draft drawn on it by a customer. These instruments reflect the obligation both of the bank and of the drawer to pay the face amount of the instrument upon maturity. The other short-term obligations may include uninsured, direct obligations, bearing fixed, floating or variable interest rates.
Borrowing
The Funds 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 Fund might have to sell portfolio securities to meet interest or principal payments at a time when investment considerations would not favor such sales. Reverse repurchase agreements, short sales not against the box, dollar roll transactions and other similar investments that involve a form of leverage have characteristics similar to borrowings, but are not considered borrowings if the Fund maintains a segregated account.
Commercial Paper
The Funds may invest in commercial paper (including variable amount master demand notes), which refers to short-term, unsecured promissory notes issued by corporations to finance short-term credit
needs. Commercial paper is usually sold on a discount basis and has a maturity at the time of issuance not exceeding nine months. Variable amount master demand notes are demand obligations which permit the investment of fluctuating amounts at varying market rates of interest pursuant to arrangements between the issuer and a commercial bank acting as agent for the payee of such notes whereby both parties have the right to vary the amount of the outstanding indebtedness on the notes. Investments by the Funds in commercial paper (including variable rate demand notes and variable rate master demand notes issued by domestic and foreign bank holding companies, corporations and financial institutions, as well as similar instruments issued by government agencies and instrumentalities) will consist of issues that are rated in one of the two highest rating categories by a Nationally Recognized Statistical Ratings Organization ("NRSRO").
Convertible Securities
The Funds may invest in convertible securities that provide current income and that have a strong earnings and credit record. The Funds may purchase convertible securities that are fixed income debt securities or preferred stocks, and which may be converted at a stated price within a specified period of time into a certain quantity of the common stock of the same issuer. Convertible securities, while usually subordinate to similar nonconvertible securities, are senior to common stocks in an issuer's capital structure. Convertible securities offer flexibility by providing the investor with a steady income stream (which generally yield a lower amount than similar nonconvertible securities and a higher amount than common stocks) as well as the opportunity to take advantage of increases in the price of the issuer's common stock through the conversion feature. Fluctuations in the convertible security's price can reflect changes in the market value of the common stock or changes in market interest rates.
Custodial Receipts for Treasury Securities
The Funds may purchase participations in trusts that hold U.S. Treasury securities, such as Treasury Investors Growth Receipts (TIGRs) and Certificates of Accrual on Treasury Securities (CATS), or other obligations where the trust participations evidence ownership in either the future interest payments or the future principal payments on the obligations. These participations are normally issued at a discount to their "face value," and can exhibit greater price volatility than ordinary debt securities because of the way in which their principal and interest are returned to investors.
Derivative Securities: Futures and Options Contracts
Futures and options contracts are types of "derivative securities," securities that derive their value, at least in part, from the price of another security or asset, or the level of an index or a rate. As is described in more detail below, a Fund often invests in these securities as a "hedge" against fluctuations in the value of the other securities in that Fund's portfolio, although a Fund may also invest in certain derivative securities for investment purposes only.
While derivative securities are useful for hedging and investment, they also carry additional risks. A hedging policy may fail if the correlation between the value of the derivative securities and the other investments in a Fund's portfolio does not follow the adviser's expectations. If the adviser's expectations are not met, it is possible that the hedging strategy will not only fail to protect the value of the Fund's investments, but the Fund may also lose money on the derivative security itself. Also, derivative securities are more likely to experience periods when they will not be readily tradable. If, as a result of such illiquidity, a Fund cannot settle a future or option contract at the time the adviser determines is optimal, the Fund may lose money on the investment. Additional risks of derivative securities include: the risk of the disruption of the Fund's ability to trade in derivative securities because of regulatory compliance problems or regulatory changes; credit risk of counterparties to derivative contracts; and market risk (i.e., exposure to adverse price changes).
The adviser uses a variety of internal risk management procedures to ensure that derivatives use is consistent with a Fund's investment objective, does not expose a Fund to undue risk and is closely monitored. These procedures include providing periodic reports to the Board concerning the use of derivatives.
The use of derivatives by a Fund also is subject to broadly applicable investment policies. For example, a Fund may not invest more than a specified percentage of its assets in "illiquid securities," including those derivatives that do not have active secondary markets. Nor may a Fund use certain derivatives without establishing adequate "cover" in compliance with the U.S. Securities and Exchange Commission ("SEC") rules limiting the use of leverage.
Futures Contracts. The Funds may trade futures contracts and options on futures contracts. A futures transaction involves a firm agreement to buy or sell a commodity or financial instrument at a particular price on a specified future date. Futures contracts are standardized and exchange-traded, where the exchange serves as the ultimate counterparty for all contracts. Consequently, the only credit risk on futures contracts is the creditworthiness of the exchange.
The purchaser or seller of a futures contract is not required to deliver or pay for the underlying instrument unless the contract is held until the delivery date. However, both the purchaser and seller are required to deposit "initial margin" with a futures broker when the parties enter into the contract. Initial margin deposits are typically equal to a percentage of the contract's value. If the value of either party's position declines, that party will be required to make additional "variation margin" payments to settle the change in value on a daily basis. The party that has a gain may be entitled to receive all or a portion of this amount. Initial and variation margin payments do not constitute purchasing securities on margin for purposes of a Fund's investment limitations. In the event of the bankruptcy of the broker that holds the margin on behalf of a Fund, the Fund may not receive a full refund of its margin.
Although the Funds intend to purchase or sell futures contracts only if there is an active market for such contracts, a liquid market may not exist for a particular contract at a particular time. Many futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit or trading may be suspended for specified periods during the trading day. Futures contracts prices could move to the limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and potentially subject a Fund to substantial losses. If it is not possible, or a Fund determines not to close a futures position in anticipation of adverse price movements, the Fund may be required to pay an additional variation margin until the position is closed.
The Trust has filed a notice of eligibility for exclusion from the definition of the term "commodity pool operator" under the Commodity Exchange Act (the "CEA") in accordance with Rule 4.5 of the CEA, and therefore, the Trust is not subject to registration or regulation as a commodity pool operator under the CEA.
The Funds may also purchase options on futures contracts. See "Options Trading" below.
Options and Futures Contracts. When hedging to attempt to protect against declines in the market value of the Funds' securities, to permit the Funds to retain unrealized gains in the value of Fund securities which have appreciated, or to facilitate selling securities for investment reasons, the Funds would: (1) sell Stock Index Futures; (2) purchase puts on such futures or securities; or (3) write covered calls on securities or on Stock Index Futures. When hedging to establish a position in the equities markets as a temporary
substitute for purchasing particular equity securities (which the Funds will normally purchase and then terminate the hedging position), the Funds would: (1) purchase Stock Index Futures, or (2) purchase calls on such Futures or on securities. The Funds' strategy of hedging with Stock Index Futures and options on such Futures will be incidental to the Funds' activities in the underlying cash market.
The Funds may write (i.e., sell) call options ("calls") if: (1) the calls are listed on a domestic securities or commodities exchange and (2) the calls are "covered" (i.e., the Funds own the securities subject to the call or other securities acceptable for applicable escrow arrangements) while the call is outstanding. A call written on a Stock Index Future must be covered by deliverable securities or segregated liquid assets. If a call written by the Funds is exercised, the Funds forego any profit from any increase in the market price above the call price of the underlying investment on which the call was written.
When the Funds write a call on a security, it receives a premium and agrees to sell the underlying securities to a purchaser of a corresponding call on the same security during the call period (usually not more than 9 months) at a fixed exercise price (which may differ from the market price of the underlying security), regardless of market price changes during the call period. The risk of loss will have been retained by the Funds if the price of the underlying security should decline during the call period, which may be offset to some extent by the premium.
To terminate its obligation on a call it has written, the Funds may purchase a corresponding call in a "closing purchase transaction." A profit or loss will be realized, depending upon whether the net of the amount of option transaction costs and the premium previously received on the call written was more or less than the price of the call subsequently purchased. A profit may also be realized if the call lapses unexercised, because the Funds retain the underlying security and the premium received. If the Funds could not effect a closing purchase transaction due to the lack of a market, they would have to hold the callable securities until the call lapsed or was exercised.
The Funds may also write calls on Stock Index Futures without owning a futures contract or a deliverable bond, provided that at the time the call is written, the Funds cover the call by segregating in escrow an equivalent dollar amount of liquid assets. The Funds will segregate additional liquid assets if the value of the escrowed assets drops below 100% of the current value of the Stock Index Future. In no circumstances would an exercise notice require the Funds to deliver a futures contract; it would simply put the Funds in a short futures position, which is permitted by the Funds' hedging policies.
Purchasing Calls and Puts. Certain Funds may purchase put options
("puts") which relate to: (1) securities held by it; (2) Stock Index Futures
(whether or not it holds such Stock Index Futures in its Fund); or (3)
broadly-based stock indices. A Fund may not sell puts other than those it
previously purchased, nor purchase puts on securities it does not hold. A Fund
may purchase calls: (1) as to securities, broadly-based stock indices or Stock
Index Futures or (2) to effect a "closing purchase transaction" to terminate its
obligation on a call it has previously written.
When a Fund purchases a call (other than in a closing purchase transaction), it pays a premium and, except as to calls on stock indices, has the right to buy the underlying investment from a seller of a corresponding call on the same investment during the call period at a fixed exercise price. A Fund benefits only if the call is sold at a profit or if, during the call period, the market price of the underlying investment is above the sum of the call price plus the transaction costs and the premium paid for the call and the call is exercised. If the call is not exercised or sold (whether or not at a profit), it will become worthless at its expiration date and the Fund will lose its premium payments and the right to purchase the underlying
investment. When a Fund purchases a call on a stock index, it pays a premium, but settlement is in cash rather than by delivery of an underlying investment.
When a Fund purchases a put, it pays a premium and, except as to puts on stock indices, has the right to sell the underlying investment to a seller of a corresponding put on the same investment during the put period at a fixed exercise price. Buying a put on a security or Stock Index Future that a Fund owns enables the Fund to attempt to protect itself during the put period against a decline in the value of the underlying investment below the exercise price by selling the underlying investment at the exercise price to a seller of a corresponding put. If the market price of the underlying investment is equal to or above the exercise price and, as a result, the put is not exercised or resold, the put will become worthless at its expiration date and the Fund will lose its premium payment and the right to sell the underlying investment; the put may, however, be sold prior to expiration (whether or not at a profit).
Purchasing a put on either a stock index or on a Stock Index Future not held by a Fund permits the Fund either to resell the put or to buy the underlying investment and sell it at the exercise price. The resale price of the put will vary inversely with the price of the underlying investment. If the market price of the underlying investment is above the exercise price and, as a result, the put is not exercised, the put will become worthless on its expiration date. In the event of a decline in price of the underlying investment, the Fund could exercise or sell the put at a profit to attempt to offset some or all of its loss on its Fund securities. When a Fund purchases a put on a stock index, or on a Stock Index Future not held by it, the put protects the Fund to the extent that the index moves in a similar pattern to the securities held. In the case of a put on a stock index or Stock Index Future, settlement is in cash rather than by the Fund's delivery of the underlying investment.
Stock Index Futures. Certain Funds may buy and sell Stock Index Futures. A stock index is "broadly-based" if it includes stocks that are not limited to issuers in any particular industry or group of industries. Stock Index Futures obligate the seller to deliver (and the purchaser to take) cash to settle the futures transaction, or to enter into an offsetting contract. No physical delivery of the underlying stocks in the index is made.
No price is paid or received upon the purchase or sale of a Stock Index Future. Upon entering into a futures transaction, a Fund will be required to deposit an initial margin payment in cash or U.S. Treasury bills with a futures commission merchant (the "futures broker"). The initial margin will be deposited with the Fund's custodian in an account registered in the futures broker's name; however the futures broker can gain access to that account only under specified conditions. As the future is marked to market to reflect changes in its market value, subsequent margin payments, called variation margin, will be paid to or by the futures broker on a daily basis. Prior to expiration of the future, if a Fund elects to close out its position by taking an opposite position, a final determination of variation margin is made, and additional cash is required to be paid by or released to the Fund. Although Stock Index Futures by their terms call for settlement by the delivery of cash, in most cases the obligation is fulfilled without such delivery, by entering into an offsetting transaction. All futures transactions are effected through a clearinghouse associated with the exchange on which the contracts are traded.
Puts and calls on broadly-based stock indices or Stock Index Futures are similar to puts and calls on securities or futures contracts except that all settlements are in cash and gain or loss depends on changes in the index in question (and thus on price movements in the stock market generally) rather than on price movements in individual securities or futures contracts. When a Fund buys a call on a stock index or Stock Index Future, it pays a premium. During the call period, upon exercise of a call by a Fund, a seller of a corresponding call on the same index will pay the Fund an amount of cash to settle the call if the closing level of the stock index or Stock Index Future upon which the call is based is greater than the exercise price
of the call; that cash payment is equal to the difference between the closing price of the index and the exercise price of the call times a specified multiple (the "multiplier") which determines the total dollar value for each point of difference. When a Fund buys a put on a stock index or Stock Index Future, it pays a premium and has the right during the put period to require a seller of a corresponding put, upon the Fund's exercise of its put, to deliver to the Fund an amount of cash to settle the put if the closing level of the stock index or Stock Index Future upon which the put is based is less than the exercise price of the put; that cash payment is determined by the multiplier, in the same manner as described above as to calls.
Foreign Currency Futures Contracts and Foreign Currency Transactions. The Funds may invest in foreign currency futures contracts and foreign currency transactions, which entail the same risks as other futures contracts as, described above, but have the additional risks associated with international investing (see "Foreign Obligations and Securities" below). Similar to other futures contracts, a foreign currency futures contract is an agreement for the future delivery of a specified currency at a specified time and at a specified price, will be secured by margin deposits, are regulated by the CFTC and are traded on designated exchanges. A Fund will incur brokerage fees when it purchases and sells futures contracts.
The Funds may invest in foreign currency transactions. Foreign currency transactions, such as forward foreign currency exchange contracts, are also contracts for the future delivery of a specified currency at a specified time and at a specified price. These transactions differ from futures contracts in that they are usually conducted on a principal basis instead of through an exchange, and therefore there are no brokerage fees, margin deposits are negotiated between the parties, and the contracts are settled through different procedures. The adviser considers on an ongoing basis the creditworthiness of the institutions with which the Fund enters into foreign currency transactions. Despite these differences, however, foreign currency futures contracts and foreign currency transactions (together, "Currency Futures") entail largely the same risks, and therefore the remainder of this section will describe the two types of securities together.
Because the Funds may invest in securities denominated in currencies other than the U.S. dollar and may temporarily hold funds in bank deposits or other money market investments denominated in foreign currencies, they may be affected favorably or unfavorably by exchange control regulations or changes in the exchange rate between such currencies and the dollar. Changes in foreign currency exchange rates influence values within the Fund from the perspective of U.S. investors. The rate of exchange between the U.S. dollar and other currencies is determined by the forces of supply and demand in the foreign exchange markets. The international balance of payments and other economic and financial conditions, government intervention, speculation and other factors affect these forces.
A Fund will purchase and sell Currency Futures in order to hedge its portfolio and to protect it against possible variations in foreign exchange rates pending the settlement of securities transactions. If a fall in exchange rates for a particular currency is anticipated, a Fund may sell a Currency Future as a hedge. If it is anticipated that exchange rates will rise, a Fund may purchase a Currency Future to protect against an increase in the price of securities denominated in a particular currency the Fund intends to purchase. These Currency Futures will be used only as a hedge against anticipated currency rate changes. Although such contracts are intended to minimize the risk of loss due to a decline in the value of the hedged currency, at the same time, they tend to limit any potential gain which might result should the value of such currency increase.
The use of Currency Futures involves the risk of imperfect correlation between movements in futures prices and movements in the price of currencies that are the subject of the hedge. The successful use of Currency Futures strategies also depends on the ability of the adviser to correctly forecast interest rate movements, currency rate movements and general stock market price movements. There can be no assurance that the adviser's judgment will be accurate. The use of Currency Futures also exposes a Fund to
the general risks of investing in futures contracts: the risk of an illiquid market for the Currency Futures, the risk of exchange-imposed trading limits, and the risk of adverse regulatory actions. Any of these events may cause a Fund to be unable to hedge its securities, and may cause a Fund to lose money on its Currency Futures investments.
Options Trading. The Funds may purchase or sell options on individual securities or options on indices of securities. The purchaser of an option risks a total loss of the premium paid for the option if the price of the underlying security does not increase or decrease sufficiently to justify the exercise of such option. The seller of an option, on the other hand, will recognize the premium as income if the option expires unrecognized but foregoes any capital appreciation in excess of the exercise price in the case of a call option and may be required to pay a price in excess of current market value in the case of a put option.
A call option for a particular security gives the purchaser of the option the right to buy, and a writer the obligation to sell, the underlying security at the stated exercise price at any time prior to the expiration of the option, regardless of the market price of the security. The premium paid to the writer is in consideration for undertaking the obligation under the option contract. A put option for a particular security gives the purchaser the right to sell, and the writer the option to buy, the security at the stated exercise price at any time prior to the expiration date of the option, regardless of the market price of the security.
The Funds will write call options only if they are "covered." In the case of a call option on a security or currency, the option is "covered" if a Fund owns the instrument underlying the call or has an absolute and immediate right to acquire that instrument without additional cash consideration (or, if additional cash consideration is required, cash, U.S. Government securities or other liquid high-grade debt obligations, in such amount are held in a segregated account by such Fund's custodian) upon conversion or exchange of other securities held by it. For a call option on an index, the option is covered if a Fund maintains with its custodian a diversified portfolio of securities comprising the index or liquid assets equal to the contract value. A call option is also covered if a Fund holds an offsetting call on the same instrument or index as the call written. The Funds will write put options only if they are "secured" by liquid assets maintained in a segregated account by the Funds' custodian in an amount not less than the exercise price of the option at all times during the option period.
Each Fund may buy put and call options and write covered call and secured put options. Options trading is a highly specialized activity, which entails greater than ordinary investment risk. Options may be more volatile than the underlying instruments, and therefore, on a percentage basis, an investment in options may be subject to greater fluctuation than an investment in the underlying instruments themselves. Purchasing options is a specialized investment technique that entails a substantial risk of a complete loss of the amounts paid as premiums to the writer of the option. If the adviser is incorrect in its forecast of market value or other factors when writing options, the Fund would be in a worse position than it would have been had if it had not written the option. If a Fund wishes to sell an underlying instrument (in the case of a covered call option) or liquidate assets in a segregated account (in the case of a secured put option), the Fund must purchase an offsetting option if available, thereby incurring additional transactions costs.
Below is a description of some of the types of options in which the Funds may invest.
A stock index option is an option contract whose value is based on the value of a stock index at some future point in time. Stock indexes fluctuate with changes in the market values of the stocks included in the index. The effectiveness of purchasing or writing stock index options will depend upon the extent to which price movements in a Fund's investment portfolio correlate with price movements of the stock index selected. Accordingly, successful use by a Fund of options on stock indexes will be subject to the adviser's ability to correctly analyze movements in the direction of the stock market generally or of particular industry
or market segments. When a Fund writes an option on a stock index, the Fund will place in a segregated account with its custodian cash or liquid securities in an amount at least equal to the market value of the underlying stock index and will maintain the account while the option is open or otherwise will cover the transaction.
The Funds may invest in stock index futures contracts and options on stock index futures contracts. A stock index futures contract is an agreement in which one party agrees to deliver to the other an amount of cash equal to a specific dollar amount multiplied by the difference between the value of a specific stock index at the close of the last trading day of the contract and the price at which the agreement is made. Stock index futures contracts may be purchased to protect a Fund against an increase in the prices of stocks that Fund intends to purchase. The purchase of options on stock index futures contracts are similar to other options contracts as described above, where a Fund pays a premium for the option to purchase or sell a stock index futures contract for a specified price at a specified date. With options on stock index futures contracts, a Fund risks the loss of the premium paid for the option. The Funds may also invest in interest rate futures contracts and options on interest rate futures contracts. These securities are similar to stock index futures contracts and options on stock index futures contracts, except they derive their price from an underlying interest rate rather than a stock index.
Interest rate and index swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest (for example, an exchange of floating rate payments for fixed rate payments). Index swaps involve the exchange by a Fund with another party of cash flows based upon the performance of an index of securities. Interest rate swaps involve the exchange by a Fund with another party of cash flows based upon the performance of a specified interest rate. In each case, the exchange commitments can involve payments to be made in the same currency or in different currencies. The Funds will usually enter into swaps on a net basis. In so doing, the two payment streams are netted out, with a Fund receiving or paying, as the case may be, only the net amount of the two payments. If a Fund enters into a swap, it will maintain a segregated account on a gross basis, unless the contract provides for a segregated account on a net basis. The risk of loss with respect to swaps generally is limited to the net amount of payments that a Fund is contractually obligated to make. There is also a risk of a default by the other party to a swap, in which case a Fund may not receive net amount of payments that the Fund contractually is entitled to receive.
Future Developments. The Funds may take advantage of opportunities in the areas of options and futures contracts and options on futures contracts and any other derivative investments which are not presently contemplated for use by the Funds or which are not currently available but which may be developed, to the extent such opportunities are both consistent with the Funds' investment objective and legally permissible for a Fund.
Floating- and Variable-Rate Obligations
The Funds may purchase floating- and variable-rate obligations such as demand notes and bonds. Variable-rate demand notes include master demand notes that are obligations that permit a Fund to invest fluctuating amounts, which may change daily without penalty, pursuant to direct arrangements between the Fund, as lender, and the borrower. The interest rate on a floating-rate demand obligation is based on a known lending rate, such as a bank's prime rate, and is adjusted automatically each time such rate is adjusted. The interest rate on a variable-rate demand obligation is adjusted automatically at specified intervals. The issuer of such obligations ordinarily has a right, after a given period, to prepay at its discretion the outstanding principal amount of the obligations plus accrued interest upon a specified number of days notice to the holders of such obligations. Frequently, such obligations are secured by letters of credit or other credit support arrangements provided by banks.
There generally is no established secondary market for these obligations because they are direct lending arrangements between the lender and borrower. Accordingly, where these obligations are not secured by letters of credit or other credit support arrangements, a Fund's right to redeem is dependent on the ability of the borrower to pay principal and interest on demand. Such obligations frequently are not rated by credit rating agencies and each Fund may invest in obligations that are not so rated only if the adviser determines that at the time of investment the obligations are of comparable quality to the other obligations in which such Fund may invest. The adviser, on behalf of each Fund, considers on an ongoing basis the creditworthiness of the issuers of the floating- and variable-rate demand obligations in such Fund's portfolio. Floating- and variable-rate instruments are subject to interest rate and credit risk.
The floating- and variable-rate instruments that the Funds may purchase include certificates of participation in such instruments.
Foreign Securities
The Funds may invest in foreign securities through American Depositary Receipts ("ADRs") and other similar securities convertible into securities of foreign issuers, including equity securities of foreign issuers trading in U.S. markets. 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.
Forward Commitments, When-Issued Purchases and Delayed-Delivery Transactions
The Funds may purchase or sell securities on a when-issued or delayed-delivery basis and make contracts to purchase or sell securities for a fixed price at a future date beyond customary settlement time. Delivery and payment on such transactions normally take place within 120 days after the date of the commitment to purchase. Securities purchased or sold on a when-issued, delayed-delivery or forward commitment basis involve a risk of loss if the value of the security to be purchased declines, or the value of the security to be sold increases, before the settlement date.
The Funds will segregate cash, U.S. Government obligations or other high-quality debt instruments in an amount at least equal in value to each such Fund's commitments to purchase when-issued securities. If the value of these assets declines, a Fund will place additional liquid assets in the account on a daily basis so that the value of the assets in the account is equal to the amount of such commitments.
Illiquid Securities
The Funds may invest in securities not registered under the Securities Act of 1933, as amended (the "1933 Act") and other securities subject to legal or other restrictions on resale. Because such securities may be less liquid than other investments, they may be difficult to sell promptly at an acceptable price. Delay or difficulty in selling securities may result in a loss or be costly to a Fund. The Funds may not invest or hold more than 15% of their net assets in illiquid securities.
Initial Public Offerings
Certain Funds may also invest in smaller companies and initial public offerings which typically have additional risks including more limited product lines, markets and financial resources than larger, more seasoned companies and their securities may trade less frequently and in more limited volume than those of larger, more mature companies.
Loans of Portfolio Securities
Each Fund may lend its portfolio securities pursuant to guidelines
approved by the Board to brokers, dealers and financial institutions, provided:
(1) the loan is secured continuously by collateral consisting of cash,
securities of the U.S. Government, its agencies or instrumentalities, or an
irrevocable letter of credit issued by a bank organized under the laws of the
United States, organized under the laws of a state, or a foreign bank that has
filed an agreement with the Federal Reserve Board to comply with the same rules
and regulations applicable to U.S. banks in securities credit transactions, and
such collateral being maintained on a daily marked-to-market basis in an amount
at least equal to the current market value of the securities loaned plus any
accrued interest or dividends; (2) the Fund may at any time call the loan and
obtain the return of the securities loaned upon sufficient prior notification;
(3) the Fund will receive any interest or dividends paid on the loaned
securities; and (4) the aggregate market value of securities loaned will not at
any time exceed the limits established by the 1940 Act.
A Fund will earn income for lending its securities because cash collateral pursuant to these loans will be invested subject to the investment objective, principal investment strategies and policies of the Fund. In connection with lending securities, a Fund may pay reasonable finders, administrative and custodial fees. Loans of securities involve a risk that the borrower may fail to return the securities or may fail to provide additional collateral. In either case, a Fund could experience delays in recovering securities or collateral or could lose all or part of the value of the loaned securities. Although voting rights, or rights to consent, attendant to securities on loan pass to the borrower, such loans may be called at any time and will be called so that the securities may be voted by a Fund if a material event affecting the investment is to occur. A Fund may pay a portion of the interest or fees earned from securities lending to a borrower or securities lending agent. Borrowers and placing brokers may not be affiliated, directly or indirectly, with the Trust, the adviser, or the distributor.
Wells Fargo Bank, N.A. ("Wells Fargo Bank" or "Custodian") acts as Securities Lending Agent for the Funds, subject to the overall supervision of the Funds' investment adviser. Pursuant to an exemptive order granted by the SEC, Wells Fargo Bank is entitled to receive a portion of the revenues generated by securities lending activities as compensation for its services in this regard.
Money Market Instruments and Temporary Investments
The Funds may invest in the following types of high-quality money market instruments that have remaining maturities not exceeding one year: (i) U.S. Government obligations; (ii) negotiable certificates of deposit, bankers' acceptances and fixed time deposits and other obligations of domestic banks (including foreign branches) that have more than $1 billion in total assets at the time of investment and are members of the Federal Reserve System or are examined by the Comptroller of the Currency or whose deposits are insured by the FDIC; (iii) commercial paper rated at the date of purchase "Prime-1" by Moody's Investors Services, Inc. ("Moody's") or "A-1" or "A-1--" by Standard & Poor's Rating Group ("S&P"), or, if unrated, of comparable quality as determined by the adviser; and (iv) repurchase agreements. The Funds also may invest in short-term U.S. dollar-denominated obligations of foreign banks (including U.S. branches) that at the time of investment: (i) have more than $10 billion, or the equivalent in other currencies, in total assets;
and (ii) in the opinion of the adviser, are of comparable quality to obligations of U.S. banks which may be purchased by the Funds.
Letters of Credit. Certain of the debt obligations (including certificates of participation, commercial paper and other short-term obligations) which the Funds may purchase may be backed by an unconditional and irrevocable letter of credit of a bank, savings and loan association or insurance company which assumes the obligation for payment of principal and interest in the event of default by the issuer. Only banks, savings and loan associations and insurance companies that, in the opinion of the adviser, are of comparable quality to issuers of other permitted investments of the Funds, may be used for letter of credit-backed investments.
Other Investment Companies
The Funds may invest in shares of other open-end management investment companies, up to the limits prescribed in Section 12(d) under the 1940 Act, subject to the Funds' non-fundamental investment policies. Currently, under the 1940 Act, a Fund that invests directly in a portfolio of securities is limited to, subject to certain exceptions: (i) 3% of the total voting stock of any one investment company ("3% Limit"); (ii) 5% of such Fund's total assets with respect to any one investment company; and (iii) 10% of such Fund's total assets. Other investment companies in which the Funds invest can be expected to charge fees for operating expenses, such as investment advisory and administration fees, that would be in addition to those charged by the Funds.
iShares. The Funds may invest in iShares Trust and iShares, Inc. ("iShares"), which are, registered investment companies that consist of numerous separate series (each, an "iShares Fund"), each of which seeks investment results similar to the performance of a single stock market or of a group of stock markets in a single geographic location. iShares combine characteristics of stocks with those of index funds. Like stocks, iShares are liquid and can be traded in any number of shares; like index funds, they provide diversification and market tracking. iShares trade on the American Stock Exchange, the Chicago Board of Options Exchange and the New York Stock Exchange in the same way as shares of a publicly held company.
Participation Interests
The Funds may purchase participation interests in loans or instruments in which the Funds may invest directly that are owned by banks or other institutions. A participation interest gives a Fund an undivided proportionate interest in a loan or instrument. Participation interests may carry a demand feature permitting the holder to tender the interests back to the bank or other institution. Participation interests, however, do not provide the Fund with any right to enforce compliance by the borrower, nor any rights of set-off against the borrower and the Fund may not directly benefit from any collateral supporting the loan in which it purchased a participation interest. As a result, the Fund will assume the credit risk of both the borrower and the lender that is selling the participation interest.
Privately Issued Securities
The Funds may invest in privately issued securities, including those which may be resold only in accordance with Rule 144A under the Securities Act of 1933 ("Rule 144A Securities"). Rule 144A Securities are restricted securities that are not publicly traded. Accordingly, the liquidity of the market for specific Rule 144A Securities may vary. Delay or difficulty in selling such securities may result in a loss to a Fund. Privately issued or Rule 144A securities that are "illiquid" are subject to the Funds' policy of not investing or holding more than 15% of its net assets in illiquid securities. The adviser will evaluate the liquidity characteristics of each Rule 144A Security proposed for purchase by a Fund on a case-by-case basis and will consider the following factors, among others, in its 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).
Repurchase Agreements
The Funds may enter into repurchase agreements, wherein the seller of a security to a Fund agrees to repurchase that security from a Fund at a mutually agreed upon time and price. All repurchase agreements will be fully "collateralized," as defined under the 1940 Act. A Fund may enter into repurchase agreements only with respect to securities that could otherwise be purchased by such Fund. The maturities of the underlying securities in a repurchase agreement transaction may be greater than twelve months, although the maximum term of a repurchase agreement will always be less than twelve months. If the seller defaults and the value of the underlying securities has declined, a Fund may incur a loss. In addition, if bankruptcy proceedings are commenced with respect to the seller of the security, a Fund's disposition of the security may be delayed or limited.
A Fund may not enter into a repurchase agreement with a maturity of more than seven days, if, as a result, more than 15% of the market value of such Fund's net assets would be invested in repurchase agreements with maturities of more than seven days and illiquid securities. A Fund will only enter into repurchase agreements with primary broker-dealers and commercial banks that meet guidelines established by the Board and that are not affiliated with the adviser. The Funds may participate in pooled repurchase agreement transactions with other funds advised by the adviser.
Reverse Repurchase Agreements
The Funds may enter into reverse repurchase agreements (an agreement under which a Fund sells its portfolio securities and agrees to repurchase them at an agreed-upon date and price). At the time a Fund enters into a reverse repurchase agreement, it will place in a segregated custodial account liquid assets such as U.S. Government securities or other liquid high-grade debt securities having a value equal to or greater than the repurchase price (including accrued interest) and will subsequently monitor the account to ensure that such value is maintained. Reverse repurchase agreements involve the risk that the market value of the securities sold by the Funds may decline below the price at which the Funds are obligated to repurchase the securities. Reverse repurchase agreements may be viewed as a form of borrowing.
Short Sales
A short sale is a transaction in which a Fund sells a security in anticipation of a decline in market price. The Funds may sell securities short if they own or have the right to obtain securities equivalent in kind and amount to the securities sold short (short sales "against the box"). A Fund will not make short sales of securities or maintain a short position if doing so could create liabilities or require collateral deposits and segregation of assets aggregating more than 25% of the value of the Fund's total assets.
At the time a Fund enters into a short sale transaction, it must place the associated securities in a segregated account until the transaction is closed out. If a Fund makes a short sale "against the box," the Fund would not immediately deliver the securities sold and would not receive the proceeds from the sale. The seller is said to have a short position in the securities sold until it delivers the securities sold, at which time it receives the proceeds of the sale. A Fund's decision to make a short sale "against the box" may be a technique to hedge against market risks when the investment manager believes that the price of a security may decline, causing a decline in the value of a security owned by the Fund or a security
convertible into or exchangeable for such security. In such case, any future losses in the Fund's long position would be reduced by a gain in the short position.
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 Fund that are traded in the over-the-counter market or on a regional securities exchange may not be traded every day or in the volume typical of securities trading on a national securities exchange. As a result, disposition by a Fund of a portfolio security, to meet redemption requests by other investors or otherwise, may require the Fund to sell these securities at a discount from market prices, to sell during periods when disposition is not desirable, or to make many small sales over a lengthy period of time.
Investment in small, unseasoned issuers generally carry greater risk than is customarily associated with larger, more seasoned companies. Such issuers often have products and management personnel that have not been tested by time or the marketplace and their financial resources may not be as substantial as those of more established companies. Their securities (which a Fund may purchase when they are offered to the public for the first time) may have a limited trading market that can adversely affect their sale by a Fund and can result in such securities being priced lower than otherwise might be the case. If other institutional investors engaged in trading this type of security, a Fund may be forced to dispose of its holdings at prices lower than might otherwise be obtained.
Synthetic Convertible Securities
The Funds may invest in "synthetic" convertible securities, which are derivative positions composed of two or more different securities whose investment characteristics, taken together, resemble those of convertible securities. For example, a Fund may purchase a non-convertible debt security and a warrant or option, which enables a Fund to have a convertible-like position with respect to a company, group of companies or stock index. Synthetic convertible securities are typically offered by financial institutions and investment banks in private placement transactions. Upon conversion, a Fund generally receives an amount in cash equal to the difference between the conversion price and the then current value of the underlying security. Unlike a true convertible security, a synthetic convertible comprises two or more separate securities, each with its own market value. Therefore, the market value of a synthetic convertible is the sum of the values of its fixed income component and its convertible component. For this reason, the values of a synthetic convertible and a true convertible security may respond differently to market fluctuations. A Fund only invests in synthetic convertibles with respect to companies whose corporate debt securities are rated "A" or higher by Moody's or S&P and will not invest more than 15% of its net assets in such synthetic securities and other illiquid securities.
U.S. Government Obligations
The Funds may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government obligations").
Payment of principal and interest on U.S. Government obligations (i) may be
backed by the full faith and credit of the United States (as with U.S. Treasury
bills and Government National Mortgage Association ("GNMA") certificates) or
(ii) may be backed solely by the issuing or guaranteeing agency or
instrumentality itself (as with FNMA notes). In the latter case investors must
look principally to the agency or instrumentality issuing or guaranteeing the
obligation for
ultimate repayment, which agency or instrumentality may be privately owned. There can be no assurance that the U.S. Government will provide financial support to its agencies or instrumentalities where it is not obligated to do so. In addition, U.S. Government obligations are subject to fluctuations in market value due to fluctuations in market interest rates. As a general matter, the value of debt instruments, including U.S. Government obligations, declines when market interest rates increase and rises when market interest rates decrease. Certain types of U.S. Government obligations are subject to fluctuations in yield or value due to their structure or contract terms.
Warrants
The Funds may invest in warrants. Warrants represent rights to purchase securities at a specific price valid for a specific period of time. The prices of warrants do not necessarily correlate with the prices of the underlying securities. A Fund may only purchase warrants on securities in which the Fund may invest directly. Warrants have no voting rights with respect to the assets of the issuer. Warrants do not pay a fixed dividend. Investments in warrants involve certain risks, including the possible lack of a liquid market for the resale of the warrants, potential price fluctuations as a result of speculation or other factors and failure of the price of the common stock to rise. A warrant becomes worthless if it is not exercised within a specified time period.
MANAGEMENT
The following information supplements, and should be read in conjunction with, the section in each Prospectus entitled "Organization and Management of the Funds."
TRUSTEES AND OFFICERS
The Board supervises each Fund's activities, monitors its contractual arrangements with various service providers, and decides upon matters of general policy.
General. The following table provides basic information about the Trustees and Officers of the Trust. Each of the Trustees and Officers listed below acts in identical capacities for each of the 94 funds comprising the Trust, Wells Fargo Variable Trust and Master Trust (collectively the "Fund Complex"). The address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and officer serves an indefinite term, with the Trustees subject to retirement from service as required pursuant to the Trust's retirement policy at the end of the calendar year in which a Trustee turns 74.
In the table below and throughout this section, information for Trustees who are not "interested" persons of the Trust, as that term is defined under the 1940 Act ("independent Trustees"), appears separately from the information for the "interested" Trustees.
POSITION HELD OTHER PUBLIC COMPANY
WITH REGISTRANT/ PRINCIPAL OCCUPATION(s) OR INVESTMENT COMPANY
NAME, AGE AND ADDRESS LENGTH OF SERVICE/1/ DURING PAST 5 YEARS DIRECTORSHIPS
-------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
-------------------------------------------------------------------------------------------------------------
Thomas S. Goho, 61 Trustee, Wake Forest University, Calloway N/A
since 1987 School of Business and Accountancy,
Associate Professor of Finance
1994-1999.
|
POSITION HELD OTHER PUBLIC COMPANY
WITH REGISTRANT/ PRINCIPAL OCCUPATION(s) OR INVESTMENT COMPANY
NAME, AGE AND ADDRESS LENGTH OF SERVICE/1/ DURING PAST 5 YEARS DIRECTORSHIPS
-------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
-------------------------------------------------------------------------------------------------------------
Peter G. Gordon, 61 Trustee, since Chairman, CEO and Co-Founder of N/A
1998; (Lead Crystal Geyser Water Company and
Trustee, since President of Crystal Geyser
2001). Roxane Water Company.
Richard M. Leach, 70 Trustee, President of Richard M. Leach N/A
since 1987 Associates (a financial
consulting firm).
Timothy J. Penny, 52 Trustee, Senior Counselor to the public N/A
since 1996 relations firm of Himle-Horner
and Senior Fellow at the Humphrey
Institute, Minneapolis, Minnesota
(a public policy organization).
Donald C. Willeke, 64 Trustee, Principal of the law firm of N/A
since 1996 Willeke & Daniels.
INTERESTED/2/ TRUSTEES
Robert C. Brown, 72 Trustee, Retired. Director, Federal Farm N/A
since 1992 Credit Banks Funding Corporation
and Farm Credit System Financial
Assistance Corporation until
February 1999.
J. Tucker Morse, 59 Trustee, Private Investor/Real Estate N/A
since 1987 Developer; Chairman of White
Point Capital, LLC.
OFFICERS
Karla M. Rabusch, 45 President, Executive Vice President of Wells N/A
since 2003 Fargo Bank, N.A. and President
of Wells Fargo Funds Management,
LLC. Senior Vice President and
Chief Administrative Officer of
Wells Fargo Funds Management, LLC
from March 2001 to March 2003.
Vice President of Wells Fargo
Bank, N.A. from December 1997 to
May 2000.
Stacie D. DeAngelo, 35 Treasurer, Senior Vice President of Wells N/A
Since 2003 Fargo Bank, N.A., and Wells Fargo
Funds Management, LLC. Prior
thereto, Operations Manager at
Scudder Weisel Capital, LLC from
October 2000 to May 2001 and
Director of Shareholder Services
at BISYS Fund Services from
September 1999 to October 2000;
and Assistant Vice President of
Operations with
Nicholas-Applegate Capital
Management from May 1993 to
September 1999.
C. David Messman, 44 Secretary, Vice President and Counsel of N/A
since 2000 Wells Fargo Bank, N.A. since
January 1996. Senior Vice
President and Secretary of Wells
Fargo Funds Management, LLC since
March 2001.
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/1/ Length of service dates reflect the Trustee's commencement of service with the Trust's predecessor entities, where applicable.
/2/ Basis of Interestedness. Robert C. Brown owns securities of Wells Fargo & Company, the parent holding company of the Funds' adviser. J. Tucker Morse is affiliated with a government securities dealer that is registered under the Securities Exchange Act of 1934, but which is not itself affiliated with Wells Fargo Funds Management, LLC.
Committees. All of the independent Trustees are also members of the Audit and Nominating Committees of the Trust. Whenever a vacancy occurs on the Board, the Nominating Committee is responsible for recommending to the Board persons to be appointed as Trustees by the Board, and persons to be nominated for election as Trustees in circumstances where a shareholder vote is required by or under the 1940 Act. Generally, the Nominating Committee selects the candidates for consideration to fill Trustee vacancies, or considers candidates recommended by the other Trustees or by the Trust's management. Pursuant to the Trust's charter document, only independent Trustees may nominate and select persons to become independent Trustees for the Trust, so long as the Trust has in effect one or more plans pursuant to Rule 12b-1 under the 1940 Act. Shareholder nominees are not considered unless required by or under the 1940 Act. The Nominating Committee meets only as necessary, and did not meet during the Funds' most recently completed fiscal year. The Audit Committee oversees the Funds' accounting and financial reporting policies and practices, reviews the results of the annual audits of the Funds' financial statements, and interacts with the Funds' independent auditors on behalf of the full Board. The Audit Committee operates pursuant to a separate charter, and met two times during the Funds' most recently completed fiscal year.
Compensation. Prior to January 1, 2004, each Trustee received from the Fund Complex an annual retainer (payable quarterly) of $52,000, plus a fee of $5,000 for attendance at in-person Fund Complex Board meetings, and a fee of $1,000 for participation in telephonic Board meetings. The Lead Trustee also received an additional $10,000 annual retainer for the extra work and time devoted in this role.
Effective January 1, 2004, each Trustee receives from the Fund Complex an annual retainer (payable quarterly) of $56,000, plus a fee of $7,000 for attendance at in-person Fund Complex Board meetings, and a fee of $2,000 per combined committee meeting. The Lead Trustee also receives an additional $10,000 annual retainer for the extra work and time devoted in this role.
The Trustees do not receive any retirement benefits or deferred compensation from the Trust or any other member of the Fund Complex. The Trust's Officers are not compensated by the Trust for their services. For the year ended February 29, 2004, the Trustees received the following compensation:
Thomas S. Goho $ 77,000 Peter G. Gordon $ 87,000 Richard M. Leach $ 77,000 Timothy J. Penny $ 77,000 Donald C. Willeke $ 77,000 |
INTERESTED TRUSTEES
Robert C. Brown $ 75,000
J. Tucker Morse $ 75,000
*The Funds' fiscal year-end is October 31/st/.
Beneficial Equity Ownership Information. As of the date of this SAI, the Trustees and Officers of the Trust, as a group, beneficially owned less than 1% of the outstanding shares of the Trust. The table
below shows for each Trustee, the amount of Fund equity securities beneficially owned by the Trustee, and the aggregate value of all investments in equity securities of the Fund Complex, stated as one of the following ranges: 0 = $0; A = $1-$10,000; B = $10,001-$50,000; C = $50,001-$100,000; and D = over $100,000.
CALENDAR YEAR ENDED DECEMBER 31, 2003
----------------------------------------------------------------------------
DOLLAR RANGE OF EQUITY
SECURITIES
OF THE FUNDS*
-------------------------------------
AGGREGATE DOLLAR
RANGE OF EQUITY
C&B LARGE C&B MID C&B TAX-MANAGED SECURITIES OF FUND
TRUSTEE CAP VALUE CAP VALUE VALUE COMPLEX
----------------- --------- --------- --------------- ------------------
INDEPENDENT TRUSTEES
Thomas S. Goho 0 0 0 D
Peter G. Gordon 0 0 0 B
Richard M. Leach 0 0 0 0
Timothy J. Penny 0 0 0 C
Donald C. Willeke 0 0 0 D
INTERESTED TRUSTEES
Robert C. Brown 0 0 0 D
J. Tucker Morse 0 0 0 D
|
* These Funds commenced operations on July 26, 2004.
Ownership of Securities of Certain Entities. None of the independent Trustees and/or their immediate family members own securities of the adviser, any sub-advisers, or the distributor, or any entity controlling, controlled by, or under common control with the adviser, any sub-advisers, or the distributor.
Approval of Advisory and Sub-Advisory Agreements. Under Section 15(c) of the 1940 Act, the Board is generally required to approve annually the investment advisory and investment sub-advisory contracts (individually, an "Advisory Agreement," and collectively, the "Advisory Agreements") for the Funds. At each quarterly meeting, the Board will review the performance information and nature of services provided by the investment adviser and sub-adviser. At least annually, the Board will be provided with quantitative and qualitative information to assist it in evaluating whether to approve the continuance of the Advisory Agreements, including comparative fee information, profitability information, performance data, descriptions of the investment philosophy, experience and senior management of the investment adviser and investment sub-advisers (individually, an "Adviser" and collectively, the "Advisers") and a description of the quality and nature of the services provided by the Advisers.
Before approving an Advisory Agreement with an Adviser, at its regular meeting, called in part for this purpose, on February 3, 2004, the Board reviewed the fees that would be payable under the Advisory Agreement, including any fee waivers or fee caps, as well as any other relationships between the Funds and the Advisers and affiliates. The Board also analyzed each Fund's contractual fees, including investment advisory and sub-advisory fees, administration fees, shareholder servicing fees and Rule 12b-1/distribution fees.
The Board then analyzed each Adviser's background and services that it would provide to the Funds. For example, the Board reviewed and discussed the investment philosophy and experience of the Investment Adviser. The Board discussed the fact that the Investment Adviser has established an investment program for each Fund and would supervise and evaluate the sub-adviser who would make the day-to-day investment decisions for the Funds. The Board recognized that the Investment Adviser has an expertise in hiring and overseeing the activities of the sub-adviser. The Board also recognized that the oversight responsibilities of the Adviser include monitoring Fund compliance with federal securities laws and regulations. The Board reviewed each Adviser's compliance procedures including their internal compliance policies relating to their respective codes of ethics, policies on personal trading, internal compliance procedures relating to the Funds' portfolio investments and operations, the process for monitoring and evaluating work performed by third parties, compliance by the distributor on behalf of the Funds with SEC and other regulatory requirements, maintenance of books and records of the Funds and recordkeeping systems of the Advisers, and other activities and clients of the Advisers. The Board also considered the background and experience of the senior management of each Adviser, and the level of attention expected to be given to the Funds by such persons. In evaluating the Advisers, the Board recognized that each has the size, visibility and resources to attract and retain highly qualified investment professionals, including research, advisory and marketing personnel.
In addition to the above considerations, the Board also analyzed certain factors relating specifically to the sub-adviser. For example, the Board considered the sub-adviser's investment strategies, research capabilities, means for executing portfolio transactions and scope of investment services. The Board reviewed the sub-adviser's procedures for selecting brokers to execute portfolio transactions for the Funds. More specifically, the Board reviewed the factors that the sub-adviser will consider prior to selecting a broker to execute portfolio transactions. One such factor is the sub-adviser's consideration of obtaining research services or other soft dollar arrangements through the allocation of Fund brokerage. The Board also considered the standards and performance in seeking best execution, whether and to what extent soft dollar credits would be sought and how any such credits would be utilized, the benefits from using an affiliated broker, the extent to which efforts would be made to recapture transaction costs, and the existence of quality controls applicable to the Funds' portfolios. Finally, the Board reviewed the sub-adviser's method for allocating portfolio opportunities among the Funds and its other advisory clients.
Based on the above analysis, which, in summary, included the following factors: (i) the quality of services provided by each of the Advisers; (ii) the scope of each Adviser's background and experience; and (iii) an analysis of advisory fees expected to be paid by the Funds, the Board determined that the Advisory Agreements, including the fee levels, were fair and reasonable in light of all relevant circumstances.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC ("Funds Management"), an indirect wholly owned subsidiary of Wells Fargo & Company and an affiliate of Wells Fargo Bank, is the investment adviser for the Funds. Funds Management is responsible for implementing the investment policies and guidelines for the Funds, and for supervising the sub-adviser who is responsible for the day-to-day portfolio management of the Funds. Prior to August 1, 2004, Funds Management is entitled to receive as compensation for its advisory services a monthly fee at the annual rate of 0.75% of each Fund's average daily net assets. Effective August 1, 2004, Funds Management is entitled to receive a monthly fee at the annual rates indicated below, as a percentage of each Fund's average daily net assets:
FUND ASSET RANGE/FEE
-------------------------- ------------------
$ 0-499M 0.75%
$ 500-999M 0.70%
C&B Large Cap Value Fund $ 1-2.99B 0.65%
$ 3-4.99B 0.625%
>$ 4.99B 0.60%
$ 0-499M 0.75%
$ 500-999M 0.70%
C&B Mid Cap Value Fund $ 1-2.99B 0.65%
$ 3-4.99B 0.625%
>$ 4.99B 0.60%
C&B Tax-Managed Value Fund $ 0-499M 0.75%
$ 500-999M 0.70%
$ 1-2.99B 0.65%
$ 3-4.99B 0.625%
>$ 4.99B 0.60%
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Advisory Fees Paid. As discussed in the "Historical Fund Information" section, the Funds were created as part of the reorganization of certain portfolios of AIC Trust into certain Funds of Funds Trust. Prior to the reorganization, Cooke & Bieler, L.P. ("C&B") served as the investment adviser to the predecessor portfolios of the Funds. Therefore, the table below shows the advisory fees paid by the predecessor portfolios of the Funds. For the periods indicated below, the predecessor portfolios of the Funds paid the following advisory fees to C&B and C&B waived the indicated amounts:
YEAR ENDED 10/31/03 YEAR ENDED 10/31/02 YEAR ENDED 10/31/01
--------------------- --------------------- ---------------------
FEES FEES FEES
FUND FEES PAID WAIVED FEES PAID WAIVED FEES PAID WAIVED
-------------------------- ----------- -------- --------- --------- --------- --------
C&B Large Cap Value Fund $ 101,093 $ 7,102 $ 48,815 $ 137,795 $ 197,067 $ 49,364
C&B Mid Cap Value Fund $ 1,019,789 $ 0 $ 162,961 $ 61,350 $ 0 $ 19,801
C&B Tax-Managed Value Fund $ 7,484 $ 31,269 $ 0 $ 24,060/1/ $ 0 $ 16,098
|
/1/ For the fiscal year ended October 31, 2001, the adviser additionally reimbursed fees of $108,986, $0 and $113,960 for the C&B Mid Cap Value Portfolio, C&B Large Cap Value Portfolio and C&B Tax-Managed Value Portfolio, respectively, pursuant to the terms of its waiver agreement with the Portfolios. For the fiscal year ended October 31, 2002, the adviser additionally reimbursed fees of $31,239 for the Tax-Managed Value Portfolio pursuant to the terms of its waiver agreement with the Portfolio.
General. Each Fund's Advisory Agreement will continue in effect for more than two years from the effective date provided the continuance is approved annually (i) by the holders of a majority of the respective Fund's outstanding voting securities or by the Board and (ii) by a majority of the Trustees who are not parties to the Advisory Agreement or "interested persons" (as defined under the 1940 Act) of any such party. A Fund's Advisory Agreement may be terminated on 60 days' written notice by either party and will terminate automatically if assigned.
INVESTMENT SUB-ADVISER
Funds Management has engaged C&B to serve as investment sub-adviser to the Funds. Subject to the direction of the Trust's Board and the overall supervision and control of Funds Management, the Sub-Adviser makes recommendations regarding the investment and reinvestment of the Funds' assets. The Sub-Adviser furnishes to Funds Management periodic reports on the investment activity and performance of the Fund. The Sub-Adviser also furnishes such additional reports and information as Funds Management and
the Trusts' Boards and Officers may reasonably request. Funds Management may, from time to time and in its sole discretion, allocate and reallocate services provided by and fees paid to C&B.
As compensation for its sub-advisory services, C&B is entitled to receive a monthly fee at the annual rates indicated below, as a percentage of each Fund's average daily net assets:
FUND ASSET RANGE/FEE
-------------------------- -------------------
C&B Large Cap Value Fund $ 0-250M 0.45%
$ 250-500M 0.40%
$ 500-750M 0.35%
>$ 750M 0.30%
$ 0-250M 0.55%
$ 250-500M 0.50%
C&B Mid Cap Value Fund $ 500-750M 0.45%
>$ 750M 0.40%
C&B Tax-Managed Value Fund $ 0-250M 0.45%
$ 250-500M 0.40%
$ 500-750M 0.35%
>$ 750M 0.30%
|
ADMINISTRATOR
The Trust has retained Funds Management (the "Administrator") as
administrator on behalf of the Funds pursuant to an Administration Agreement.
Under the Administration Agreement with the Trust, Funds Management provides,
among other things: (i) general supervision of the Funds' operations, including
communication, coordination, and supervision services with regard to the Funds'
transfer agent, custodian, fund accountant and other service organizations that
render recordkeeping or shareholder communication services; (ii) coordination of
the preparation and filing of reports and other information materials regarding
the Funds, including prospectuses, proxies and other shareholder communications;
(iii) development and implementation of procedures for monitoring compliance
with regulatory requirements and compliance with the Funds' investment
objectives, policies and restrictions; and (iv) any other administrative
services reasonably necessary for the operation of the Funds other than those
services that are provided by the Funds' transfer agent, custodian, and fund
accountant. Funds Management also furnishes office space and certain facilities
required for conducting the Funds' business together with ordinary clerical and
bookkeeping services.
In addition, Funds Management has agreed to pay all of the Funds' fees and expenses for services provided by the Funds' transfer agent and various sub-transfer agents and omnibus account servicers and record-keepers out of the fees it receives as Administrator. Because the administrative services provided by Funds Management vary by class, the fees payable to Funds Management also vary by class. For providing administrative services, including paying the Funds' fees and expenses for services provided by the Funds' transfer agent and various sub-transfer agents and omnibus account servicers and record-keepers, Funds Management is entitled to receive an annual fee at the rates indicated below, as a percentage of each Fund's average daily net assets:
CLASS Prior to 8/1/04 Effective 8/1/04
------------------------------- --------------- --------------------
Class A, Class B, Class C and 0.33% $ 0-4.99B 0.33%
Class D Shares $ 5-9.99B 0.32%
>$ 9.99B 0.31%
Institutional Class Shares 0.25% $ 0-4.99B 0.25%
$ 5-9.99B 0.24%
>$ 9.99B 0.23%
Select Class Shares 0.15% $ 0-4.99B 0.15%
$ 5-9.99B 0.14%
>$ 9.99B 0.13%
|
Administration Fees Paid. As discussed in the "Historical Fund Information" section, the Funds were created as part of the reorganization of certain portfolios of AIC Trust into certain Funds of Funds Trust. Prior to the reorganization of the Funds, SEI Investments Global Funds Services ("SEI") served as the administrator to the predecessor portfolios of the Funds. Therefore, the table below shows the administration fees paid by the predecessor portfolios of the Funds. For the periods indicated below, the predecessor portfolios paid the following administration fees to SEI:
YEAR ENDED YEAR ENDED YEAR ENDED
FUND 10/31/03 10/31/02 10/31/01
------------------------------- ------------ ------------ ------------
C&B Large Cap Value Fund $ 30,858 $ 124,907 $ 36,453
C&B Mid Cap Value Fund $ 275,851 $ 125,081 $ 20,860
C&B Tax-Managed Value Fund $ 10,928 $ 17,083 $ 20,606
|
Prior to November 19, 2001, SEI served as the sub-administrator to the predecessor portfolios of the Funds. For the period indicated below, the predecessor portfolios of the Funds paid the following sub-administration fees to SEI:
YEAR ENDED
FUND 10/31/01
---------------------- ----------
C&B Large Cap Value $ 46,829
C&B Mid Cap Value $ 35,950
C&B Tax-Managed Value $ 35,773
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DISTRIBUTOR
Stephens Inc. ("Stephens," or the "Distributor"), located at 111 Center Street, Little Rock, Arkansas 72201, serves as distributor for the Funds. The Funds that offer Class B and Class C shares have adopted a distribution plan (a "Plan") under Section 12(b) under the 1940 Act and Rule 12b-1 thereunder (the "Rule") for their Class B and Class C shares. The Plan was adopted by the Board, including a majority of the Trustees who were not "interested persons" (as defined under the 1940 Act) of the Funds and who had no direct or indirect financial interest in the operation of the Plan or in any agreement related to the Plan (the "Non-Interested Trustees").
Under the Plan and pursuant to the related Distribution Agreement, the Class B and Class C shares of the Funds pay Stephens, on a monthly basis, an annual fee of 0.75% of the average daily net assets attributable to each class as compensation for distribution-related services or as reimbursement for distribution-related expenses.
The actual fee payable to the Distributor by the Funds and classes is
determined, within such limits, from time to time by mutual agreement between
the Trust and the Distributor and will not exceed the maximum sales charges
payable by mutual funds sold by members of the National Association of
Securities Dealers, Inc. ("NASD") under the Conduct Rules of the NASD. The
Distributor may enter into selling agreements with one or more selling agents
(which may include Wells Fargo Bank, Funds Management and their affiliates)
under which such agents may receive compensation for distribution-related
services from the Distributor, including, but not limited to, commissions or
other payments to such agents based on the average daily net assets of Fund
shares attributable to their customers. The Distributor may retain any portion
of the total distribution fee payable thereunder to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses.
Stephens has entered into an arrangement whereby sales commissions payable to broker-dealers with respect to sales of Class B shares of the Funds are financed by an unaffiliated third party lender. Under this financing arrangement, Stephens has assigned certain amounts that it is entitled to receive pursuant to the Distribution Plan to the third party lender, as reimbursement and consideration for these payments.
Prior to July 26, 2004, SEI Investments Distribution Co. served as the distributor to the predecessor portfolios to the Funds. For the year ended October 31, 2003, the predecessor portfolios to the Funds did not pay any distribution-related expenses.
General. The Plan will continue in effect from year to year if such continuance is approved by a majority vote of both the Trustees of the Trust and the Non-Interested Trustees. Any Distribution Agreement related to the Plan also must be approved by such vote of the Trustees and the Non-Interested Trustees. Such agreement will terminate automatically if assigned, and may be terminated at any time, without payment of any penalty, by a vote of a majority of the outstanding voting securities of the relevant class of a Fund or by vote of a majority of the Non-Interested Trustees on not more than 60 days' written notice. The Plan may not be amended to increase materially the amounts payable thereunder without the approval of a majority of the outstanding voting securities of a Fund, and no material amendment to the Plan may be made except by a majority of both the Trustees and the Non-Interested Trustees.
The Plan provides that the Treasurer of Trust shall provide to the Trustees, and the Trustees shall review, at least quarterly, a written report of the amounts expended (and purposes therefor) under the Plan. The Rule also requires that the selection and nomination of Trustees who are not "interested persons" of the Trust be made by such Non-Interested Trustees.
Wells Fargo Bank and Funds Management, interested persons (as that term is defined under Section 2(a)(19) under the 1940 Act) of the Trust, act as selling agents for the Funds' shares pursuant to selling agreements with Stephens authorized under the Plan. As selling agents, Wells Fargo Bank and Funds Management have an indirect financial interest in the operation of the Plan. The Board has concluded that the Plan is reasonably likely to benefit the Funds and their shareholders because the Plan authorizes the relationships with selling agents, including Wells Fargo Bank and Funds Management, that have previously developed distribution channels and relationships with the retail customers that the Funds are designed to serve. The Trustees believe that these relationships and distribution channels provide potential for increased Fund assets and ultimately corresponding economic efficiencies (i.e., lower per-share
transaction costs and fixed expenses) that are generated by increased assets under management. In addition to payments received from the Funds, selling or servicing agents may receive significant additional payments directly from the Adviser, the Distributor, or their affiliates in connection with the sale of Fund shares.
SHAREHOLDER SERVICING AGENT
The Funds have approved a Shareholder Servicing Plan and have entered into related Shareholder Servicing Agreements with financial institutions, including Wells Fargo Bank and Funds Management. Under the agreements, Shareholder Servicing Agents (including Wells Fargo Bank and Funds Management), as agents for their customers, agree to perform administrative services with respect to Fund shares, including aggregating and transmitting shareholder orders for purchases, exchanges and redemptions; maintaining shareholder accounts and records; and providing such other related services as the Trust or a shareholder may reasonably request. For providing these services, a Shareholder Servicing Agent is entitled to an annual fee from the applicable Fund of 0.25% of the average daily net assets of the Class A, Class B, Class C and Class D shares and from the C&B Large Cap Value Fund and C&B Mid Cap Value Fund of 0.10% of the average daily net assets of the Institutional Class shares owned of record or beneficially by the customers of the Servicing Agent during the period for which payment is being made. The Shareholder Servicing Plan and related Shareholder Servicing Agreements were approved by the Trustees and provide that a Fund shall not be obligated to make any payments under such plans or related agreements that exceed the maximum amounts payable under the Conduct Rules of the NASD.
General. The Shareholder Servicing Plan will continue in effect from year to year if such continuance is approved by a majority vote of the Trustees and the Non-Interested Trustees. Any form of Shareholder Servicing Agreement related to the Shareholder Servicing Plan also must be approved by such vote of the Trustees and the Non-Interested Trustees. Shareholder Servicing Agreements may be terminated at any time, without payment of any penalty, by a vote of a majority of the Board, including a majority of the Non-Interested Trustees. No material amendment to the Shareholder Servicing Plan or related Shareholder Servicing Agreements may be made except by a majority of both the Trustees of the Trust and the Non-Interested Trustees.
The Shareholder Servicing Plan requires that the Administrator of the Trust shall provide to the Trustees, and the Trustees shall review, at least quarterly, a written report of the amounts expended (and purposes therefor) under the Shareholder Servicing Plan.
CUSTODIAN
Wells Fargo Bank, located at 6th and Marquette, Minneapolis, Minnesota 55479, acts as custodian for each Fund. The Custodian, among other things, maintains a custody account(s) in the name of each Fund; receives and delivers all assets for each Fund upon purchase, sale or maturity; collects and receives all income, other payments and distributions on account of the assets of each Fund; and pays all expenses of each Fund. For its services as Custodian, Wells Fargo Bank is entitled to receive an annual fee at the rate of 0.02% of the average daily net assets of each Fund.
FUND ACCOUNTANT
PFPC, Inc. ("PFPC"), located at 400 Bellevue Parkway, Wilmington, Delaware 19809, serves as fund accountant for the Funds. For these services, PFPC is entitled to receive an annual base fee of $20,000 from each Fund. In addition, each Fund pays a monthly fee of $500 per class for each class greater than one. PFPC also receives an annual complex-wide fee, calculated based upon the aggregate average net assets of all of the funds and portfolios of the Trusts (excluding Wells Fargo Master Trust portfolios) and payable monthly, as indicated in the chart below. Each Fund's share of the annual
complex-wide fee would be based on its proportionate share of the aggregate average net assets of all of the funds and portfolios. Finally, PFPC is entitled to receive certain out-of-pocket costs.
AVERAGE DAILY NET ASSETS ANNUAL ASSET-BASED FEES
------------------------- -----------------------
$0 - 85 billion 0.0057%
>$85 billion 0.0025%
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TRANSFER AND DIVIDEND DISBURSING AGENT
Boston Financial Data Services, Inc. ("BFDS"), located at Two Heritage Drive, Quincy, Massachusetts 02171, acts as transfer agent and dividend-disbursing agent for the Funds. For providing such services, BFDS is entitled to receive fees from the Administrator.
UNDERWRITING COMMISSIONS
Stephens serves as the principal underwriter distributing securities of the Funds on a continuous basis.
Prior to July 26, 2004, SEI Investments Distribution Co. acted as principal underwriter for shares of the predecessor portfolios of the Funds. For the period from November 1, 2003 through July 26, 2004, and for the years ended October 31, 2003 and October 31, 2002, the predecessor portfolios did not pay any underwriting commissions.
CODE OF ETHICS
The Fund Complex, the Adviser and the Sub-Adviser have each adopted a code of ethics, which contains policies on personal securities transactions by "access persons." These policies comply with Rule 17j-1 under the 1940 Act. Each code of ethics, among other things, permits access persons to invest in certain securities, subject to various restrictions and requirements. More specifically, each code of ethics either prohibits its access persons from purchasing or selling securities that may be purchased or held by a Fund or permits such access persons to purchase or sell such securities, subject to certain restrictions. For purposes of a code of ethics, an access person means (i) a director, trustee or officer of a fund or adviser; (ii) any employee of a fund or investment adviser (or any company in a control relationship to a fund or investment adviser) who, in connection makes, participates in, or obtains information about the purchase or sale of securities by a fund, or whose functions relate to the making of any recommendations with respect to the purchases or sales; and (iii) any natural person in a control relationship to a fund or investment adviser who obtains information concerning recommendations made to a fund regarding the purchase or sale of securities. Portfolio managers and other persons who assist in the investment process are subject to additional restrictions under Rule 17j-1. The above restrictions do not apply to purchases or sales of certain types of securities, including mutual fund shares, money market instruments and certain U.S. Government securities. To facilitate enforcement, the codes of ethics generally require that an access person, other than "disinterested" directors or trustees, submit reports to a designated compliance person regarding transactions involving securities which are eligible for purchase by a Fund. The codes of ethics for the Fund Complex, Adviser and the Sub-Advisers are on public file with, and are available from, the SEC.
PERFORMANCE CALCULATIONS
The Funds may advertise certain yield and total return information. Quotations of yield and total return reflect only the performance of a hypothetical investment in a Fund during the particular time period shown. Yield and total return vary based on changes in the market conditions and the level of a Fund's expenses, and no reported performance figure should be considered an indication of performance which may be expected in the future.
In connection with communicating its performance to current or prospective shareholders, these figures may also be compared to the performance of other mutual funds tracked by mutual fund ratings services or to unmanaged indices which may assume reinvestment of distributions but generally do not reflect deductions for administrative and management costs.
Performance information for a Fund may be useful in reviewing the performance of such Fund or class of shares and for providing a basis for comparison with investment alternatives. The performance of a Fund, however, may not be comparable to the performance from investment alternatives because of differences in the foregoing variables and differences in the methods used to value portfolio securities, compute expenses and calculate performance.
Performance information may be advertised for non-standardized periods, including year-to-date and other periods less than a year for the Funds. Annual and Semi-Annual Reports for the Funds may contain additional performance information, and are available free of charge upon request.
AVERAGE ANNUAL TOTAL RETURN
The Funds may advertise certain total return information. As and to the extent required by the SEC, an average annual compound rate of return ("T") is computed by using the redeemable value at the end of a specified period ("ERV") of a hypothetical initial investment ("P") over a period of years ("n") according to the following formula: P(1+T)/n/=ERV. Average annual total return information for the Funds for the fiscal year ended October 31, 2003 is incorporated by reference to the Annual Report for the predecessor portfolios of these Funds.
Average Annual Total Return (After Taxes on Distributions). As and to the extent required by the SEC, a Fund's average annual total returns (after taxes on distributions) ("T") is computed by using the redeemable value at the end of a specified period, after deducting taxes on Fund distributions but without redemption of Fund shares ("ATV//D//") of a hypothetical initial investment ("P") over a period of years ("n") according to the following formula: P(1+T)/n/=ATV//D//.
Average Annual Total Return (After Taxes on Distributions and Redemption). As and to the extent required by a SEC, a Fund's average annual total returns (after taxes on distributions and redemption) ("T") is computed by using the redeemable value at the end of a specified period, after deducting taxes on Fund distributions and redemption of Fund shares ("ATV//DR//"), of a hypothetical initial investment ("P") over a period of years ("n") according to the following formula: P(1+T)/n/=ATV//DR//.
All of the above average annual total return information, along with the before-tax average annual total returns for an appropriate broad-based index, for the calendar year ended December 31, 2003 is presented in the Prospectuses.
From time to time and only to the extent the comparison is appropriate for a Fund or a class of shares, the Trust may quote the performance or price-earnings ratio of a Fund or a class of a Fund in advertising and other types of literature as compared to the performance of managed or unmanaged indices
or performance data of bonds, municipal securities, stocks or government securities, or by other services, companies, publications or persons who monitor mutual funds on overall performance or other criteria.
Any such comparisons may be useful to investors who wish to compare past performance of the Funds or a class of shares with that of competitors. Of course, past performance cannot be a guarantee of future results. The Trust also may include, from time to time, a reference to certain marketing approaches of the Distributor, including, for example, a reference to a potential shareholder being contacted by a selected broker-dealer. General mutual fund statistics provided by the Investment Company Institute may also be used.
The Trust also may use the following information in advertisements and other types of literature, only to the extent the information is appropriate for each class of shares of a Fund: (i) the Consumer Price Index may be used to assess the real rate of return from an investment in each class of shares of a Fund; (ii) other government statistics; (iii) the effect of tax-deferred compounding on the investment returns of each class of shares of a Fund or on returns in general, may be illustrated by graphs, charts, etc., where such graphs or charts would compare, at various points in time, the return from an investment in each class of shares of the Fund (or returns in general) on a tax-deferred basis (assuming reinvestment of capital gains and distributions and assuming one or more tax rates) with the return on a taxable basis; and (iv) the sectors or industries in which the Fund invests may be compared to relevant indices of stocks or surveys (e.g., S&P Industry Surveys) to evaluate the historical performance or current or potential value of each class of shares of a Fund with respect to the particular industry or sector.
In addition, the Trust also may use, in advertisements and other types of literature, information and statements: (1) showing that bank savings accounts offer a guaranteed return of principal and a fixed rate of interest, but no opportunity for capital growth; and (2) describing Wells Fargo Bank, and its affiliates and predecessors, as one of the first investment managers to advise investment accounts using asset allocation and index strategies. The Trust also may include in advertising and other types of literature information and other data from reports and studies including information regarding federal and state tax levels and the related "Tax Freedom Day."
The Trust also may discuss in advertising and other types of literature that a Fund has been assigned a rating by an NRSRO, such as Standard Poor's Corporation. Such rating would assess the creditworthiness of the investments held by a Fund. The assigned rating would not be a recommendation to purchase, sell or hold a Fund's shares since the rating would not comment on the market price of a Fund's shares or the suitability of a Fund for a particular investor. In addition, the assigned rating would be subject to change, suspension or withdrawal as a result of changes in, or unavailability of, information relating to a Fund or its investments. The Trust may compare the performance of each class of shares of a Fund with other investments that are assigned ratings by NRSROs. Any such comparisons may be useful to investors who wish to compare each class's past performance with other rated investments.
From time to time, a Fund may use the following statements, or variations thereof, in advertisements and other promotional materials: "Wells Fargo Bank, as a Shareholder Servicing Agent for the Trust, provides various services to its customers that are also shareholders of the Funds. These services may include access to the Trust account information through Automated Teller Machines ("ATMs"), the placement of purchase and redemption requests for shares of the Funds through ATMs and the availability of combined Wells Fargo Bank and Wells Fargo Funds Trust account statements."
The Trust also may disclose in advertising and other types of sales literature the assets and categories of assets under management by the Trust's Adviser and the total amount of assets and mutual
fund assets managed by Funds Management. As of March 31, 2004, Funds Management managed over $76 billion in mutual fund assets.
The Trust may disclose in advertising and other types of literature that investors can open and maintain Sweep Accounts over the Internet or through other electronic channels (collectively, "Electronic Channels"). Such advertising and other literature may discuss the investment options available to investors, including the types of accounts and any applicable fees. Such advertising and other literature may disclose that Wells Fargo Bank is the first major bank to offer an online application for a mutual fund account that can be filled out completely through Electronic Channels. Advertising and other literature may disclose that Wells Fargo Bank may maintain Web sites, pages or other information sites accessible through Electronic Channels (an "Information Site") and may describe the contents and features of the Information Site and instruct investors on how to access the Information Site and open a Sweep Account. Advertising and other literature may also disclose the procedures employed by Wells Fargo Bank to secure information provided by investors, including disclosure and discussion of the tools and services for accessing Electronic Channels. Such advertising or other literature may include discussions of the advantages of establishing and maintaining a Sweep Account through Electronic Channels and testimonials from Wells Fargo Bank customers or employees and may also include descriptions of locations where product demonstrations may occur. The Trust may also disclose the ranking of Wells Fargo Bank as one of the largest money managers in the United States.
DETERMINATION OF NET ASSET VALUE
NAV per share for each Fund is determined as of the close of regular trading (currently 4:00 p.m. (Eastern time)) on each day the New York Stock Exchange ("NYSE") is open for business. Expenses and fees, including advisory fees, are accrued daily and are taken into account for the purpose of determining the NAV of the Funds' shares.
Each Fund's investments are generally valued at current market prices. If a security trades on an exchange, it is generally valued based on the last sale price during the regular trading session ("closing price"); if no sale has occurred, the security is valued based on the latest bid quotation. Securities that are not traded primarily on an exchange generally are valued using latest quoted bid prices obtained by an independent pricing service. Securities listed on the NASDAQ Stock Market, Inc., however, are valued at the Nasdaq Official Closing Price ("NOCP"), and if no NOCP is available, then at the last reported sales price. A Fund is required to depart from these general valuation methods and use fair value pricing methods to determine the value of certain investments if an accurate market quotation is not readily available, i.e., if it is determined that the closing price or the latest quoted bid price of a security, including securities that trade primarily on a foreign exchange, does not accurately reflect its current value. This situation may result if, among other things, a significant event occurs after the closing price or the latest bid price but before a Fund calculates its NAV that materially affects the value of the security. We use various criteria, including a systematic evaluation of U.S. market moves after the close of foreign markets, in deciding whether a market quotation is readily available and, if not, what fair value to assign to the security. In light of the judgment involved in fair valuation decisions, there can be no assurance that a fair value assigned to a particular security is accurate.
Money market instruments and debt instruments maturing in 60 days or less are valued at amortized cost. Futures contracts will be marked to market daily at their respective settlement prices determined by the relevant exchange. Prices for fixed income and other securities may be furnished by a reputable independent pricing service. 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.
For the Funds that invest directly in foreign securities, portfolio securities are generally valued on the basis of quotations from the primary market in which they are traded. However, if, in the judgment of the Board, a security's value has been materially affected by events occurring after the close of the exchange or the market on which the security is principally traded (for example, a foreign exchange or market), that security may be valued by another method that the Board believes accurately reflects fair value. A security's valuation may differ depending on the method used to determine its value.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Funds may be purchased on any day a Fund is open for business. Each Fund is open for business each day the NYSE is open for trading (a "Business Day"). Currently, the NYSE is closed on New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day (each a "Holiday"). When any Holiday falls on a weekend, the NYSE typically is closed on the weekday immediately before or after such Holiday.
Purchase orders for a Fund that are received before such Fund's NAV calculation time generally are processed at such time on that Business Day. Purchase Orders received after a Fund's NAV calculation time generally are processed at such Fund's NAV calculation time on the next Business Day. Selling Agents may establish earlier cut-off times for processing your order. Requests received by a Selling Agent after the applicable cut-off time will be processed on the next Business Day. On any day the NYSE closes early, the Funds will close early. On these days, the NAV calculation time and the dividend, purchase and redemption cut-off times for the Funds may be earlier than their stated NAV calculation time described above.
Payment for shares may, in the discretion of the Adviser, be made in the form of securities that are permissible investments for the Fund. For further information about this form of payment, please contact Stephens. In connection with an in-kind securities payment, the Funds will require, among other things, that the securities be valued on the day of purchase in accordance with the pricing methods used by a Fund and that such Fund receives satisfactory assurances that (i) it will have good and marketable title to the securities received by it; (ii) that the securities are in proper form for transfer to the Fund; and (iii) adequate information will be provided concerning the basis and other matters relating to the securities.
The Funds reserve the right to reject any purchase orders, and under the 1940 Act, may suspend the right of redemption or postpone the date of payment upon redemption for any period during which the NYSE is closed (other than customary weekend and holiday closings), or during which trading is restricted, or during which, as determined by SEC rule, regulation or order, an emergency exists as a result of which disposal or valuation of portfolio securities is not reasonably practicable, or for such periods as the SEC may permit. The Trust also may redeem shares involuntarily or make payment for redemption in securities or other property if it appears appropriate to do so in light of the Trust's responsibilities under the 1940 Act. In addition, the Trust may redeem shares involuntarily to reimburse a Fund for any losses sustained by reason of the failure of a shareholder to make full payment for shares purchased or to collect any charge relating to a transaction effected for the benefit of a shareholder which is applicable to shares of a Fund as provided from time to time in the Prospectuses.
THE DEALER REALLOWANCE FOR CLASS A SHARES IS AS FOLLOWS:
FRONT-END SALES FRONT-END SALES DEALER
CHARGE AS% CHARGE AS % REALLOWANCE AS
OF PUBLIC OF NET AMOUNT % OF PUBLIC
AMOUNT OF PURCHASE OFFERING PRICE INVESTED OFFERING PRICE
---------------------- --------------- --------------- ----------------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 to $99,999 4.75% 4.99% 4.00%
$100,000 to $249,999 3.75% 3.90% 3.00%
$250,000 to $499,999 2.75% 2.83% 2.25%
$500,000 to $999,999 2.00% 2.04% 1.75%
$1,000,000 and over/1/ 0.00% 0.00% 1.00%
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/1/ We will assess Class A shares purchases of $1,000,000 or more a 1.00% contingent deferred sales charge ("CDSC") if they are redeemed within one year from the date of purchase, unless the dealer of record waived its commission with a Fund's approval. The CDSC percentage you pay is applied to the NAV on the date of original purchase.
Purchases and Redemptions for Existing Wells Fargo Funds Account Holders Via the Internet. Class A, Class B and Class C shareholders with an existing Wells Fargo Funds account may purchase additional shares of classes of Funds that they already own, and redeem existing shares, via the Internet. For purchases, such account holders must have a bank account linked to their Wells Fargo Funds account. Redemptions may be deposited into a linked bank account or mailed via check to the shareholder's address of record. We expect that in the future, Internet account access will be available for institutional clients of the Wells Fargo Funds. Shareholders should contact Investor Services at 1-800-222-8222 or log on at www.wellsfargo.com for further details.
Purchases and Redemptions Through Brokers and/or Their Affiliates. A broker may charge transaction fees on the purchase and/or sale of Fund shares in addition to those fees described in the Prospectuses in the Summary of Expenses. The Trust has authorized one or more brokers to receive on its behalf purchase and redemption orders, and such brokers are authorized to designate other intermediaries to receive purchase and redemption orders on the Trust's behalf. The Trust will be deemed to have received a purchase or redemption order for Fund shares when an authorized broker or, if applicable, a broker's authorized designee, receives the order, and such orders will be priced at the Fund's NAV next calculated after they are received by the authorized broker or the broker's designee.
Conversion Feature, Purchases and Reduced Sales Charges for Former Cooke & Bieler Portfolio Shareholders.
Conversion Feature. Class D shares of the Funds that Cooke & Bieler Portfolio shareholders receive in the proposed reorganization of the Cooke & Bieler Portfolios into the Wells Fargo Funds expected to occur in the third quarter of 2004 will be converted to Institutional Class shares or Select Class shares of the same Fund if the shareholder elects to convert such Class D shares.
The Conversion Feature will be applied as follows: i) only Cooke & Bieler Portfolio shareholders who qualify (e.g., are direct-to-fund shareholders of the Cooke & Bieler Portfolios; become Wells Fargo Fund shareholders in the proposed reorganization; and meet the minimum investment limits: a reduced limit of $1 million for Institutional Class shares and $5 million for Select Class shares) for the Conversion Feature at the time of the reorganization will be able to convert their Class D shares; ii) all shareholders who qualify for the Conversion Feature and elect within a limited period of time to have their Class D shares converted will have their shares converted to the new share class shortly after the reorganization,
and iii) the conversion will be completed as a tax-free exchange. Such conversion will occur on the basis of the relative NAVs of the two classes involved, without the imposition of any sales charge or other charge.
Purchases of Class D Shares. Former Cooke & Bieler Portfolio shareholders who receive Class D shares in the proposed reorganization and do not hold shares through a financial services firm (as defined in the Class D shares prospectus) should contact Investor Services at 1-800-222-8222 for assistance with purchasing, selling or exchanging Fund shares.
Reduced Sales Charges. Effective upon the closing, expected in third quarter 2004, of the proposed reorganization of the Cooke & Bieler Portfolios into certain Wells Fargo Funds, shareholders who purchased shares of the Cooke & Bieler Portfolios directly from the Cooke & Bieler Portfolios, and who become Wells Fargo Fund shareholders in the reorganization, will be permitted to purchase Class A shares of any Wells Fargo Fund and any unnamed shares of WealthBuilder Portfolios at NAV. Please see your account representative for details.
Reduced Sales Charges for Affiliated Funds. Any affiliated fund that invests in a Wells Fargo equity fund may purchase Class A shares of such fund at NAV.
Reduced Sales Charges for Employees of the Transfer Agent. Employees of BFDS, transfer agent for the Trust, may purchase Class A shares at NAV.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any broker-dealer or group of broker-dealers in the execution of transactions in portfolio securities. Subject to the supervision of the Trust's Board and the Investment Adviser, a Fund's Sub-Adviser is responsible for the Funds' portfolio decisions and the placing of portfolio transactions. In placing orders, it is the policy of the Sub-Adviser to obtain the best overall results taking into account various factors, including, but not limited to, the size and type of transaction involved; the broker-dealer's risk in positioning the securities involved; the nature and character of the market for the security; the confidentiality, speed and certainty of effective execution required for the transaction, the general execution and operational capabilities of the broker-dealer; the reputation, reliability, experience and financial condition of the firm, the value and quality of the services rendered by the firm in this and other transactions; and the reasonableness of the spread or commission. While each Sub-Adviser generally seeks reasonably competitive spreads or commissions, the Funds will not necessarily be paying the lowest spread or commission available.
Purchases and sales of equity securities on a securities exchange are effected through broker-dealers who charge a negotiated commission for their services. Orders may be directed to any broker-dealer including, to the extent and in the manner permitted by applicable law, Stephens or affiliated broker-dealers. In the over-the-counter market, securities are generally traded on a "net" basis with broker-dealers acting as principal for their own accounts without a stated commission, although the price of the security usually includes a profit to the broker-dealer. In underwritten offerings, securities are purchased at a fixed price that includes an amount of compensation to the underwriter, generally referred to as the underwriter's concession or discount.
In placing orders for portfolio securities of a Fund, the Sub-Adviser is required to give primary consideration to obtaining the most favorable price and efficient execution. This means that a Sub-Adviser 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-dealer based, in part, on the quality and quantity of execution services provided by the broker-dealer and in the light of generally prevailing rates. Furthermore, Funds Management oversees each Sub-Adviser's trade execution procedures to ensure that such procedures are in place, that they are adhered to, and that adjustments are made to the procedures to address ongoing changes in the marketplace.
The Sub-Adviser may, in circumstances in which two or more broker-dealers are in a position to offer comparable results for a Fund portfolio transaction, give preference to a broker-dealer that has provided statistical or other research services to the Sub-Adviser. In selecting a broker-dealer under these circumstances, a Sub-Adviser will consider, in addition to the factors listed above, the quality of the research provided by the broker-dealer. A Sub-Adviser may pay higher commissions than those obtainable from other broker-dealers in exchange for such research services. The research services generally include (1) furnishing advice as to the value of securities, the advisability of investing in, purchasing, or selling securities, and the advisability of securities or purchasers or sellers of securities; (2) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and the performance of accounts; and (3) effecting securities transactions and performing functions incidental thereto. By allocating transactions in this manner, the Sub-Adviser 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 the Sub-Adviser under the advisory contracts, and the expenses of the Sub-Adviser will not necessarily be reduced as a result of the receipt of this supplemental research information. Furthermore, research services furnished by broker-dealers through which the Sub-Adviser places securities transactions for a Fund may be used by the Sub-Adviser in servicing its other accounts, and not all of these services may be used by the Sub-Adviser in connection with advising the Funds.
Portfolio Turnover. The portfolio turnover rate is not a limiting factor when the Sub-Adviser deems portfolio changes appropriate. Changes may be made in the portfolios consistent with the investment objectives and policies of the Funds whenever such changes are believed to be in the best interests of the Funds and their shareholders. The portfolio turnover rate is calculated by dividing the lesser of purchases or sales of portfolio securities by the average monthly value of a Fund's portfolio securities. Portfolio turnover generally involves some expenses to the Funds, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and the reinvestment in other securities. Portfolio turnover may also result in adverse tax consequences to a Fund's shareholders. Portfolio turnover rate is not a limiting factor when Funds Management deems portfolio changes appropriate.
Brokerage Commissions. For the periods listed below, the predecessor portfolios of the Funds paid the following aggregate brokerage commissions on brokerage transactions:
TOTAL COMMISSIONS
--------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
FUND 10/31/03 10/31/02 10/31/01
---------------------------- ------------ ------------ ------------
C&B Large Cap Value Fund $ 15,042 $ 38,839 $ 56,607
C&B Mid Cap Value Fund $ 475,830 $ 189,256 $ 13,065
C&B Tax-Managed Value Fund $ 11,700 $ 9,369 $ 1,820
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For the fiscal year ended October 31, 2003, the predecessor portfolios of the Funds directed brokerage transactions to a broker for research services provided, and paid the following commissions based on stated total amount of transactions.
FUND COMMISSIONS PAID TRANSACTIONAL VALUE
---------------------------- ------------------ ---------------------
C&B Large Cap Value Fund $ 5,643 $ 2,935,717
C&B Mid Cap Value Fund $ 124,867 $ 44,062,267
C&B Tax-Managed Value Fund $ 3,155 $ 1,184,605
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For the fiscal years ended October 31, 2001, 2002 and 2003, the predecessor portfolios of the Funds did not pay any brokerage commissions to affiliated brokers.
Securities of Regular Broker Dealers. The Funds are required to identify any securities of its "regular brokers and dealers" (as defined under the 1940 Act) which the Funds may hold at the close of their most recent fiscal year. As of October 31, 2003, the C&B Large Cap Value Portfolio held 11,200 shares of JP Morgan Chase common stock valued at $402,080 and a repurchase agreement valued at $1,492,225 of Morgan Stanley. The C&B Mid Cap Value Portfolio held a repurchase agreement valued at $1,270,502 of Morgan Stanley. The C&B Tax-Managed Portfolio held 11,200 shares of JP Morgan Chase stock valued at $178,782 and a repurchase agreement valued at $519,757 of Morgan Stanley.
FUND EXPENSES
From time to time, Funds Management may waive fees from a Fund in whole or in part. Any such waiver will reduce expenses and, accordingly, have a favorable impact on a Fund's performance.
Except for the expenses borne by Funds Management, the Trust bears all costs of its operations, including the compensation of its Trustees who are not affiliated with Funds Management or any of its affiliates; advisory, shareholder servicing and administration fees; payments pursuant to any plan; interest charges; taxes; fees and expenses of its independent auditors, legal counsel, transfer agent and dividend disbursing agent; expenses of redeeming shares; expenses of preparing and printing prospectuses (except the expense of printing and mailing prospectuses used for promotional purposes, unless otherwise payable pursuant to a plan), shareholders' reports, notices, proxy statements and reports to regulatory agencies; insurance premiums and certain expenses relating to insurance coverage; trade association membership dues; brokerage and other expenses connected with the execution of portfolio transactions; fees and expenses of its custodian, including those for keeping books and accounts and calculating the NAV per share of a Fund; expenses of shareholders' meetings; expenses relating to the issuance, registration and qualification of a Fund's shares; pricing services, and any extraordinary expenses. Expenses attributable to a Fund are charged against Fund assets. General expenses of the Trust are allocated among all of the funds of the Trust, including the Funds, in a manner proportionate to the net assets of each Fund, on a transactional basis, or on such other basis as the Trust's Board deems equitable.
FEDERAL INCOME TAXES
The following information supplements and should be read in conjunction with the section in each Prospectus entitled "Taxes." The Prospectuses generally describe the federal income tax treatment of distributions by the Funds. This section of the SAI provides additional information concerning federal
income taxes. It is based on the Internal Revenue Code (the "Code"), applicable Treasury Regulations, judicial authority, and administrative rulings and practice, all as of the date of this SAI and all of which are subject to change, including changes with retroactive effect. The following discussion does not address any state, local or foreign tax matters.
A shareholder's tax treatment may vary depending upon his or her particular situation. This discussion only applies to shareholders holding Fund shares as capital assets within the meaning of the Code. Except as otherwise noted, it may not apply to certain types of shareholders who may be subject to special rules, such as: insurance companies, tax-exempt organizations, shareholders holding Fund shares through tax-advantaged accounts (such as 401(k) Plan Accounts or Individual Retirement Accounts ("IRAs")), financial institutions, broker-dealers, entities that are not organized under the laws of the United States or a political subdivision thereof, persons who are neither a citizen nor resident of the United States, shareholders holding Fund shares as part of a hedge, straddle or conversion transaction, and shareholders who are subject to the federal alternative minimum tax.
The Trust has not requested and will not request an advance ruling from the Internal Revenue Service (the "IRS") as to the federal income tax matters described below. The IRS could adopt positions contrary to that discussed below and such positions could be sustained. In addition, the foregoing discussion and the discussions in the Prospectuses applicable to each shareholder address only some of the federal income tax considerations generally affecting investments in the Funds. Prospective shareholders are urged to consult with their own tax advisors and financial planners as to the particular federal tax consequences to them of an investment in a Fund, as well as the applicability and effect of any state, local or foreign laws, and the effect of possible changes in applicable tax laws.
General. The Trust intends to continue to qualify each Fund as a "regulated investment company" under Subchapter M of the Code, as long as such qualification is in the best interests of the Fund's shareholders. Each Fund will be treated as a separate entity for federal income tax purposes. Thus, the provisions of the Code applicable to regulated investment companies generally will apply separately to each Fund, rather than to the Trust as a whole. Furthermore, each Fund will separately determine its income, gains, losses and expenses for federal income tax purposes.
In order to qualify as a regulated investment company under the Code, each Fund must, among other things, derive at least 90% of its annual gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, and other income attributable to its business of investing in such stock, securities or foreign currencies (including, but not limited to, gains from options, futures or forward contracts). Pursuant to future regulations, the IRS may limit qualifying income from foreign currency gains to the amount of such currency gains which are directly related to a Fund's principal business of investing in stock or securities. Each Fund must also diversify its holdings so that, at the end of each quarter of the taxable year: (i) at least 50% of the fair market value of its assets consists of (A) cash and cash items (including receivables), government securities and securities of other regulated investment companies, and (B) securities of any one issuer (other than those described in clause (A)) to the extent such securities do not exceed the greater of 5% of the Fund's total assets and not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the Fund's total assets consists of the securities of any one issuer (other than those described in clause (i)(A)), or in two or more issuers the Fund controls and which are engaged in the same or similar trades or businesses. The qualifying income and diversification requirements applicable to a Fund may limit the extent to which it can engage in transactions in options, futures contracts, forward contracts and swap agreements.
In addition, each Fund generally must distribute to its shareholders at least 90% of its investment company taxable income, which generally includes its ordinary income and the excess of any net short-term capital gain over net long-term capital loss, as well as 90% of its net tax-exempt income earned in each taxable year. A Fund generally will not be subject to federal income tax on the investment company taxable income and net capital gain (i.e., the excess of net long-term capital gain over net short-term capital loss) it distributes to its shareholders. For this purpose, a Fund generally must make the distributions in the same year that it realizes the income and gain. However, in certain circumstances, a Fund may make the distributions in the following taxable year. Furthermore, if a Fund declares a distribution to shareholders of record in October, November or December of one year and pays the distribution by January 31 of the following year, the Fund and its shareholders will be treated as if the Fund paid the distribution by December 31 of the first taxable year. Each Fund intends to distribute its net income and gain in a timely manner to maintain its status as a regulated investment company and eliminate Fund-level federal income taxation of such income and gain. However, no assurance can be given that a Fund will not be subject to federal income taxation.
If, in any taxable year, a Fund fails to qualify as a regulated investment company under the Code or fails to meet the distribution requirements, such Fund would be taxed in the same manner as an ordinary corporation without any deduction for distributions to shareholders, and all distributions from the Fund's earnings and profits (including any distributions of net tax-exempt income and net long-term capital gains) to its shareholders would be taxable as ordinary income. To qualify again to be taxed as a regulated investment company in a subsequent year, the Fund may be required to distribute to its shareholders its earnings and profits attributable to non-regulated investment company years reduced by an interest charge on 50% of such earnings and profits payable by the Fund to the IRS. In addition, if the Fund failed to qualify as a regulated investment company for a period greater than two taxable years, the Fund may be required to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if the Fund had been liquidated) or, alternatively, to be subject to taxation on such built-in gain recognized for a period of ten years, in order to qualify as a regulated investment company in a subsequent year.
A Fund is permitted to carry forward a net capital loss from any year to offset its capital gains, if any, realized during the eight years following the year of the loss. A Fund's capital loss carry-forward is treated as a short-term capital loss in the year to which it is carried. If future capital gains are offset by carried-forward capital losses, such future capital gains are not subject to Fund-level federal income taxation, regardless of whether they are distributed to shareholders. Accordingly, the Funds do not expect to distribute such capital gains. The Funds cannot carry back or carry forward any net operating losses.
Equalization Accounting. Under the Code, the Funds may use the so-called "equalization method" of accounting to allocate a portion of their "earnings and profits," which generally equals a Fund's undistributed net investment income and realized capital gains, with certain adjustments, to redemption proceeds. This method permits a Fund to achieve more balanced distributions for both continuing and redeeming shareholders. Although using this method generally will not affect a Fund's total returns, it may reduce the amount that the Fund would otherwise distribute to continuing shareholders by reducing the effect of purchases and redemptions of Fund shares on Fund distributions to shareholders. However, the IRS may not have expressly sanctioned the equalization accounting method used by the Funds, and thus the use of this method may be subject to IRS scrutiny.
Excise Tax. A 4% nondeductible excise tax will be imposed on each Fund's net income and gains (other than to the extent of its tax-exempt interest income, if any) to the extent it fails to distribute during each calendar year at least 98% of its ordinary income (excluding capital gains and losses), at least 98% of its net capital gains (adjusted for ordinary losses) for the 12 month period ending on October 31, and all of
its ordinary income and capital gains from previous years that were not distributed during such years. Each Fund intends to actually or be deemed to distribute substantially all of its net income and gains, if any, by the end of each calendar year and, thus, expects not to be subject to the excise tax. However, no assurance can be given that a Fund will not be subject to the excise tax.
Taxation of Fund Investments. In general, if a Fund realizes gains or losses on the sale of portfolio securities, such gains or losses will be capital gains or losses, and long-term capital gains or losses if the Fund has held the disposed securities for more than one year at the time of disposition.
If a Fund purchases a debt obligation with original issue discount, generally at a price less than its principal amount ("OID"), such as a zero-coupon bond, the Fund may be required to annually include in its taxable income a portion of the OID as ordinary income, even though the Fund will not receive cash payments for such discount until maturity or disposition of the obligation. A portion of the OID includible in income with respect to certain high-yield corporate debt securities may be treated as a dividend for federal income tax purposes. Gains recognized on the disposition of a debt obligation (including a municipal obligation) purchased by a Fund at a market discount, generally at a price less than its principal amount, generally will be treated as ordinary income to the extent of the portion of market discount which accrued, but was not previously recognized pursuant to an available election, during the term that the Fund held the debt obligation. A Fund generally will be required to make distributions to shareholders representing the OID on debt securities that is currently includible in income, even though the cash representing such income may not have been received by the Fund. Cash to pay such distributions may be obtained from borrowing or from sales proceeds of securities held by a Fund which the Fund otherwise might have continued to hold.
If an option granted by a Fund lapses or is terminated through a closing transaction, such as a repurchase by the Fund of the option from its holder, the Fund will realize a short-term capital gain or loss, depending on whether the premium income is greater or less than the amount paid by the Fund in the closing transaction. Some capital losses may be deferred if they result from a position that is part of a "straddle," discussed below. If securities are sold by a Fund pursuant to the exercise of a call option granted by it, the Fund will add the premium received to the sale price of the securities delivered in determining the amount of gain or loss on the sale. If securities are purchased by a Fund pursuant to the exercise of a put option written by it, the Fund will subtract the premium received from its cost basis in the securities purchased.
Some regulated futures contracts, certain foreign currency contracts, and non-equity, listed options used by a Fund will be deemed "Section 1256 contracts." A Fund will be required to "mark to market" any such contracts held at the end of the taxable year by treating them as if they had been sold on the last day of that year at market value. Sixty percent of any net gain or loss realized on all dispositions of Section 1256 contracts, including deemed dispositions under the "mark-to-market" rule, generally will be treated as long-term capital gain or loss, and the remaining 40% will be treated as short-term capital gain or loss. Transactions that qualify as designated hedges are excepted from the mark-to-market rule and the "60%/40%" rule.
Foreign exchange gains and losses realized by a Fund in connection with certain transactions involving foreign currency-denominated debt securities, certain options and futures contracts relating to foreign currency, foreign currency forward contracts, foreign currencies, or payables or receivables denominated in a foreign currency are subject to Section 988 of the Code, which generally causes such gains and losses to be treated as ordinary income and losses and may affect the amount and timing of recognition of the Fund's income. Under future Treasury Regulations, any such transactions that are not directly related to a Fund's investments in stock or securities (or its options contracts or futures contracts with respect to stock or securities) may have to be limited in order to enable the Fund to satisfy the 90%
income test described above. If the net foreign exchange loss for a year exceeds a Fund's investment company taxable income (computed without regard to such loss), the resulting ordinary loss for such year will not be deductible by the Fund or its shareholders in future years.
Offsetting positions held by a Fund involving certain financial forward, futures or options contracts may be considered, for federal income tax purposes, to constitute "straddles." "Straddles" are defined to include "offsetting positions" in actively traded personal property. The tax treatment of "straddles" is governed by Section 1092 of the Code, which, in certain circumstances, overrides or modifies the provisions of Section 1256. If a Fund is treated as entering into "straddles" by engaging in certain financial forward, futures or option contracts, such straddles could be characterized as "mixed straddles" if the futures, forward, or option contracts comprising a part of such straddles are governed by Section 1256 of the Code, described above. A Fund may make one or more elections with respect to "mixed straddles." Depending upon which election is made, if any, the results with respect to a Fund may differ. Generally, to the extent the straddle rules apply to positions established by a Fund, losses realized by the Fund may be deferred to the extent of unrealized gain in any offsetting positions. Moreover, as a result of the straddle and the conversion transaction rules, short-term capital loss on straddle positions may be recharacterized as long-term capital loss, and long-term capital gain may be characterized as short-term capital gain or ordinary income. Further, the Fund may be required to capitalize, rather than deduct currently, any interest expense on indebtedness incurred or continued to purchase or carry any positions that are part of a straddle. Because the application of the straddle rules may affect the character of gains and losses, defer losses, and/or accelerate the recognition of gains or losses from affected straddle positions, the amount which must be distributed to shareholders, and which will be taxed to shareholders as ordinary income of long-term capital gain, may be increased or decreased substantially as compared to if a Fund had not engaged in such transactions.
If a Fund enters into a "constructive sale" of any appreciated financial position in stock, a partnership interest, or certain debt instruments, the Fund will be treated as if it had sold and immediately repurchased the property and must recognize gain (but not loss) with respect to that position. A constructive sale occurs when a Fund enters into one of the following transactions with respect to the same or substantially identical property: (i) a short sale; (ii) an offsetting notional principal contract; (iii) a futures or forward contract; or (iv) other transactions identified in future Treasury Regulations. The character of the gain from constructive sales will depend upon a Fund's holding period in the property. Losses from a constructive sale of property will be recognized when the property is subsequently disposed of. The character of such losses will depend upon a Fund's holding period in the property and the application of various loss deferral provisions in the Code. Constructive sale treatment does not apply to transactions if such transaction is closed before the end of the 30th day after the close of the Fund's taxable year and the Fund holds the appreciated financial position throughout the 60-day period beginning with the day such transaction was closed.
The amount of long-term capital gain a Fund may recognize from derivative transactions is limited with respect to certain pass-through entities. The amount of long-term capital gain is limited to the amount of such gain a Fund would have had if the Fund directly invested in the pass-through entity during the term of the derivative contract. Any gain in excess of this amount is treated as ordinary income. An interest charge is imposed on the amount of gain that is treated as ordinary income.
"Passive foreign investment corporations" ("PFICs") are generally defined as foreign corporations that receive at least 75% of their annual gross income from passive sources (such as interest, dividends, certain rents and royalties, or capital gains) or that hold at least 50% of their assets in investments producing such passive income. If a Fund acquires any equity interest (which generally includes not only stock but also an option to acquire stock such as is inherent in a convertible bond under proposed Treasury
Regulations) in a PFIC, the Fund could be subject to federal income tax and IRS interest charges on "excess distributions" received from the PFIC or on gain from the sale of stock in the PFIC, even if all income or gain actually received by the Fund is timely distributed to its shareholders. Excess distributions will be characterized as ordinary income even though, absent the application of PFIC rules, some excess distributions would have been classified as capital gain.
A Fund will not be permitted to pass through to its shareholders any credit or deduction for taxes and interest charges incurred with respect to PFICs. Elections may be available that would ameliorate these adverse tax consequences, but such elections could require a Fund to recognize taxable income or gain without the concurrent receipt of cash. Investments in PFICs could also result in the treatment of associated capital gains as ordinary income. The Funds may limit and/or manage their holdings in PFICs to minimize their tax liability or maximize their returns from these investments. Because it is not always possible to identify a foreign corporation as a PFIC in advance of acquiring shares in the corporation, however, a Fund may incur the tax and interest charges described above in some instances.
Rules governing the federal income tax aspects of swap agreements are in a developing stage and are not entirely clear in certain respects. Accordingly, while each Fund intends to account for such transactions in a manner it deems to be appropriate, the IRS might not accept such treatment. If it did not, the status of a Fund as a regulated investment company might be jeopardized. The Funds intend to monitor developments in this area. Certain requirements that must be met under the Code in order for each Fund to qualify as a regulated investment company may limit the extent to which a Fund will be able to engage in swap agreements.
In addition to the investments described above, prospective shareholders should be aware that other investments made by the Funds may involve sophisticated tax rules that may result in income or gain recognition by the Funds without corresponding current cash receipts. Although the Funds seek to avoid significant noncash income, such noncash income could be recognized by the Funds, in which case the Funds may distribute cash derived from other sources in order to meet the minimum distribution requirements described above. In this regard, the Funds could be required at times to liquidate investments prematurely in order to satisfy their minimum distribution requirements.
Taxation of Distributions. For federal income tax purposes, a Fund's earnings and profits, described above, are determined at the end of the Fund's taxable year and are allocated pro rata over the entire year. All distributions paid out of a Fund's earnings and profits (as determined at the end of the year), whether paid in cash or reinvested in the Fund, generally are deemed to be taxable distributions and must be reported on each shareholder's federal income tax return. Distributions in excess of a Fund's earnings and profits will first be treated as a return of capital up to the amount of a shareholder's tax basis in his or her Fund shares and then capital gain. A Fund may make distributions in excess of earnings and profits to a limited extent, from time to time.
Distributions designated by a Fund as a capital gain distribution will be taxed to shareholders as long-term capital gain (to the extent such distributions do not exceed the Fund's actual net long-term capital gain for the taxable year), regardless of how long a shareholder has held Fund shares. Each Fund will designate capital gains distributions, if any, in a written notice mailed by the Fund to its shareholders not later than 60 days after the close of the Fund's taxable year.
Some states will not tax distributions made to individual shareholders that are attributable to interest a Fund earned on direct obligations of the U.S. Government, if the Fund meets the state's minimum investment or reporting requirements, if any. Investments in GNMA or FNMA securities, bankers'
acceptances, commercial paper and repurchase agreements collateralized by U.S. Government securities generally do not qualify for tax -free treatment. This exemption may not apply to corporate shareholders.
Sales and Exchanges of Fund Shares. If a shareholder sells, pursuant to a cash or in-kind redemption, or exchanges his or her Fund shares, subject to the discussion below, he or she generally will realize a taxable capital gain or loss on the difference between the amount received for the shares (or deemed received in the case of an exchange) and his or her tax basis in the shares. This gain or loss will be long-term capital gain or loss if he or she has held such Fund shares for more than one year at the time of the sale or exchange. Under certain circumstances, an individual shareholder receiving qualified dividend income from a Fund, explained further below, may be required to treat a loss on the sale or exchange of Fund shares as a long-term capital loss.
If a shareholder sells or exchanges Fund shares within 90 days of having acquired such shares and if, as a result of having initially acquired those shares, he or she subsequently pays a reduced sales charge on a new purchase of shares of the Fund or a different regulated investment company, the sales charge previously incurred in acquiring the Fund's shares generally shall not be taken into account (to the extent the previous sales charges do not exceed the reduction in sales charges on the new purchase) for the purpose of determining the amount of gain or loss on the disposition, but generally will be treated as having been incurred in the new purchase. Also, if a shareholder realizes a loss on a disposition of Fund shares, the loss will be disallowed to the extent that he or she purchases substantially identical shares within the 61-day period beginning 30 days before and ending 30 days after the disposition. Any disallowed loss generally will be included in the tax basis of the purchased shares.
If a shareholder receives a capital gain distribution with respect to any Fund share and such Fund share is held for six months or less, then (unless otherwise disallowed) any loss on the sale or exchange of that Fund share will be treated as a long-term capital loss to the extent of the capital gain distribution. This loss disallowance rule does not apply to losses realized under a periodic redemption plan.
Foreign Taxes. Amounts realized by a Fund on foreign securities may be subject to withholding and other taxes imposed by such countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. If more than 50% of the value of a Fund's total assets at the close of its taxable year consists of securities of non-U.S. corporations, the Fund will be eligible to file an annual election with the IRS pursuant to which the Fund may pass-through to its shareholders on a pro rata basis foreign income and similar taxes paid by the Fund, which may be claimed, subject to certain limitations, either as a tax credit or deduction by the shareholders. However, none of the Funds expect to qualify for this election.
Federal Income Tax Rates. As of the printing of this SAI, the maximum individual federal income tax rate applicable to (i) ordinary income generally is 35%; (ii) net capital gain realized prior to May 6, 2003 generally is 20%; and (iii) net capital gain realized on or after May 6, 2003 generally is 15%. The date on which a Fund sells or exchanges a security is the date used in determining whether any net capital gain from such sale or exchange distributed to an individual shareholder will qualify for the pre-May 6 or post-May 5 net capital gain federal income tax rate.
Current federal income tax law also provides for a maximum individual federal income tax rate applicable to "qualified dividend income" of 15%. In general, "qualified dividend income" is income attributable to dividends received from certain domestic and foreign corporations on or after January 1, 2003, as long as certain holding period requirements are met. If 95% or more of a Fund's gross income constitutes qualified dividend income, all of its distributions will be treated as qualified dividend income in the hands of individual shareholders, as long as they meet certain holding period requirements set forth
below for their Fund shares. If less than 95% of the Fund's income is attributable to qualified dividend income, then only the portion of the Fund's distributions that are attributable to and designated as such in a timely manner will be so treated in the hands of individual shareholders. A Fund will only be treated as realizing qualified dividend income to the extent it receives dividends from certain domestic and foreign corporations and the Fund has held the shares of the stock producing the dividend for at least 61 days during the 120-day period beginning on the date that is 60 days before the date on which such shares became ex-dividend. A longer holding period applies to investments in preferred stock. (Only dividends from direct investments will qualify. Payments received by the Fund from securities lending, repurchase and other derivative transactions ordinarily will not.) Furthermore, an individual Fund shareholder can only treat a Fund distribution designated as qualified dividend income as such if he or she as held the Fund shares producing the distribution for at least 61 days during the 120-day period beginning on the date that is 60 days before the date on which such shares became ex-dividend. No assurance can be given as to what portion, if any, of the Fund's dividend income distributed to shareholders will qualify for the reduced rate of taxation.
The maximum corporate federal income tax rate applicable to ordinary income and net capital gain is 35%. Marginal tax rates may be higher for some shareholders to reduce or eliminate the benefit of lower marginal income tax rates. Naturally, the amount of tax payable by any taxpayer will be affected by a combination of tax laws covering, for example, deductions, credits, deferrals, exemptions, sources of income and other matters. Federal income tax rates are set to increase in future years under various "sunset" provisions of laws enacted in 2001 and 2004.
Backup Withholding. The Trust may be required to withhold, subject to certain exemptions, at a rate of 28% ("backup withholding") on all distributions and redemption proceeds (including proceeds from exchanges and redemptions in-kind) paid or credited to a Fund shareholder, unless the shareholder generally certifies under penalties of perjury that the "taxpayer identification number" ("TIN"), generally the shareholder's social security or employer identification number, provided is correct and that the shareholder is not subject to backup withholding, or the IRS notifies the Fund that the shareholder's TIN is incorrect or that the shareholder is subject to backup withholding. This tax is not an additional federal income tax imposed on the shareholder, and the shareholder may claim the tax withheld as a tax payment on his or her federal income tax return, provided that the required information is furnished to the IRS. An investor must provide a valid TIN upon opening or reopening an account. If a shareholder fails to furnish a valid TIN upon request, the shareholder can also be subject to IRS penalties. The rate of backup withholding is set to increase in future years under "sunset" provisions of law enacted in 2001.
Tax-Deferred Plans. The shares of the Funds may be available for a variety of tax-deferred retirement and other tax-advantaged plans and accounts, including IRAs, [Simplified Employee Pension Plans ("SEP-IRAs"), Savings Incentive Match Plans for Employees ("SIMPLE Plans"), Roth IRAs, and Coverdell Education Savings Accounts] [need to confirm]. Prospective investors should contact their tax advisors and financial planners regarding the tax consequences to them of holding Fund shares through a tax-advantaged plan or account.
Corporate Shareholders. Subject to limitation and other rules, a corporate shareholder of a Fund may be eligible for the dividends-received deduction on Fund distributions attributable to dividends received by the Fund from domestic corporations, which, if received directly by the corporate shareholder, would qualify for such deduction. In general, a distribution by a Fund attributable to dividends of a domestic corporation will only be eligible for the deduction if: (i) the corporate shareholder holds the Fund shares upon which the distribution is made for at least 46 days during the 90 day period beginning 45 days prior to the date upon which the shareholder becomes entitled to the distribution; and (ii) the Fund holds the shares of the domestic corporation producing the dividend income in an unleveraged position for at least 46
days during the 90 day period beginning 45 days prior to the date upon which the Fund becomes entitled to such dividend income. A longer holding period applies to investments in preferred stock.
Foreign Shareholders. Under the Code, distributions attributable to ordinary income, net short-term capital gain and certain other items realized by a Fund and paid to a nonresident alien individual, foreign trust (i.e., a trust other than a trust which a U.S. court is able to exercise primary supervision over administration of that trust and one or more U.S. persons have authority to control substantial decisions of that trust), foreign estate (i.e., the income of which is not subject to U.S. tax regardless of source) or foreign corporation ( "foreign shareholders") generally will be subject to a withholding tax at a flat rate of 30% or a lower treaty rate, if an income tax treaty applies, provided the Fund obtains a properly completed and signed certificate of foreign status. This tax generally is not refundable. However, if a distribution paid by a Fund to a foreign shareholder is "effectively connected" with a U.S. trade or business (or, if an income tax treaty applies, is attributable to a permanent establishment) of the foreign shareholder, the withholding tax will not apply and the distribution will be subject to the reporting and withholding requirements generally applicable to U.S. persons. In general, foreign shareholders' capital gains realized on the disposition of Fund shares and capital gains distributions are not subject to federal income tax, withholding or otherwise, provided the Fund obtains a properly completed and signed certificate of foreign status, unless: (i) the gains or losses are effectively connected with a U.S. trade or business (or, if an income tax treaty applies, is attributable to a permanent establishment) of the foreign shareholder, or (ii) in the case of an individual foreign shareholder, the shareholder is present in the U.S. for a period or periods aggregating 183 days or more during the year of the sale and certain other conditions are met. If the capital gains or losses are effectively connected with a U.S. trade or business or are attributable to a U.S. permanent establishment of the foreign shareholder pursuant to an income tax treaty, the reporting and withholding requirements applicable to U.S. persons generally applies. If the capital gains and losses are not effectively connected for this purpose, but the foreign shareholder exceeds the 183 day limitation, the gains will be subject to a withholding tax at a flat rate of 30% or the lower treaty rate, if an income tax treaty applies.
If a foreign shareholder is a resident of a foreign country but is not a citizen or resident of the U.S. at the time of the shareholder's death, Fund shares will be deemed property situated in the U.S. and will be subject to federal estate taxes (at graduated rates of 18% to 55% of the total value, less allowable deductions and credits). In general, no federal gift tax will be imposed on gifts of Fund shares made by foreign shareholders.
The availability of reduced U.S. taxes pursuant to the 1972 Convention or the applicable estate tax convention depends upon compliance with established procedures for claiming the benefits thereof, and may, under certain circumstances, depend upon the foreign shareholder making a satisfactory demonstration to U.S. tax authorities that the shareholder qualifies as a foreign person under federal income tax laws and the 1972 Convention.
Special rules apply to foreign partnerships and those holding Fund shares through foreign partnerships.
PROXY VOTING POLICIES AND PROCEDURES
Wells Fargo Funds Trust, Wells Fargo Master Trust and Wells Fargo Variable Trust (the "Trusts") and Wells Fargo Funds Management, LLC ("Funds Management") have adopted policies and procedures ("Procedures") that are used to vote proxies relating to portfolio securities held by the Funds of the Trusts. The Procedures are designed to ensure that proxies are voted in the best interests of Fund shareholders.
The responsibility for voting proxies relating to the Funds' portfolio securities has been delegated to Funds Management. In accordance with the Procedures, Funds Management exercises its voting responsibility with the goal of maximizing value to shareholders consistent with governing laws and the investment policies of each Fund. While the Funds do not purchase securities to exercise control or to seek to effect corporate change through share ownership, they support sound corporate governance practices within companies in which they invest and reflect that support through their proxy voting process.
Funds Management has established a Proxy Voting Committee (the "Proxy Committee") that is responsible for overseeing the proxy voting process and ensuring that the voting process is implemented in conformance with the Procedures. Funds Management has retained an independent, unaffiliated nationally recognized proxy voting company, as proxy voting agent. The Proxy Committee monitors the proxy voting agent and the voting process and, in certain situations, votes proxies or directs the proxy voting agent how to vote.
The Procedures set out guidelines regarding how Funds Management and the proxy voting agent will vote proxies. Where the guidelines specify a particular vote on a particular matter, the proxy voting agent handles the proxy, generally without further involvement by the Proxy Committee. Where the guidelines specify a case-by-case determination, or where a particular issue is not addressed in the guidelines, the proxy voting agent forwards the proxy to the Proxy Committee for a vote determination by the Proxy Committee. In addition, even where the guidelines specify a particular vote, the Proxy Committee may exercise a discretionary vote if it determines that a case-by-case review of a particular matter is warranted.
The Procedures set forth Funds Management's general position on various proposals, such as:
- Routine Items - Funds Management will generally vote for the ratification of auditors, uncontested director or trustee nominees, changes in company name, and other procedural matters related to annual meetings.
- Corporate Governance - Funds Management will generally vote for charter and bylaw amendments proposed solely to conform with modern business practices or for purposes of simplification.
- Anti-Takeover Matters - Funds Management generally will vote for proposals that require shareholder ratification of poison pills, and on a case-by-case basis on proposals to redeem a company's poison pill.
- Mergers/Acquisitions and Corporate Restructurings - Funds Management's Proxy Committee will examine these items on a case-by-case basis.
- Shareholder Rights - Funds Management will generally vote against proposals that may restrict shareholder rights.
In all cases where the Proxy Committee makes the decision regarding how a particular proxy should be voted, the Proxy Committee exercises its voting discretion in accordance with the voting philosophy of the Funds and in the best interests of Fund shareholders. In deciding how to vote, the Proxy Committee may rely on independent research, input and recommendations from third parties including independent proxy services, other independent sources, investment sub-advisers, company managements and shareholder groups as part of its decision-making process.
In most cases, any potential conflicts of interest involving Funds Management or any affiliate regarding a proxy are avoided through the strict and objective application of the Funds' voting guidelines. However, when the Proxy Committee is aware of a material conflict of interest regarding a matter that
would otherwise be considered on a case-by-case basis by the Proxy Committee, either the Proxy Committee will instruct the proxy voting agent to vote in accordance with the recommendation the proxy voting agent makes to its clients generally, or the Trust's Board will exercise its authority to vote on the matter. In addition, the Proxy Committee does not permit its votes to be influenced by any conflict of interest that exists for any other affiliated person of the Funds (such as a sub-adviser or principal underwriter) and the Proxy Committee votes all such matters without regard to the conflict. The Procedures may reflect voting positions that differ from practices followed by other companies or subsidiaries of Wells Fargo & Company.
In order to not hinder possible economic benefits to the Funds and Fund shareholders, Funds Management will generally refrain from voting proxies on foreign securities that are subject to share blocking restrictions. In addition, securities on loan will typically not be recalled to facilitate voting. However, if the Proxy Committee determines that the importance of the matter to be voted upon outweighs any potential loss of benefits or revenue, the security will be recalled for voting.
Information regarding how the Funds voted proxies relating to portfolio securities during the 12-month period ended June 30 will be available annually, beginning no later than August 31, 2004, through the Funds' website at wellsfargofunds.com and on the Commission's website at http://www.sec.gov.
CAPITAL STOCK
The Funds are three of the funds in the Wells Fargo Funds Trust family of funds. The Trust was organized as a Delaware statutory trust on March 10, 1999.
Most of the Trust's funds are authorized to issue multiple classes of shares, one class generally subject to a front-end sales charge and, in some cases, classes subject to a CDSC, that are offered to retail investors. Certain of the Trust's funds also are authorized to issue other classes of shares, which are sold primarily to institutional investors. Each share in a Fund represents an equal, proportionate interest in the Fund with all other shares. Shareholders bear their pro rata portion of a Fund's operating expenses, except for certain class-specific expenses (e.g., any state securities registration fees, shareholder servicing fees or distribution fees that may be paid under Rule 12b-1) that are allocated to a particular class. Please contact Investor Services at 1-800-222-8222 if you would like additional information about other funds or classes of shares offered.
With respect to matters that affect one class but not another, shareholders vote as a class; for example, the approval of a plan. Subject to the foregoing, all shares of a Fund have equal voting rights and will be voted in the aggregate, and not by series, except where voting by a series is required by law or where the matter involved only affects one series. For example, a change in a Fund's fundamental investment policy affects only one series and would be voted upon only by shareholders of the Fund involved. Additionally, approval of an Advisory contract, since it only affects one Fund, is a matter to be determined separately by each series. Approval by the shareholders of one series is effective as to that series whether or not sufficient votes are received from the shareholders of the other series to approve the proposal as to those series.
As used in the Prospectuses and in this SAI, the term "majority" when referring to approvals to be obtained from shareholders of a class of shares of a Fund, means the vote of the lesser of (i) 67% of the shares of such class the Fund represented at a meeting if the holders of more than 50% of the outstanding shares such class of the Fund are present in person or by proxy, or (ii) more than 50% of the outstanding shares of such class the Fund. The term "majority," when referring to approvals to be obtained from shareholders of the Fund, means the vote of the lesser of (i) 67% of the shares of the Fund represented at a
meeting if the holders of more than 50% of the outstanding shares of the Fund
are present in person or by proxy, or (ii) more than 50% of the outstanding
shares of the Fund. The term "majority," when referring to the approvals to be
obtained from shareholders of the Trust as a whole, means the vote of the lesser
of (i) 67% of the Trust's shares represented at a meeting if the holders of more
than 50% of the Trust's outstanding shares are present in person or by proxy, or
(ii) more than 50% of the Trust's outstanding shares.
Shareholders are not entitled to any preemptive rights. All shares are issued in uncertificated form only, and, when issued will be fully paid and non-assessable by the Trust. The Trust may dispense with an annual meeting of shareholders in any year in which it is not required to elect directors under the 1940 Act.
Each share of a class of a Fund represents an equal proportional interest in the Fund with each other share in the same class and is entitled to such distributions out of the income earned on the assets belonging to a Fund as are declared in the discretion of the Trustees. In the event of the liquidation or dissolution of the Trust, shareholders of a Fund are entitled to receive the assets attributable to the relevant class of shares of the Fund that are available for distribution, and a distribution of any general assets not attributable to a particular Fund or portfolio that are available for distribution in such manner and on such basis as the Trustees in their sole discretion may determine.
Set forth below, as of July 26, 2004, is the name, address and share ownership of each person known by the Trust to have beneficial or record ownership of 5% or more of a class of a Fund or 5% or more of the voting securities as a whole.
TYPE OF PERCENTAGE
FUND NAME AND ADDRESS OWNERSHIP OF CLASS
----------------------------- ------------------------------ ----------- ------------
C&B LARGE CAP VALUE FUND
Class A Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
Class B Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
Class C Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
Institutional Class Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
Select Class Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
C&B MID CAP VALUE FUND
Class A Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
Class B Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
Class C Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
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TYPE OF PERCENTAGE
FUND NAME AND ADDRESS OWNERSHIP OF CLASS
----------------------------- ------------------------------ ----------- ------------
Institutional Class Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
Select Class Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
C&B TAX-MANAGED VALUE FUND
Class A Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
Class B Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
Class C Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
Institutional Class Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
Select Class Stephens Inc
111 Center Street, Suite 130 Record 100%
Little Rock, AK 72201
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OTHER
The Trust's Registration Statement, including the Prospectuses and SAI for the Funds and the exhibits filed therewith, may be examined at the office of the SEC in Washington, D.C. Statements contained in the Prospectuses or the SAI as to the contents of any contract or other document referred to herein or in the Prospectuses are not necessarily complete, and, in each instance, reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference.
COUNSEL
Morrison & Foerster LLP, 2000 Pennsylvania Avenue, N.W., Suite 5500, Washington, D.C. 20006, as counsel for the Trust, has rendered its opinion as to certain legal matters regarding the due authorization and valid issuance of the shares of beneficial interest being sold pursuant to the Funds' Prospectuses.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP has been selected as the independent registered public accounting firm 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.
FINANCIAL INFORMATION
The audited financial statements and the portfolio of investments for the Funds for the fiscal year ended October 31, 2003 were audited by KPMG LLP, the independent registered public accounting firm for the predecessor portfolios, and are incorporated herein by reference to the Funds' Annual Report.
WELLS FARGO FUNDS TRUST
File Nos. 333-74295; 811-09253
PART C
OTHER INFORMATION
Item 23. Exhibits.
Exhibit
Number Description
------- -----------
(a) - Amended and Restated Declaration of Trust, incorporated by
reference to Post-Effective Amendment No. 54, filed December
27, 2002.
(b) - Not Applicable.
(c) Not Applicable.
(d)(1)(i) - Investment Advisory Agreement with Wells Fargo Funds
Management, LLC, incorporated by reference to Post-Effective
Amendment No. 66, filed October 1, 2003; Schedule A, filed
herewith.
(ii) - Amended and Restated Fee and Expense Agreement between Wells
Fargo Funds Trust and Wells Fargo Funds Management, LLC,
incorporated by reference to Post-Effective Amendment No. 32,
filed February 8, 2002; Schedule A, filed herewith.
(2)(i) - Investment Sub-Advisory Agreement with Barclays Global Fund
Advisors, incorporated by reference to Post-Effective
Amendment No. 22, filed June 15, 2001; Appendix I,
incorporated by reference to Post-Effective Amendment No. 49,
filed November 1, 2002.
(ii) - Investment Sub-Advisory Agreement with Galliard Capital
Management, Inc., incorporated by reference to Post-Effective
Amendment No. 20, filed May 1, 2001; Schedule A, incorporated
by reference to Post-Effective Amendment No. 29, filed
November 1, 2001; Appendix A, incorporated by reference to
Post-Effective Amendment No. 66, filed October 1, 2003.
C-1
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(iii) - Investment Sub-Advisory Agreement with Peregrine Capital
Management, Inc., incorporated by reference to Post-Effective
Amendment No. 20, filed May 1, 2001; Schedule A, incorporated
by reference to Post-Effective Amendment No. 32, filed
February 8, 2002; Appendix A, incorporated by reference to
Post-Effective Amendment No. 66, filed October 1, 2003.
(iv) - Investment Sub-Advisory Agreement with Schroder Investment
Management North America Inc., incorporated by reference to
Post-Effective Amendment No. 20, filed May 1, 2001; Schedule
A, incorporated by reference to Post-Effective Amendment No.
58, filed June 9, 2003; Appendix A, incorporated by reference
to Post-Effective Amendment No. 66, filed October 1, 2003.
(v) - Investment Sub-Advisory Agreement with Smith Asset Management
Group, L.P, incorporated by reference to Post-Effective
Amendment No. 49, filed November 1, 2002; Schedule A,
incorporated by reference to Post-Effective Amendment No. 69,
filed January 30, 2004; Appendix A, incorporated by reference
to Post-Effective Amendment No. 66, filed October 1, 2003.
(vi) - Investment Sub-Advisory Agreement with Wells Capital
Management Incorporated, incorporated by reference to
Post-Effective Amendment No. 22, filed June 15, 2001;
Appendix A, Schedule A, and Appendix A to Schedule A,
incorporated by reference to Post-Effective Amendment No. 66,
filed October 1, 2003.
(vii) - Investment Sub-Advisory Agreement with Dresdner RCM Global
Investors, LLC, incorporated by reference to Post-Effective
Amendment No. 32, filed February 8, 2002; Schedule A,
incorporated by reference to Post-Effective Amendment No. 58,
filed June 9, 2003; Appendix A, incorporated by reference to
Post-Effective Amendment No. 66, filed October 1, 2003.
(viii) - Not Applicable.
C-2
|
(ix) - Investment Sub-Advisory Agreement with Cadence Capital
Management, incorporated by reference to Post-Effective
Amendment No. 26, filed September 12, 2001; Appendix A,
incorporated by reference to Post-Effective Amendment No. 66,
filed October 1, 2003.
(x) - Investment Sub-Advisory Agreement with Sutter Advisors LLC,
incorporated by reference to Post-Effective Amendment No. 66,
filed October 1, 2003.
(xi) - Investment Sub-Advisory Agreement with Systematic Financial
Management, L.P., incorporated by reference to Post-Effective
Amendment No. 66, filed October 1, 2003.
(xii) - Investment Sub-Advisory Agreement with LSV Asset Management,
incorporated by reference to Post-Effective Amendment No. 69,
filed January 30, 2004.
(xiii) - Investment Sub-Advisory Agreement with Cooke & Bieler, L.P.,
filed herewith.
(e) - Amended and Restated Distribution Agreement along with Form
of Selling Agreement, incorporated by reference to
Post-Effective Amendment No. 49, filed November 1, 2002;
Appendix A, incorporated by reference to Post-Effective
Amendment No. 66, filed October 1, 2003.
(f) - Not Applicable.
(g)(1) - Not Applicable.
(2) - Custody Agreement with Wells Fargo Bank, N.A. (formerly Wells
Fargo Bank Minnesota, N.A.), incorporated by reference to
Post-Effective Amendment No. 16, filed October 30, 2000;
Appendix A, filed herewith.
(i) - Delegation Agreement (17f-5) with Wells Fargo Bank, N.A.
(formerly Wells Fargo Bank Minnesota, N.A.), incorporated by
reference to Post-Effective Amendment No. 16, filed October
30, 2000; Exhibit A, incorporated by reference to
Post-Effective Amendment No. 66, filed October 1, 2003.
C-3
|
(3) - Securities Lending Agreement by and among Wells Fargo Funds
Trust, Wells Fargo Funds Management, LLC and Wells Fargo
Bank, N.A. (formerly Wells Fargo Bank Minnesota, N.A.),
incorporated by reference to Post-Effective Amendment No. 22,
filed June 15, 2001; Exhibit A, filed herewith.
(4) - Not Applicable.
(h)(1) - Administration Agreement with Wells Fargo Funds Management,
LLC, incorporated by reference to Post-Effective Amendment
No. 65, filed August 15, 2003; Appendix A, filed herewith.
(2) - Accounting Services Agreement with PFPC Inc., incorporated by
reference to Post-Effective Amendment No. 54, filed December
27, 2002; Exhibit A, filed herewith.
(3) - Transfer Agency and Service Agreement with Boston Financial
Data Services, Inc., incorporated by reference to
Post-Effective Amendment No. 16, filed October 30, 2000;
Amendment to Transfer Agreement, incorporated by reference to
Post-Effective Amendment No. 65, filed August 15, 2003;
Schedule A, filed herewith.
(4) - Shareholder Servicing Plan, incorporated by reference to
Post-Effective Amendment No. 16, filed October 30, 2000;
Appendix A, filed herewith.
(5) - Shareholder Servicing Agreement, incorporated by reference to
Post-Effective Amendment No. 8, filed December 17, 1999.
(i) - Legal Opinion, filed herewith.
(j)(A)(1) - Consent of Independent Registered Public Accounting Firm,
filed herewith.
(j)(A)(2) - Consent of Independent Registered Public Accounting Firm,
filed herewith.
(j)(1) - Power of Attorney, Robert C. Brown, incorporated by reference
to Post-Effective Amendment No. 72, filed on June 30, 2004.
C-4
|
(2) - Not Applicable.
(3) - Not Applicable.
(4) - Power of Attorney, Thomas S. Goho, incorporated by reference
to Post-Effective Amendment No. 72, filed on June 30, 2004.
(5) - Power of Attorney, Peter G. Gordon, incorporated by reference
to Post-Effective Amendment No. 72, filed on June 30, 2004.
(6) - Not Applicable.
(7) - Power of Attorney, Richard M. Leach, incorporated by
reference to Post-Effective Amendment No. 72, filed on June
30, 2004.
(8) - Power of Attorney, J. Tucker Morse, incorporated by reference
to Post-Effective Amendment No. 72, filed on June 30, 2004.
(9) - Power of Attorney, Timothy J. Penny, incorporated by
reference to Post-Effective Amendment No. 72, filed on June
30, 2004.
(10) - Power of Attorney, Donald C. Willeke, incorporated by
reference to Post-Effective Amendment No. 72, filed on June
30, 2004.
(11) - Not Applicable.
(12) - Power of Attorney, Karla M. Rabusch, incorporated by
reference to Post-Effective Amendment No. 72, filed on June
30, 2004.
(13) - Not Applicable.
(14) - Power of Attorney, Stacie D. DeAngelo, incorporated by
reference to Post-Effective Amendment No. 72, filed on June
30, 2004.
(k) - Not Applicable.
(l) - Not Applicable.
C-5
|
(m) - Rule 12b-1 Plan, incorporated by reference to Post-Effective
Amendment No. 23, filed July 1, 2001; Appendix A, filed
herewith (see Exhibit (e) above for related Distribution
Agreement).
(n) - Rule 18f-3 Plan, incorporated by reference to Post-Effective
Amendment No. 58, filed June 9, 2003; Appendix A, filed
herewith.
(o) - Not Applicable.
(p)(1) - Joint Code of Ethics for Funds Trust, Master Trust and
Variable Trust, incorporated by reference to Post-Effective
Amendment No. 20, filed May 1, 2001.
(2) - Wells Fargo Funds Management, LLC Code of Ethics,
incorporated by reference to Post-Effective Amendment No. 20,
filed May 1, 2001.
(3) - Barclays Global Investors, N.A. Code of Ethics, incorporated
by reference to Post-Effective Amendment No. 20, filed May 1,
2001.
(4) - Dresdner RCM Global Investors, LLC Code of Ethics,
incorporated by reference to Post-Effective Amendment No. 15,
filed October 2, 2000.
(5) - Galliard Capital Management, Inc. Code of Ethics,
incorporated by reference to Post-Effective Amendment No. 15,
filed October 2, 2000.
(6) - Peregrine Capital Management, Inc. Code of Ethics,
incorporated by reference to Post-Effective Amendment No. 15,
filed October 2, 2000.
(7) - Schroder Investment Management North America Inc. Code of
Ethics, incorporated by reference to Post-Effective Amendment
No. 15, filed October 2, 2000.
(8) - Smith Asset Management Group, L.P. Code of Ethics,
incorporated by reference to Post-Effective Amendment No. 15,
filed October 2, 2000.
C-6
|
(9) - Wells Capital Management Incorporated Code of Ethics,
incorporated by reference to Post-Effective Amendment No. 58,
filed June 9, 2003.
(10) - Cadence Capital Management Code of Ethics, incorporated by
reference to Post-Effective Amendment No. 67, filed October
31, 2003.
(11) - Not Applicable.
(12) - Sutter Advisors LLC Code of Ethics, incorporated by reference
to Post-Effective Amendment No. 54, filed December 27, 2002.
(13) - Systematic Financial Management, L.P. Code of Ethics,
incorporated by reference to Post-Effective Amendment No. 66,
filed October 1, 2003.
(14) - LSV Asset Management Code of Ethics and Personal Trading
Policy, incorporated by reference to Post-Effective Amendment
No. 67, filed October 31, 2003.
(15) - Cooke & Bieler, L.P. Code of Ethics, filed herewith.
|
Item 24. Persons Controlled by or Under Common Control with the Fund.
Registrant believes that no person is controlled by or under common control with Registrant.
Item 25. Indemnification.
Article V of the Registrant's Declaration of Trust limits the liability and, in certain instances, provides for mandatory indemnification of the Registrant's Trustees, officers, employees, agents and holders of beneficial interests in the Trust. In addition, the Trustees are empowered under Section 3.9 of the Registrant's Declaration of Trust to obtain such insurance policies as they deem necessary.
Item 26. Business and Other Connections of Investment Adviser.
(a) Effective March 1, 2001, Wells Fargo Funds Management, LLC ("Funds Management") assumed investment advisory responsibilities for each of the Funds. For providing these services, Funds Management is entitled to receive fees at the same annual rates as were applicable under the advisory contract with Wells Fargo Bank, N.A. ("Wells Fargo Bank"). Funds Management, an indirect, wholly owned subsidiary
of Wells Fargo & Company, was created to succeed to the mutual fund advisory responsibilities of Wells Fargo Bank in early 2001.
To the knowledge of Registrant, none of the directors or officers of Funds Management 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 they also hold various positions with and engage in business for Wells Fargo Bank.
(b) Barclays Global Fund Advisors ("BGFA"), a wholly owned subsidiary of Barclays Global Investors, N.A. ("BGI"), serves as a sub-adviser to various Funds of Wells Fargo Funds Trust (the "Trust") and as adviser or sub-adviser to certain other open-end management investment companies. The descriptions of BGFA in Parts A and B of the Registration Statement are incorporated by reference herein. The directors and officers of BGFA also serve as directors or officers of BGI. To the knowledge of the Registrant, none of the directors or officers of BGFA is or has been at any time during the past two fiscal years engaged in any other business, profession, vocation or employment of a substantial nature.
(c) Wells Capital Management Incorporated ("Wells Capital Management"), an affiliate of Funds Management, serves as sub-adviser to various Funds of the Trust. The descriptions of Wells Capital Management in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of Wells Capital Management 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.
(d) Peregrine Capital Management, Inc. ("Peregrine"), an indirect, wholly owned subsidiary of Wells Fargo & Company, serves as sub-adviser to various Funds of the Trust. The descriptions of Peregrine in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of Peregrine is or has been at any time during the last two fiscal years engaged in any other business, profession, vocation or employment of a substantial nature.
(e) Schroder Investment Management North America Inc. ("Schroder"), serves as sub-adviser to the Small Cap Opportunities Fund of the Trust. The descriptions of Schroder in Parts A and B of the Registration Statement are incorporated by reference herein. Schroder Capital Management International Limited ("Schroder Ltd.") is a United Kingdom affiliate of Schroder which provides investment management services to international clients located principally in the United States. Schroder Ltd. and Schroder p.l.c. are located at 31 Gresham St., London ECZV 7QA, United Kingdom. To the knowledge of the Registrant, none of the directors or officers of Schroder is or has been at any time during the last two fiscal years engaged in any other business, profession, vocation or employment of a substantial nature.
(f) Galliard Capital Management, Inc. ("Galliard"), an indirect, wholly owned subsidiary of Wells Fargo & Company serves as sub-adviser to various Funds of
the Trust. The descriptions of Galliard in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of Galliard is or has been at any time during the last two fiscal years engaged in any other business, profession, vocation or employment of a substantial nature.
(g) Smith Asset Management Group, L.P. ("Smith"), in which Wells Fargo Bank maintains an indirect, minority-ownership interest, serves as sub-adviser to various Funds of the Trust. The descriptions of Smith in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of this sub-adviser is or has been at any time during the last two fiscal years engaged in any other business, profession, vocation or employment of a substantial nature.
(h) Dresdner RCM Global Investors LLC ("Dresdner"), an indirect, wholly owned subsidiary of Dresdner Bank AG, serves as sub-adviser for the Specialized Technology Fund and Specialized Health Sciences Fund of the Trust. The descriptions of Dresdner in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of Dresdner is or has been at any time during the last two fiscal years engaged in any other business, profession, vocation or employment of a substantial nature.
(i) Cadence Capital Management ("Cadence") serves as sub-adviser for the Large Cap Appreciation Portfolio of Wells Fargo Master Trust ("Master Trust") in which several Funds of the Trust invest. The descriptions of Cadence in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of Cadence 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.
(j) Sutter Advisors LLC ("Sutter") serves as the sub-adviser to the High Yield Bond Fund of the Trust. The descriptions of Sutter in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of Sutter 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.
(k) Systematic Financial Management, L.P. ("Systematic") serves as sub-adviser to the Large Cap Value Portfolio of Master Trust in which several Funds of the Trust invest. The descriptions of Systematic in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of Systematic 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.
(l) LSV Asset Management ("LSV") serves as sub-adviser to Overseas Portfolio of Master Trust in which several Funds of the Trust invest. The descriptions of
LSV in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of LSV 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.
(m) Cooke & Bieler, L.P. ("Cooke & Bieler") serves as the sub-adviser to the Wells Fargo C&B Large Cap Value Fund, Wells Fargo C&B Mid Cap Value Fund and Wells Fargo C&B Tax-Managed Value Fund. The descriptions of Cooke & Bieler in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of Cooke & Bieler 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.
Item 27. Principal Underwriters.
(a) Stephens Inc. ("Stephens"), distributor for the Registrant, also acts as principal underwriter for Wells Fargo Variable Trust and Wells Fargo Funds Trust, and is the exclusive placement agent for Wells Fargo Master Trust, all of which are registered open-end management investment companies. Stephens Capital Management, an operating division of Stephens, acts as an investment adviser for certain funds of The Diversified Investors Fund Group, also an open-end management investment company.
(b) Information with respect to each director and officer of the principal underwriter is incorporated by reference to Form ADV and Schedules A and D thereto, filed by Stephens with the Securities and Exchange Commission pursuant to the Investment Advisers Act of 1940 (File No. 501-15510).
(c) Not Applicable.
Item 28. Location of Accounts and Records.
(a) The Registrant maintains accounts, books and other documents required by Section 31(a) of the Investment Company Act of 1940 and the rules thereunder (collectively, "Records") at the offices of Wells Fargo Funds Management, LLC, 525 Market Street, 12th Floor, San Francisco, California 94105.
(b) Wells Fargo Funds Management, LLC maintains all Records relating to its services as investment adviser and administrator at 525 Market Street, 12th Floor, San Francisco, California 94105.
(c) Boston Financial Data Services, Inc. maintains all Records relating to its services as transfer agent at Two Heritage Drive, Quincy, Massachusetts 02171.
(d) Barclays Global Fund Advisors and Barclays Global Investors, N.A. maintain all Records relating to their services as sub-adviser (and through April 12, 2002, as custodian for the Asset Allocation and Index Allocation Funds) at 45 Fremont Street, San Francisco, California 94105.
(e) Stephens Inc. maintains all Records relating to its services as distributor at 111 Center Street, Little Rock, Arkansas 72201.
(f) Wells Fargo Bank, N.A. (formerly Wells Fargo Bank Minnesota, N.A.) maintains all Records relating to its services as custodian at 6th & Marquette, Minneapolis, Minnesota 55479-0040.
(g) Wells Capital Management Incorporated maintains all Records relating to its services as investment sub-adviser at 525 Market Street, 10th Floor, San Francisco, California 94105.
(h) Peregrine Capital Management, Inc. maintains all Records relating to its services as investment sub-adviser at 800 LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402.
(i) Galliard Capital Management, Inc. maintains all Records relating to its services as investment sub-adviser at 800 LaSalle Avenue, Suite 2060, Minneapolis, Minnesota 55402.
(j) Smith Asset Management Group, L.P. maintains all Records relating to its services as investment sub-adviser at 200 Crescent Court, Suite 850, Dallas, Texas 75201.
(k) Schroder Investment Management North America Inc. maintains all Records relating to its services as investment sub-adviser at 875 Third Avenue, 22nd Floor, New York, New York 10022.
(l) Dresdner RCM Global Investors, LLC maintains all Records relating to its services as investment sub-adviser at Four Embarcadero Center, San Francisco, California 94111.
(m) Cadence Capital Management maintains all Records relating to its services as investment sub-adviser at 265 Franklin Street, Boston, Massachusetts 02110.
(n) Sutter Advisors LLC maintains all Records relating to its services as investment sub-adviser at 550 California Street, San Francisco, California 94104.
(o) Systematic Financial Management, L.P. maintains all Records relating to its services as investment sub-adviser at 300 Frank W. Burr Boulevard, Glenpointe East, 7th Floor, Teaneck, New Jersey 07666.
(p) LSV Asset Management maintains all Records relating to its services as investment sub-adviser at One North Wacker Drive, Suite 4000, Chicago, Illinois 60606.
(q) Cooke & Bieler, L.P. will maintain all Records relating to its services as investment sub-adviser at 1700 Market Street, Philadelphia, Pennsylvania 19103.
Item 29. Management Services.
Other than as set forth under the captions "Organization and Management of the Funds" in the Prospectuses constituting Part A of this Registration Statement and "Management" in the Statement of Additional Information constituting Part B of this Registration Statement, the Registrant is not a party to any management-related service contract.
Item 30. Undertakings. Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Amendment to the Registration Statement on Form N-1A, pursuant to Rule 485(b) under the Securities Act of 1933, and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized in the City of San Francisco, State of California on the 26th day of July, 2004.
WELLS FARGO FUNDS TRUST
Carol Lorts Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 74 to its Registration Statement on Form N-1A has been signed below by the following persons in the capacities and on the date indicated:
Signature Title Date
--------- ----- ----
*
--------------------------------- Trustee
Robert C. Brown
*
--------------------------------- Trustee
Thomas S. Goho
*
--------------------------------- Trustee
Peter G. Gordon
*
--------------------------------- Trustee
Richard M. Leach
*
--------------------------------- Trustee
J. Tucker Morse
*
--------------------------------- Trustee
Timothy J. Penny
*
--------------------------------- Trustee
Donald C. Willeke
*
--------------------------------- President
Karla M. Rabusch (Principal Executive Officer)
*
--------------------------------- Treasurer
Stacie D. DeAngelo (Principal Financial Officer)
07/26/2004
By:
-------------------------------
Carol Lorts
July 26, 2004
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WELLS FARGO FUNDS TRUST
FILE NOS. 333-74295; 811-09253
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
EX-99.B(d)(1)(i) Schedule A to the Investment Advisory Agreement with Wells
Fargo Funds Management, LLC
EX-99.B(d)(1)(ii) Schedule A to the Amended and Restated Fee and Expense
Agreement with Wells Fargo Funs Management, LLC
EX-99.B(d)(2)(xiii) Investment Sub-Advisory Agreement with Cooke & Bieler,
L.P.
EX-99.B(g)(2) Appendix A to the Custody Agreement with Wells Fargo Bank,
N.A.
EX-99.B(g)(3) Exhibit A to the Securities Lending Agreement by and among
Wells Fargo Funds Trust, Wells Fargo Funds Management, LLC
and Wells Fargo Bank, N.A.
EX-99.B(h)(1) Appendix A to the Administration Agreement with Wells
Fargo Funds Management, LLC
EX-99.B(h)(2) Exhibit A to the Accounting Services Agreement with PFPC
Inc.
EX-99.B(h)(3) Schedule A to the Transfer Agency and Service Agreement
with Boston Financial Data Services, Inc.
EX-99.B(h)(4) Appendix A to the Shareholder Servicing Plan
EX-99.B(i) Legal Opinion
EX-99.B(j)(A)(1) Consent of Independent Registered Public Accounting Firm
EX-99.B(j)(A)(2) Consent of Independent Registered Public Accounting Firm
EX-99.B(m) Appendix A to the Rule 12b-1 Plan
EX-99.B(n) Appendix A to the Rule 18f-3 Plan
EX-99.B(p)(15) Cooke & Bieler, L.P. Code of Ethics
|
EX-99.B(d)(1)(i)
WELLS FARGO FUNDS TRUST
INVESTMENT ADVISORY AGREEMENT
SCHEDULE A
------------------------------------------------------------------------------------
Fee as % of Avg. Daily Net Asset Value
--------------------------------------
FUNDS Prior to 8/1/04 Effective 8/1/04
------------------------------------------------------------------------------------
1. Asset Allocation Fund 0.75 0-499M 0.65
500-999M 0.60
1-2.99B 0.55
3-4.99B 0.525
>4.99B 0.50
------------------------------------------------------------------------------------
2. California Limited Term Tax-Free Fund 0.40 0-499M 0.40
500-999M 0.35
1-2.99B 0.30
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
3. California Tax-Free Fund 0.40 0-499M 0.40
500-999M 0.35
1-2.99B 0.30
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
4. California Tax-Free Money Market Fund 0.30 0-499M 0.30
500-999M 0.30
1-2.99B 0.275
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
5. California Tax-Free Money Market Trust 0.00 No change
------------------------------------------------------------------------------------
6. Cash Investment Money Market Fund 0.10 No change
------------------------------------------------------------------------------------
7. Colorado Tax-Free Fund 0.40 0-499M 0.40
500-999M 0.35
1-2.99B 0.30
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
8. C&B Large Cap Value Fund 0.75 0-499M 0.75
500-999M 0.70
1-2.99B 0.65
3-4.99B 0.625
>4.99B 0.60
------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------
Fee as % of Avg. Daily Net Asset Value
--------------------------------------
FUNDS Prior to 8/1/04 Effective 8/1/04
------------------------------------------------------------------------------------
9. C&B Mid Cap Value Fund 0.75 0-499M 0.75
500-999M 0.70
1-2.99B 0.65
3-4.99B 0.625
>4.99B 0.60
------------------------------------------------------------------------------------
10. C&B Tax-Managed Value Fund 0.75 0-499M 0.75
500-999M 0.70
1-2.99B 0.65
3-4.99B 0.625
>4.99B 0.60
------------------------------------------------------------------------------------
11. Diversified Bond Fund Based on a blended fee rate of the
advisory fees charged by the Wells
Fargo Master Trust Portfolios.
------------------------------------------------------------------------------------
12. Diversified Equity Fund Based on a blended fee rate of the
advisory fees charged by the Wells
Fargo Master Trust Portfolios.
------------------------------------------------------------------------------------
13. Diversified Small Cap Fund Based on a blended fee rate of the
advisory fees charged by the Wells
Fargo Master Trust Portfolios.
------------------------------------------------------------------------------------
14. Equity Income Fund 0.75 0-499M 0.75
500-999M 0.70
1-2.99B 0.65
3-4.99B 0.625
>4.99B 0.60
------------------------------------------------------------------------------------
15. Equity Index Fund 0.15 0-499M 0.10
500-999M 0.10
1-2.99B 0.075
3-4.99B 0.075
>4.99B 0.05
------------------------------------------------------------------------------------
16. Government Money Market Fund 0.10 No change
------------------------------------------------------------------------------------
17. Growth Balanced Fund Based on a blended fee rate of the
advisory fees charged by the Wells
Fargo Master Trust Portfolios.
------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------
Fee as % of Avg. Daily Net Asset Value
--------------------------------------
FUNDS Prior to 8/1/04 Effective 8/1/04
------------------------------------------------------------------------------------
18. Growth Equity Fund Based on a blended fee rate of the
advisory fees charged by the Wells
Fargo Master Trust Portfolios.
------------------------------------------------------------------------------------
19. Growth Fund 0.75 0-499M 0.75
500-999M 0.70
1-2.99B 0.65
3-4.99B 0.625
>4.99B 0.60
------------------------------------------------------------------------------------
20. High Yield Bond Fund 0.60 0-499M 0.55
500-999M 0.50
1-2.99B 0.45
3-4.99B 0.425
>4.99B 0.40
------------------------------------------------------------------------------------
21. Income Fund 0.50 0-499M 0.45
500-999M 0.40
1-2.99B 0.35
3-4.99B 0.325
>4.99B 0.30
------------------------------------------------------------------------------------
22. Income Plus Fund 0.60 0-499M 0.55
500-999M 0.50
1-2.99B 0.45
3-4.99B 0.425
>4.99B 0.40
------------------------------------------------------------------------------------
23. Index Allocation Fund 0.75 0-499M 0.65
500-999M 0.60
1-2.99B 0.55
3-4.99B 0.525
>4.99B 0.50
------------------------------------------------------------------------------------
24. Index Fund 0.15 0-499M 0.10
500-999M 0.10
1-2.99B 0.075
3-4.99B 0.075
>4.99B 0.05
------------------------------------------------------------------------------------
25. Inflation-Protected Bond Fund 0.50 0-499M 0.45
500-999M 0.40
1-2.99B 0.35
3-4.99B 0.325
>4.99B 0.30
------------------------------------------------------------------------------------
26. Intermediate Government Income Fund 0.50 0-499M 0.45
500-999M 0.40
1-2.99B 0.35
3-4.99B 0.325
>4.99B 0.30
------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------
Fee as % of Avg. Daily Net Asset Value
--------------------------------------
FUNDS Prior to 8/1/04 Effective 8/1/04
------------------------------------------------------------------------------------
27. International Equity Fund 1.00 0-499M 0.95
500-999M 0.90
1-2.99B 0.85
3-4.99B 0.825
>4.99B 0.80
------------------------------------------------------------------------------------
28. Large Cap Appreciation Fund 0.70 0-499M 0.70
500-999M 0.70
1-2.99B 0.65
3-4.99B 0.625
>4.99B 0.60
------------------------------------------------------------------------------------
29. Large Cap Value Fund 0.75 0-499M 0.75
500-999M 0.70
1-2.99B 0.65
3-4.99B 0.625
>4.99B 0.60
------------------------------------------------------------------------------------
30. Large Company Growth Fund 0.75 0-499M 0.75
500-999M 0.70
1-2.99B 0.65
3-4.99B 0.625
>4.99B 0.60
------------------------------------------------------------------------------------
31. Limited Term Government Income Fund 0.50 0-499M 0.45
500-999M 0.40
1-2.99B 0.35
3-4.99B 0.325
>4.99B 0.30
------------------------------------------------------------------------------------
32. Liquidity Reserve Money Market Fund 0.35 0-499M 0.30
500-999M 0.30
1-2.99B 0.275
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
33. Minnesota Money Market Fund 0.30 0-499M 0.30
500-999M 0.30
1-2.99B 0.275
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
34. Minnesota Tax-Free Fund 0.40 0-499M 0.40
500-999M 0.35
1-2.99B 0.30
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
35. Moderate Balanced Fund/1/ Based on a blended fee rate of the
advisory fees charged by the Wells
Fargo Master Trust Portfolios.
------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------
Fee as % of Avg. Daily Net Asset Value
--------------------------------------
FUNDS Prior to 8/1/04 Effective 8/1/04
------------------------------------------------------------------------------------
36. Money Market Fund 0.40 0-499M 0.30
500-999M 0.30
1-2.99B 0.275
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
37. Money Market Trust 0.00 No change
------------------------------------------------------------------------------------
38. Montgomery Emerging Markets Focus Fund 1.10 0-499M 1.10
500-999M 1.05
1-2.99B 1.00
3-4.99B 0.975
>4.99B 0.95
------------------------------------------------------------------------------------
39. Montgomery Institutional Emerging
Markets Fund 1.10 0-499M 1.10
500-999M 1.05
1-2.99B 1.00
3-4.99B 0.975
>4.99B 0.95
------------------------------------------------------------------------------------
40. Montgomery Mid Cap Growth Fund 0.75 0-499M 0.75
500-999M 0.70
1-2.99B 0.65
3-4.99B 0.625
>4.99B 0.60
------------------------------------------------------------------------------------
41. Montgomery Short Duration Government
Bond Fund 0.50 0-499M 0.45
500-999M 0.40
1-2.99B 0.35
3-4.99B 0.325
>4.99B 0.30
------------------------------------------------------------------------------------
42. Montgomery Small Cap Fund 0.90 0-499M 0.90
500-999M 0.85
1-2.99B 0.80
3-4.99B 0.775
>4.99B 0.75
------------------------------------------------------------------------------------
43. Montgomery Total Return Bond Fund 0.50 0-499M 0.45
500-999M 0.40
1-2.99B 0.35
3-4.99B 0.325
>4.99B 0.30
------------------------------------------------------------------------------------
44. National Limited Term Tax-Free Fund 0.40 0-499M 0.40
500-999M 0.35
1-2.99B 0.30
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------
Fee as % of Avg. Daily Net Asset Value
--------------------------------------
FUNDS Prior to 8/1/04 Effective 8/1/04
------------------------------------------------------------------------------------
45. National Tax-Free Fund 0.40 0-499M 0.40
500-999M 0.35
1-2.99B 0.30
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
46. National Tax-Free Money Market Fund 0.10 No change
------------------------------------------------------------------------------------
47. National Tax-Free Money Market Trust 0.00 No change
------------------------------------------------------------------------------------
48. Nebraska Tax-Free Fund 0.50 0-499M 0.40
500-999M 0.35
1-2.99B 0.30
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
49. Outlook Today Fund 0.70 0-499M 0.65
500-999M 0.60
1-2.99B 0.55
3-4.99B 0.525
>4.99B 0.50
------------------------------------------------------------------------------------
50. Outlook 2010 Fund 0.70 0-499M 0.65
500-999M 0.60
1-2.99B 0.55
3-4.99B 0.525
>4.99B 0.50
------------------------------------------------------------------------------------
51. Outlook 2020 Fund 0.70 0-499M 0.65
500-999M 0.60
1-2.99B 0.55
3-4.99B 0.525
>4.99B 0.50
------------------------------------------------------------------------------------
52. Outlook 2030 Fund 0.70 0-499M 0.65
500-999M 0.60
1-2.99B 0.55
3-4.99B 0.525
>4.99B 0.50
------------------------------------------------------------------------------------
53. Outlook 2040 Fund 0.70 0-499M 0.65
500-999M 0.60
1-2.99B 0.55
3-4.99B 0.525
>4.99B 0.50
------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------
Fee as % of Avg. Daily Net Asset Value
--------------------------------------
FUNDS Prior to 8/1/04 Effective 8/1/04
------------------------------------------------------------------------------------
54. Overland Express Sweep Fund 0.45 0-499M 0.30
500-999M 0.30
1-2.99B 0.275
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
55. Overseas Fund 1.00 0-499M 0.95
500-999M 0.90
1-2.99B 0.85
3-4.99B 0.825
>4.99B 0.80
------------------------------------------------------------------------------------
56. Prime Investment Money Market Fund 0.10 No change
------------------------------------------------------------------------------------
57. SIFE Specialized Financial Services 0.95 0-499M 0.95
Fund 500-999M 0.90
1-2.99B 0.85
3-4.99B 0.825
>4.99B 0.80
------------------------------------------------------------------------------------
58. Small Cap Growth Fund 0.90 0-499M 0.90
500-999M 0.85
1-2.99B 0.80
3-4.99B 0.775
>4.99B 0.75
------------------------------------------------------------------------------------
59. Small Cap Opportunities Fund 0.90 0-499M 0.90
500-999M 0.85
1-2.99B 0.80
3-4.99B 0.775
>4.99B 0.75
------------------------------------------------------------------------------------
60. Small Company Growth Fund 0.90 0-499M 0.90
500-999M 0.85
1-2.99B 0.80
3-4.99B 0.775
>4.99B 0.75
------------------------------------------------------------------------------------
61. Small Company Value Fund 0.90 0-499M 0.90
500-999M 0.85
1-2.99B 0.80
3-4.99B 0.775
>4.99B 0.75
------------------------------------------------------------------------------------
62. Specialized Health Sciences Fund 0.95 0-499M 0.95
500-999M 0.90
1-2.99B 0.85
3-4.99B 0.825
>4.99B 0.80
------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------
Fee as % of Avg. Daily Net Asset Value
--------------------------------------
FUNDS Prior to 8/1/04 Effective 8/1/04
------------------------------------------------------------------------------------
63. Specialized Technology Fund 1.05 0-499M 1.05
500-999M 1.00
1-2.99B 0.95
3-4.99B 0.925
>4.99B 0.90
------------------------------------------------------------------------------------
64. Stable Income Fund 0.50 0-499M 0.45
500-999M 0.40
1-2.99B 0.35
3-4.99B 0.325
>4.99B 0.30
------------------------------------------------------------------------------------
65. Strategic Growth Allocation Fund Based on a blended fee rate of the
advisory fees charged by the Wells
Fargo Master Trust Portfolios.
------------------------------------------------------------------------------------
66. Strategic Income Fund Based on a blended fee rate of the
advisory fees charged by the Wells
Fargo Master Trust Portfolios.
------------------------------------------------------------------------------------
67. Tactical Maturity Bond Fund 0.50 0-499M 0.45
500-999M 0.40
1-2.99B 0.35
3-4.99B 0.325
>4.99B 0.30
------------------------------------------------------------------------------------
68. Treasury Plus Money Market Fund 0.10 No change
------------------------------------------------------------------------------------
69. WealthBuilder Equity Portfolio 0.35 0-499M 0.20
500-999M 0.20
1-2.99B 0.175
3-4.99B 0.175
>4.99B 0.15
------------------------------------------------------------------------------------
70. WealthBuilder Growth Balanced 0.35 0-499M 0.20
Portfolio 500-999M 0.20
1-2.99B 0.175
3-4.99B 0.175
>4.99B 0.15
------------------------------------------------------------------------------------
71. WealthBuilder Moderate Balanced 0.35 0-499M 0.20
Portfolio 500-999M 0.20
1-2.99B 0.175
3-4.99B 0.175
>4.99B 0.15
------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------
Fee as % of Avg. Daily Net Asset Value
--------------------------------------
FUNDS Prior to 8/1/04 Effective 8/1/04
------------------------------------------------------------------------------------
72. WealthBuilder Tactical Equity 0.20 0-499M 0.20
Portfolio 500-999M 0.20
1-2.99B 0.175
3-4.99B 0.175
>4.99B] 0.15
------------------------------------------------------------------------------------
73. 100% Treasury Money Market Fund 0.35 0-499M 0.30
500-999M 0.30
1-2.99B 0.275
3-4.99B 0.275
>4.99B 0.25
------------------------------------------------------------------------------------
|
Most Recent annual agreement approval by the Board of Trustees: May 18, 2004 Schedule A amended: May 18, 2004
The foregoing fee schedule is agreed to as of May 18, 2004 and shall remain in effect until changed in writing by the parties.
WELLS FARGO FUNDS TRUST
By: /s/ C. David Messman
-----------------------------------
C. David Messman
Secretary
|
WELLS FARGO FUNDS MANAGEMENT, LLC
By: /s/ Andrew Owen
-----------------------------------
Andrew Owen
Senior Vice President
|
EX-99.B(d)(1)(ii)
Schedule A
WELLS FARGO FUNDS TRUST
Capped Operating Expense Ratios
-----------------------------------------------------------------------------------------
Capped Operating
Name of Fund/Class Expense Ratio Expiration/Renewal Date
-----------------------------------------------------------------------------------------
Asset Allocation
Class A 1.15% January 31
Class B 1.90% January 31
Class C 1.90% January 31
Institutional Class 0.90% January 31
-----------------------------------------------------------------------------------------
California Limited Term Tax-Free
Class A 0.85% October 31
Class C 1.60% October 31
Institutional Class 0.60% October 31
-----------------------------------------------------------------------------------------
California Tax-Free
Class A 0.80% October 31
Class B 1.55% October 31
Class C 1.55% October 31
Institutional Class 0.55% October 31
-----------------------------------------------------------------------------------------
California Tax-Free Money Market
Class A 0.65% July 31
Service Class 0.45% July 31
-----------------------------------------------------------------------------------------
California Tax-Free Money Market Trust 0.20% July 31
-----------------------------------------------------------------------------------------
Cash Investment Money Market
Administrator Class 0.35% July 31
Service Class 0.50% July 31
Institutional Class 0.20% July 31
-----------------------------------------------------------------------------------------
|
-----------------------------------------------------------------------------------------
Capped Operating
Name of Fund/Class Expense Ratio Expiration/Renewal Date
-----------------------------------------------------------------------------------------
Colorado Tax-Free
Class A 0.85% October 31
Class B 1.60% October 31
Institutional Class 0.60% October 31
-----------------------------------------------------------------------------------------
C&B Large Cap Value Fund/1/
Class A 1.20% January 31
Class B 1.95% January 31
Class C 1.95% January 31
Class D 1.20% January 31
Institutional Class 0.95% January 31
Select Class 0.70% January 31
-----------------------------------------------------------------------------------------
C&B Mid Cap Value Fund/1/
Class A 1.40% January 31
Class B 2.15% January 31
Class C 2.15% January 31
Class D 1.25% January 31
Institutional Class 1.15% January 31
Select Class 0.90% January 31
-----------------------------------------------------------------------------------------
C&B Tax-Managed Value Fund/1/
Class A 1.20% January 31
Class B 1.95% January 31
Class C 1.95% January 31
Class D 1.20% January 31
Institutional Class 0.95% January 31
-----------------------------------------------------------------------------------------
Diversified Bond
Institutional Class 0.70% September 30
-----------------------------------------------------------------------------------------
Diversified Equity
Class A 1.25% January 31
Class B 2.00% January 31
Class C 2.00% January 31
Institutional Class 1.00% January 31
-----------------------------------------------------------------------------------------
Diversified Small Cap
Institutional Class 1.20% January 31
-----------------------------------------------------------------------------------------
|
-----------------------------------------------------------------------------------------
Capped Operating
Name of Fund/Class Expense Ratio Expiration/Renewal Date
-----------------------------------------------------------------------------------------
Equity Income
Class A 1.10% January 31
Class B 1.85% January 31
Class C 1.85% January 31
Institutional Class 0.85% January 31
-----------------------------------------------------------------------------------------
Equity Index
Class A 0.64% January 31
Class B 1.39% January 31
-----------------------------------------------------------------------------------------
Government Money Market
Class A 0.65% July 31
Service Class 0.50% July 31
Administrator Class 0.35% July 31
Institutional Class 0.20% July 31
-----------------------------------------------------------------------------------------
Growth Balanced
Class A 1.20% January 31
Class B 1.95% January 31
Class C 1.95% January 31
Institutional Class 0.95% January 31
-----------------------------------------------------------------------------------------
Growth Equity
Class A 1.50% January 31
Class B 2.25% January 31
Class C 2.25% January 31
Institutional Class 1.25% January 31
-----------------------------------------------------------------------------------------
Growth
Class A 1.25% January 31
Class B 2.00% January 31
Institutional Class 1.00% January 31
-----------------------------------------------------------------------------------------
High Yield Bond
Class A 1.15% September 30
Class B 1.90% September 30
Class C 1.90% September 30
-----------------------------------------------------------------------------------------
Income/2/
Class A 1.00% September 30
Class B 1.75% September 30
Institutional Class 0.75% September 30
-----------------------------------------------------------------------------------------
|
-----------------------------------------------------------------------------------------
Capped Operating
Name of Fund/Class Expense Ratio Expiration/Renewal Date
-----------------------------------------------------------------------------------------
Income Plus/2/
1.00% September 30
Class A 1.75% September 30
Class B 1.75% September 30
Class C
-----------------------------------------------------------------------------------------
Index
Institutional Class 0.25% January 31
-----------------------------------------------------------------------------------------
Index Allocation
Class A 1.15% January 31
Class B 1.90% January 31
Class C 1.90% January 31
-----------------------------------------------------------------------------------------
Inflation-Protected Bond/3/
0.85% September 30
Class A 1.60% September 30
Class B 1.60% September 30
Class C 0.60% September 30
Institutional Class
-----------------------------------------------------------------------------------------
Intermediate Government Income
Class A 0.95% September 30
Class B 1.70% September 30
Class C 1.70% September 30
Institutional Class 0.70% September 30
-----------------------------------------------------------------------------------------
International Equity
Class A 1.50% January 31
Class B 2.25% January 31
Class C 2.25% January 31
Institutional Class 1.25% January 31
-----------------------------------------------------------------------------------------
Large Cap Appreciation
Class A 1.25% January 31
Class B 2.00% January 31
Class C 2.00% January 31
Institutional Class 1.00% January 31
-----------------------------------------------------------------------------------------
Large Cap Value
Class A 1.25% January 31
Class B 2.00% January 31
Class C 2.00% January 31
Institutional Class 1.00% January 31
-----------------------------------------------------------------------------------------
|
-----------------------------------------------------------------------------------------
Capped Operating
Name of Fund/Class Expense Ratio Expiration/Renewal Date
-----------------------------------------------------------------------------------------
Large Company Growth
Class A 1.20% January 31
Class B 1.95% January 31
Class C 1.95% January 31
Institutional Class 0.95% January 31
Select Class/4/ 0.75% January 31
-----------------------------------------------------------------------------------------
Limited Term Government Income
Class A 0.95% September 30
Class B 1.70% September 30
Institutional Class 0.70% September 30
-----------------------------------------------------------------------------------------
Liquidity Reserve Money Market
Investor Class 1.00% July 31
-----------------------------------------------------------------------------------------
Minnesota Money Market
Class A 0.80% July 31
-----------------------------------------------------------------------------------------
Minnesota Tax-Free
Class A 0.85% October 31
Class B 1.60% October 31
Institutional Class 0.60% October 31
-----------------------------------------------------------------------------------------
Moderate Balanced
Class A 1.15% January 31
Class B 1.90% January 31
Class C 1.90% January 31
Institutional Class 0.90% January 31
-----------------------------------------------------------------------------------------
Money Market
Class A 0.76% July 31
Class B 1.51% July 31
-----------------------------------------------------------------------------------------
Money Market Trust 0.20% July 31
-----------------------------------------------------------------------------------------
Montgomery Emerging Markets Focus
Class A 1.90% January 31
Class B 2.65% January 31
Class C 2.65% January 31
Institutional Class 1.60% January 31
-----------------------------------------------------------------------------------------
Montgomery Institutional Emerging Markets
Select Class 1.25% January 31
-----------------------------------------------------------------------------------------
Montgomery Mid Cap Growth/5/
Class A 1.40% January 31
Class B 2.15% January 31
Class C 2.15% January 31
-----------------------------------------------------------------------------------------
|
-----------------------------------------------------------------------------------------
Capped Operating
Name of Fund/Class Expense Ratio Expiration/Renewal Date
-----------------------------------------------------------------------------------------
Montgomery Short Duration Government Bond/6/
Class A 0.85% September 30
Class B 1.60% September 30
Class C 1.60% September 30
Institutional Class 0.60% September 30
-----------------------------------------------------------------------------------------
Montgomery Small Cap
Class A 1.40% January 31
Class B 2.15% January 31
Class C 2.15% January 31
Institutional Class 1.20% January 31
-----------------------------------------------------------------------------------------
Montgomery Total Return Bond
Class A 0.90% September 30
Class B 1.65% September 30
Class C 1.65% September 30
Institutional Class 0.70% September 30
Select Class 0.42% September 30
-----------------------------------------------------------------------------------------
National Limited Term Tax-Free
Class A 0.85% October 31
Class B 1.60% October 31
Class C 1.60% October 31
Institutional Class 0.60% October 31
-----------------------------------------------------------------------------------------
National Tax-Free
Class A 0.85% October 31
Class B 1.60% October 31
Class C 1.60% October 31
Institutional Class 0.60% October 31
-----------------------------------------------------------------------------------------
National Tax-Free Money Market
Class A 0.65% July 31
Service Class 0.45% July 31
Institutional Class 0.20% July 31
-----------------------------------------------------------------------------------------
National Tax-Free Money Market Trust 0.20% July 31
-----------------------------------------------------------------------------------------
Nebraska Tax-Free/7/
Institutional Class 0.75% October 31
-----------------------------------------------------------------------------------------
|
/6/ On May 18, 2004, the Board of Trustees approved a reduction in the net OER of the Class A, Class B and Class C shares of this Fund, effective October 1, 2004. Through September 30, 2004, the net OER for such Classes are as follows: 0.90% for Class A; and 1.65% for Class B and Class C.
-----------------------------------------------------------------------------------------
Capped Operating
Name of Fund/Class Expense Ratio Expiration/Renewal Date
-----------------------------------------------------------------------------------------
Outlook Today/8/
Class A 1.25% June 30
Class B 2.00% June 30
Class C 2.00% June 30
Institutional Class 0.95% June 30
Select Class 0.75% June 30
-----------------------------------------------------------------------------------------
Outlook 2010/8/
Class A 1.25% June 30
Class B 2.00% June 30
Class C 2.00% June 30
Institutional Class 0.95% June 30
Select Class 0.75% June 30
-----------------------------------------------------------------------------------------
Outlook 2020/8/
Class A 1.25% June 30
Class B 2.00% June 30
Class C 2.00% June 30
Institutional Class 0.95% June 30
Select Class 0.75% June 30
-----------------------------------------------------------------------------------------
Outlook 2030/8/
Class A 1.25% June 30
Class B 2.00% June 30
Class C 2.00% June 30
Institutional Class 0.95% June 30
Select Class 0.75% June 30
-----------------------------------------------------------------------------------------
Outlook 2040/8/
Class A 1.25% June 30
Class B 2.00% June 30
Class C 2.00% June 30
Institutional Class 0.95% June 30
Select Class 0.75% June 30
-----------------------------------------------------------------------------------------
Overland Express Sweep/9/ 1.08% July 31
-----------------------------------------------------------------------------------------
|
/8/ On May 18, 2004, the Board of Trustees approved a reduction to the net OER of each Class of each of the Outlook Funds, effective July 1, 2004. Through June 30, 2004, the net OER for each class of each Outlook Fund is as follows: 1.30% for Class A; 2.05% for Class B and Class C; and 1.00% for the Institutional Class. In addition, the Board of Trustees also approved the addition of Select Class shares for each Outlook Fund. The Select Class shares for each Outlook Fund will become effective on or about June 30, 2004.
/9/ On May 18, 2004, the Board of Trustees approved a decrease to the net OER of this Fund, effective August 1, 2004. Through July 30, 2004, the net OER for the Fund is 1.25%.
-----------------------------------------------------------------------------------------
Capped Operating
Name of Fund/Class Expense Ratio Expiration/Renewal Date
-----------------------------------------------------------------------------------------
Overseas/10/
Class A 1.50% January 31
Class B 2.25% January 31
Class C 2.25% January 31
Institutional Class 1.25% January 31
-----------------------------------------------------------------------------------------
Prime Investment Money Market
Service Class 0.55% July 31
Institutional Class 0.20% July 31
-----------------------------------------------------------------------------------------
SIFE Specialized Financial Services
Class A 1.35% January 31
Class B 2.10% January 31
Class C 2.10% January 31
-----------------------------------------------------------------------------------------
Small Cap Growth
Class A 1.45% January 31
Class B 2.20% January 31
Class C 2.20% January 31
Institutional Class 1.20% January 31
-----------------------------------------------------------------------------------------
Small Cap Opportunities
Institutional Class 1.20% January 31
-----------------------------------------------------------------------------------------
Small Company Growth
Class A 1.45% January 31
Class B 2.20% January 31
Class C 2.20% January 31
Institutional Class 1.20% January 31
-----------------------------------------------------------------------------------------
Small Company Value
Class A 1.45% January 31
Class B 2.20% January 31
Class C 2.20% January 31
Institutional Class 1.20% January 31
-----------------------------------------------------------------------------------------
Specialized Health Sciences
Class A 1.65% January 31
Class B 2.40% January 31
Class C 2.40% January 31
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Specialized Technology
Class A 1.75% January 31
Class B 2.50% January 31
Class C 2.50% January 31
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Capped Operating
Name of Fund/Class Expense Ratio Expiration/Renewal Date
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Stable Income
Class A 0.90% September 30
Class B 1.65% September 30
Class C 1.65% September 30
Institutional Class 0.65% September 30
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Strategic Growth Allocation
Institutional Class 1.00% January 31
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Strategic Income
Institutional Class 0.85% January 31
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Tactical Maturity Bond
Institutional Class 0.60% September 30
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Treasury Plus Money Market
Class A 0.65% July 31
Service Class 0.50% July 31
Institutional Class 0.20% July 31
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WealthBuilder Equity 1.25% September 30
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WealthBuilder Growth Balanced 1.25% September 30
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WealthBuilder Moderate Balanced/11/ 1.50% September 30
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WealthBuilder Tactical Equity 1.25% September 30
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100% Treasury Money Market
Class A 0.65% July 31
Service Class 0.50% July 31
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Most Recent annual agreement approval by the Board of Trustees: May 18, 2004
Schedule A amended: May 18, 2004
The foregoing schedule of capped operating expense ratios is agreed to as of May 18, 2004 and shall remain in effect until changed in writing by the parties.
WELLS FARGO FUNDS TRUST
By: /s/ C. David Messman
-----------------------------------
C. David Messman
Secretary
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WELLS FARGO FUNDS MANAGEMENT, LLC
By: /s/ Stacie D. DeAngelo
-----------------------------------
Stacie D. DeAngelo
Senior Vice President
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EX-99.B(d)(2)(xiii)
SUB-ADVISORY AGREEMENT
BETWEEN WELLS FARGO FUNDS TRUST, WELLS FARGO
FUNDS MANAGEMENT, LLC AND COOKE & BIELER, L.P.
This AGREEMENT is made as of this 24th day of March, 2004, between Wells Fargo Funds Trust (the "Trust"), a statutory trust organized under the laws of the State of Delaware with its principal place of business at 525 Market Street, 12th Floor, San Francisco, California 94105, Wells Fargo Funds Management, LLC (the "Adviser"), a limited liability company organized under the laws of the State of Delaware with its principal place of business at 525 Market Street, 12th Floor, San Francisco, California 94105, and Cooke & Bieler, L.P. (the "Sub-Adviser"), a limited partnership organized under the laws of the State of Pennsylvania, with its principal place of business at 1700 Market Street, Philadelphia, Pennsylvania 19103.
WHEREAS, the Adviser and the Sub-Adviser are registered investment advisers under the Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Trust is engaged in business as an open-end investment company with one or more series of shares and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust's Board of Trustees (the "Board") has engaged the Adviser to perform investment advisory services for each series of the Trust under the terms of an investment advisory agreement, dated August 6, 2003, between the Adviser and the Trust (the "Advisory Agreement"); and
WHEREAS, the Adviser, acting pursuant to the Advisory Agreement, wishes to engage the Sub-Adviser, and the Trust's Board has approved the engagement of the Sub-Adviser, to provide investment advisory services to each series of the Trust listed in Appendix A hereto as it may be amended from time to time (each a "Fund" and collectively the "Funds"), and the Sub-Adviser is willing to provide those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust, the Adviser and Sub-Adviser agree as follows:
Section 1. Appointment of Sub-Adviser. 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
amended or supplemented from time to time, all in such manner and to such extent as may from time to time be authorized by the Board.
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 other services as specified in the Advisory Agreement.
Subject to the direction and control of the Board and the Adviser, 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.
The investment authority granted to the Sub-Adviser shall include the authority to exercise whatever powers the Trust may possess with respect to any of its assets held by the Funds, including, but not limited to, the power to exercise rights, options, warrants, conversion privileges, redemption privileges, and to tender securities pursuant to a tender offer. The Sub-Adviser shall not, however, be responsible for voting proxies, for participating in class actions and/or other legal proceedings on behalf of the Funds, but will provide such assistance as is reasonably requested by the Adviser.
Section 2. 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 and other assets for the Funds, the Sub-Adviser is authorized to exercise full discretion and act for the Trust and instruct the Fund's custodian (the "Custodian") 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.
The Sub-Adviser acknowledges that the Funds and any other series of the Trust may engage in transactions with certain sub-advisers in the fund complex (and their affiliated persons) in reliance on exemptions under Rule 10f-3, Rule 12d3-1, Rule 17a-10 and Rule 17e-1 under the 1940 Act. Accordingly, the Sub-Adviser hereby agrees that it will not consult with any other sub-adviser of a fund in the fund complex, or an affiliated person of a sub-adviser, concerning transactions for a fund in securities or other fund assets. With respect to a multi-managed Fund, the Sub-Adviser shall be limited to providing investment advice with respect to only the discrete portion of the Fund's portfolio as may be determined from time-to-time by the Board or the Adviser, and shall not consult with the sub-adviser as to any other portion of the Fund's portfolio concerning transactions for the Fund in securities or other Fund assets.
(b) The Sub-Adviser will report to the Board at each regular meeting thereof regarding the investment performance of 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 and the Adviser 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 and the Adviser with such statistical and analytical information with respect to securities held by the Funds as the Sub-Adviser may believe appropriate or as the Board or the Adviser reasonably request.
The Sub-Adviser shall promptly notify the Adviser of (i) any changes
regarding the Sub-Adviser that would impact disclosure in the Trust's
Registration Statement, or (ii) any violation of any requirement, provision,
policy or restriction that the Sub-Adviser is required to comply with under
Section 6 of this Agreement. The Sub-Adviser shall immediately notify both the
Adviser and the Trust of any legal process served upon it in connection with its
activities hereunder, including any legal process served upon it on behalf of
the Adviser, the Funds or the Trust. The Sub-Adviser shall reasonably cooperate
with the Custodian in the Custodian's processing of class actions or other legal
proceedings relating to the holdings (historical and/or current) of the Funds.
(c) The Sub-Adviser may from time to time employ or sub-contract the services of certain persons as the Sub-Adviser believes to be appropriate or necessary to assist in the execution of the Sub-Adviser's duties hereunder; provided, however, that the employment or association with any such person shall not relieve the Sub-Adviser of its responsibilities or liabilities hereunder. The cost of performance of such duties shall be borne and paid by the Sub-Adviser. No obligation may be imposed on the Trust in any such respect.
The Sub-Adviser shall supervise and monitor the activities of its representatives, personnel and agents in connection with the execution of its duties and obligations hereunder. The appropriate personnel of the Sub-Adviser will be made available to consult with the Adviser, the Trust and the Board at reasonable times and upon reasonable notice concerning the business of the Trust.
(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 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 3. Delivery of Documents to the Sub-Adviser. The Adviser has furnished the Sub-Adviser with true, correct and complete copies of the following documents:
(a) The Declaration of Trust, as in effect on the date hereof;
(b) The Registration Statement filed with the Commission under the 1940
Act and the Securities Act;
(c) The Advisory Agreement; and
(d) Written guidelines, policies and procedures adopted by the Trust.
The Adviser will furnish the Sub-Adviser with all future amendments and supplements to the foregoing as soon as practicable after such documents become available, to the extent that such documents have been changed materially. The Adviser shall furnish the Sub-Adviser with any further documents, materials or information that the Sub-Adviser may reasonably request in connection with the performance of its duties hereunder.
The Sub-Adviser shall furnish the Adviser with written certifications, in such form as the Adviser shall reasonably request, that it has received and reviewed the most recent version of the foregoing documents provided by the Adviser and that it will comply with such documents in the performance of its obligations under this Agreement.
Section 4. Delivery of Documents to the Adviser. The Sub-Adviser has furnished, and in the future will furnish, the Adviser with true, correct and complete copies of each of the following documents:
(a) The Sub-Adviser's most recent Form ADV;
(b) The Sub-Adviser's most recent balance sheet;
(c) The current Code of Ethics of the Sub-Adviser, adopted pursuant to
Rule 17j-1 under the 1940 Act, and annual certifications regarding
compliance with such Code; and
(d) A report describing material findings resulting from any examination
of the Sub-Adviser by the Commission or other regulatory agency with
jurisdiction with respect to Sub-Adviser's activities hereunder.
The Sub-Adviser will furnish the Adviser with all such documents as soon as practicable after such documents become available, to the extent that such documents have been changed materially. The Sub-Adviser shall furnish the Adviser with any further documents, materials or information as the Adviser may reasonably request in connection with Sub-Adviser's performance of its duties under this Agreement,
including, but not limited to, information regarding the Sub-Adviser's financial condition, level of insurance coverage and any certifications or sub-certifications which may reasonably be requested in connection with Fund registration statements, Form N-CSR filings or other regulatory filings.
Section 5. Control by Board. As is the case with respect to the Adviser under the 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 of the Trust's Board.
Section 6. Compliance with Applicable Requirements. In carrying out its obligations under this Agreement, the Sub-Adviser shall at all times comply with:
(a) investment guidelines, policies and restrictions established by the Board that have been communicated in writing to the Sub-Adviser;
(b) all applicable provisions of the 1940 Act and the Advisers Act, and any rules and regulations adopted thereunder;
(c) the Registration Statement of the Trust, as it may be amended from time to time, filed with the Commission under the Securities Act and the 1940 Act;
(d) the provisions of the Declaration of Trust of the Trust, as it may be amended or supplemented from time to time;
(e) the provisions of the Internal Revenue Code of 1986, as amended, applicable to the Trust or the Funds, and any rules and regulations adopted thereunder; and
(f) any other applicable provisions of state or federal law, and any rules and regulations adopted thereunder.
Section 7. Proxies. The Adviser shall have responsibility to vote proxies solicited with respect to issuers of securities in which assets of the Funds are invested from time to time in accordance with the Trust's policies on proxy voting. The Sub-Adviser will provide, when requested by the Adviser, information on a particular issuer to assist the Adviser in the voting of a proxy.
Section 8. 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 consider such factors it considers to be relevant to the transaction, which are expected to include, among other things: 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 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 provide brokerage and research services within the meaning of
Section 28(e) of the Securities Exchange Act of 1934 and in compliance
therewith. 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, indicating the brokers to whom such allocations have
been made and the basis therefore.
Provided the investment objectives of the Funds are adhered to, the Sub-Adviser may aggregate sales and purchase orders of securities held in a Fund with similar orders being made at approximately the same time for other portfolios managed by the Sub-Adviser, if, in the Sub-Adviser's reasonable judgment, such aggregation will result in an overall economic benefit to the Fund. In accounting for such aggregated order, price and commission shall be averaged on a per bond or share basis daily. The Trust and the Adviser acknowledge that the Sub-Adviser's determination of such economic benefit to the Fund may be based on an evaluation that the Fund is benefited by relatively better purchase or sales price, lower commission expenses and beneficial timing of transactions, the Sub-Adviser's fiduciary duty to fairly allocate trading opportunities among its clients, or a combination of these and other factors. The allocation of securities so purchased or sold shall be made by the Sub-Adviser in the manner that the Sub-Adviser considers to be most equitable and consistent with its fiduciary obligations to the Fund and other clients. The Sub-Adviser represents and acknowledges that it is solely responsible for complying with any and all applicable pronouncements of the Commission or its staff with respect to the requirements for aggregating trades as may be set out in any interpretive release and/or no-action letters issued by the Commission staff ("SEC Requirements"). The Sub-Adviser further agrees to hold the Trust and the Adviser harmless from any and all loss, damage or liability resulting from the Sub-Adviser's failure to comply with any applicable SEC Requirements. The Sub-Adviser shall not be responsible for any acts or omissions by any broker or dealer, provided that the Sub-Adviser did not act with negligence or willful misconduct in the selection of such broker or dealer.
Section 9. Expenses. 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. The expenses borne by the Funds 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 Board 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.
The Sub-Adviser shall pay its own expenses in connection with the services
to be provided by it pursuant to this Agreement. In addition, the Sub-Adviser
shall be responsible for reasonable out-of-pocket costs and expenses incurred by
the Adviser or the Trust: (a) to amend the Trust's registration statement or
supplement the Fund's prospectus, and circulate the same, to reflect a change in
the personnel of the Sub-Adviser responsible for making investment decisions in
relation to a Fund; (b) to obtain shareholder approval of a new sub-advisory
agreement as a result of a "change in control" (as such term in defined in
Section 2(a)(9) of the 1940 Act) of the Sub-Adviser, or to otherwise comply with
the 1940 Act, the Securities Act, or any other applicable statute, law, rule or
regulation, as a result of such change; or (c) to meet other legal or regulatory
obligations caused by actions of the Sub-Adviser.
Section 10. Compensation. As compensation for the sub-advisory services provided under this Agreement, the Adviser shall pay the Sub-Adviser fees, payable monthly, at the annual rates indicated on Schedule A hereto, as such Schedule may be amended or supplemented as agreed to in writing by the parties from time to time. Adviser shall pay Sub-Adviser such fee within thirty days after the end of each month. 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 11. Standard of Care. The Trust and the Adviser will 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 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 Adviser, 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 12. 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.
It is understood that the Sub-Adviser performs investment advisory services for various clients, including accounts of clients in which the Sub-Adviser or associated persons have a beneficial interest. The Sub-Adviser may give advice and take action in the performance of its duties with respect to any of its other clients, which may differ from the advice given, or the timing or nature of action taken, with respect to the assets of the Funds. Nothing in this Agreement shall be deemed to impose upon the Sub-Adviser any obligation to purchase or sell for the Funds any security or other property that the Sub-Adviser purchases or sells for its own accounts or for the account of any other client.
Section 13. 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 reasonably requests to be maintained. All such records shall be maintained in a form acceptable to the Adviser and the Trust and in compliance with the provisions of Rule 31a-1 or any successor rule. All such records will be the property of the Trust, and will be made available for inspection by the Trust and its authorized representatives (including the Adviser). The Sub-Adviser shall promptly, upon the Trust's request, surrender to the Trust those records which are the property of the Trust or any Fund; provided, however, that the Sub-Adviser may retain copies of such records.
Section 14. 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) by the Board, or 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), or
(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 15. 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 Board 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.
This Agreement may also be terminated immediately by the Adviser, the Sub-Adviser or the Trust in the event that a respective party: (i) breaches a material term of this Agreement; (ii) commits a material violation of any governing law or regulation; or (iii) engages in conduct that would have a material adverse effect upon the reputation or business prospects of a respective party.
Section 16. Indemnification by the Sub-Adviser. In the absence of willful misfeasance, bad faith, negligence or reckless disregard of obligations or duties hereunder on the part of the Trust or the Adviser, or any of their respective officers, directors, employees or agents, the Trust and the Adviser, respectively, shall not be responsible for, and the Sub-Adviser hereby agrees to indemnify and hold harmless the Trust and the Adviser (severally, but not jointly) against any and all losses, damages, costs, charges, reasonable counsel fees, payments, expenses, liability, 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 out of or attributable to the willful misfeasance, bad faith, negligent acts or reckless disregard of obligations or duties hereunder on the part of the Sub-Adviser or any of its officers, directors, employees affiliates or agents.
Section 17. Indemnification by the Trust and the Adviser. 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 responsible for, and the Trust and the Adviser (severally, but not jointly) hereby agree to indemnify and hold harmless the Sub-Adviser against any and all losses, damages, costs, charges, reasonable counsel fees, payments, expenses, liability, 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 out of or attributable to conduct of the party from whom such indemnification is sought and relating to: (i) the advertising, solicitation, sale, purchase or pledge of securities, whether of the Funds or other securities, undertaken by the Funds, their officers, directors, employees, affiliates or agents, (ii) any violations of the securities laws, rules, regulations, statutes and codes, whether federal or of any state, by the Funds or the Adviser, respectively, or their respective officers, directors, employees, affiliates or agents, or (iii) the willful misfeasance, bad faith, negligent acts or reckless disregard of obligations or duties
hereunder on the part of the Funds or the Adviser, respectively, or their respective officers, directors, employees, affiliates or agents.
Section 18. 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 525 Market Street, 12th Floor, San Francisco, California 94105, Attention: Karla M. Rabusch, and that of the Adviser shall be 525 Market Street, 12th Floor, San Francisco, California 94105, Attention: C. David Messman, and that of the Sub-Adviser shall be 1700 Market Street, Suite 3222 Philadelphia, Pennsylvania 19103, Attention: Kermit S. Eck.
Section 19. 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 to the extent that state law is not preempted by the provisions of any law of the United States heretofore or hereafter enacted.
Section 20. 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, the Adviser and the Sub-Adviser.
Section 21. 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, 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.
Section 22. Authority to Execute Agreement. Each of the individuals whose signature appears below represents and warrants that he or she has full authority to execute this Agreement on behalf of the party on whose behalf he or she has affixed his or her signature to this Agreement. The Trust and the Adviser will deliver to the Sub-Adviser such evidence of its authority with respect to this Agreement as Sub-Adviser may reasonably require. The Sub-Adviser will deliver to the Trust and the Adviser such evidence of its authority with respect to this Agreement as the Trust or the Adviser may reasonably require.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in triplicate by their respective officers on the day and year first written above.
WELLS FARGO FUNDS TRUST
on behalf of the Funds
By: /s/ David C. Messman
------------------------------------
C. David Messman
Secretary
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WELLS FARGO FUNDS MANAGEMENT, LLC
By: /s/ Andrew Owen
------------------------------------
Andrew Owen
Senior Vice President
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COOKE & BIELER, L.P.
By CBGP, LLC, its sole general partner
By: /s/ Kermit S. Eck
------------------------------------
Kermit S. Eck, Manager
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APPENDIX A
Approved by the Board of Trustees: February 3, 2004
SCHEDULE A
WELLS FARGO FUNDS TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the 24th day of March, 2004, by and between Wells Fargo Funds Trust (the "Trust"), Wells Fargo Funds Management, LLC (the "Adviser") and Cooke & Bieler, L.P. (the "Sub-Adviser").
WHEREAS, the parties and Wells Fargo Funds Trust have entered into an Investment Sub-Advisory Agreement ("Sub-Advisory Agreement") whereby the Sub-Adviser provides management and other services to each series of the Trust listed in Appendix A to the Sub-Advisory Agreement (each a "Fund" and collectively the "Funds"); and
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid to the Sub-Adviser are to be as indicated below;
NOW THEREFORE, the parties agree that the fees to be paid to the Sub-Adviser under the Sub-Advisory Agreement shall be calculated and paid on a monthly basis by applying the annual rates indicated below to each Fund's average daily net assets throughout the month:
----------------------------------------------------------------------------------------
Name of Fund Breakpoints Sub-Advisory Rate
----------------------------------------------------------------------------------------
Well Fargo C&B Large Cap Value Fund First $250 million USD 0.45%
Next $250 million USD 0.40%
Next $250 million USD 0.35%
Additional amounts over $750 0.30%
million USD
----------------------------------------------------------------------------------------
Name of Fund Breakpoints Sub-Advisory Rate
----------------------------------------------------------------------------------------
Well Fargo C&B Tax-Managed Value Fund First $250 million USD 0.45%
Next $250 million USD 0.40%
Next $250 million USD 0.35%
Additional amounts over $750 0.30%
million USD
----------------------------------------------------------------------------------------
|
----------------------------------------------------------------------------------------
Name of Fund Breakpoints Sub-Advisory Rate
----------------------------------------------------------------------------------------
Well Fargo C&B Mid Cap Value Fund First $250 million USD 0.55%
Next $250 million USD 0.50%
Next $250 million USD 0.45%
Additional amounts over $750 0.40%
million USD
----------------------------------------------------------------------------------------
|
WELLS FARGO FUNDS TRUST
on behalf of the Funds
By: /s/ C. David Messman
------------------------------------
C. David Messman
Secretary
|
WELLS FARGO FUNDS MANAGEMENT, LLC
By: /s/ Andrew Owen
------------------------------------
Andrew Owen
Senior Vice President
|
COOKE & BIELER, L.P.
By CBGP, LLC, its sole general partner
By: /s/ Kermit S. Eck
------------------------------------
Kermit S. Eck, Manager
|
EX-99.B(g)(2)
CUSTODY AGREEMENT
Wells Fargo Funds Trust
Appendix A
For its custodial services, the Custodian shall receive a fee, with respect to each Fund, except for the International Equity Fund, Montgomery Emerging Markets Focus Fund, Montgomery Institutional Emerging Markets Fund, Overseas Fund, Specialized Health Sciences Fund and Specialized Technology Fund, of 0.02% of the average daily net assets of each such Fund. The custodial fee for the Gateway Funds, which are listed below with an asterisk, is 0.0% so long as they remain a Gateway Fund. The custodial fee for the International Equity Fund and Overseas Fund is 0.10%. The custodial fee for the Montgomery Emerging Markets Focus Fund and the Montgomery Institutional Emerging Markets Fund is 0.25%. The custodial fee for the Specialized Health Sciences Fund and Specialized Technology Fund is 0.07%.
Funds of Wells Fargo Funds Trust Covered by This Agreement
1. Asset Allocation Fund
2. California Limited Term Tax-Free Fund
3. California Tax-Free Fund
4. California Tax-Free Money Market Fund
5. California Tax-Free Money Market Trust
6. Cash Investment Money Market Fund
7. Colorado Tax-Free Fund
8. C&B Large Cap Value Fund
9. C&B Mid Cap Value Fund
10. C&B Tax-Managed Value Fund
11. Diversified Bond Fund*
12. Diversified Equity Fund*
13. Diversified Small Cap Fund*
14. Equity Income Fund*
15. Equity Index Fund
16. Government Money Market Fund
17. Growth Balanced Fund*
18. Growth Equity Fund*
19. Growth Fund
20. High Yield Bond Fund
21. Income Fund
22. Income Plus Fund
23. Index Allocation Fund
24. Index Fund*
25. Inflation-Protected Bond Fund
26. Intermediate Government Income Fund
27. International Equity Fund
28. Large Cap Appreciation Fund*
29. Large Cap Value Fund*
30. Large Company Growth Fund*
31. Limited Term Government Income Fund
32. Liquidity Reserve Money Market Fund
33. Minnesota Money Market Fund
34. Minnesota Tax-Free Fund
35. Moderate Balanced Fund*
36. Money Market Fund
37. Money Market Trust
38. Montgomery Emerging Markets Focus Fund
39. Montgomery Institutional Emerging Markets Fund
40. Montgomery Mid Cap Growth Fund
41. Montgomery Short Duration Government Bond Fund
42. Montgomery Small Cap Fund
43. Montgomery Total Return Bond Fund
44. National Limited Term Tax-Free Fund
45. National Tax-Free Fund
46. National Tax-Free Money Market Fund
47. National Tax-Free Money Market Trust
48. Nebraska Tax-Free Fund
49. Outlook Today Fund
50. Outlook 2010 Fund
51. Outlook 2020 Fund
52. Outlook 2030 Fund
53. Outlook 2040 Fund
54. Overland Express Sweep Fund
55. Overseas Fund*
56. Prime Investment Money Market Fund
57. SIFE Specialized Financial Services Fund
58. Small Cap Growth Fund
59. Small Cap Opportunities Fund
60. Small Company Growth Fund*
61. Small Company Value Fund*
62. Specialized Health Sciences Fund
63. Specialized Technology Fund
64. Stable Income Fund*
65. Strategic Growth Allocation Fund*
66. Strategic Income Fund*
67. Tactical Maturity Bond Fund*
68. Treasury Plus Money Market Fund
69. WealthBuilder Equity Portfolio
70. WealthBuilder Growth Balanced Portfolio
71. WealthBuilder Moderate Balanced Portfolio
72. WealthBuilder Tactical Equity Portfolio
73. 100% Treasury Money Market Fund
Most Recent annual agreement approval by the Board of Trustees: May 18, 2004 Appendix A amended: May 18, 2004
The foregoing fee schedule is agreed to as of May 18, 2004 and shall remain in effect until changed in writing by the parties.
WELLS FARGO FUNDS TRUST
By: /s/ C. David Messman
-----------------------------------
C. David Messman
Secretary
|
WELLS FARGO BANK, N.A.
By: /s/ P. Jay Kiedrowski
-----------------------------------
P. Jay Kiedrowski
Executive Vice President
|
EX-99.B(g)(3)
SECURITIES LENDING AGREEMENT
Exhibit A
FUNDS OF WELLS FARGO FUNDS TRUST
1. Asset Allocation Fund
2. California Limited Term Tax-Free Fund
3. California Tax-Free Fund
4. Colorado Tax-Free Fund
5. C&B Large Cap Value Fund
6. C&B Mid Cap Value Fund
7. C&B Tax-Managed Value Fund
8. Diversified Bond Fund
9. Diversified Equity Fund
10. Diversified Small Cap Fund
11. Equity Income Fund
12. Equity Index Fund
13. Growth Balanced Fund
14. Growth Equity Fund
15. Growth Fund
16. High Yield Bond Fund
17. Income Fund
18. Income Plus Fund
19. Index Allocation Fund
20. Index Fund
21. Inflation-Protected Bond Fund
22. Intermediate Government Income Fund
23. International Equity Fund
24. Large Cap Appreciation Fund
25. Large Cap Value Fund
26. Large Company Growth Fund
27. Limited Term Government Income Fund
28. Minnesota Tax-Free Fund
29. Moderate Balanced Fund
30. Montgomery Emerging Markets Focus Fund
31. Montgomery Institutional Emerging Markets Fund
32. Montgomery Mid Cap Growth Fund
33. Montgomery Short Duration Government Bond Fund
34. Montgomery Small Cap Fund
35. Montgomery Total Return Bond Fund
36. National Limited Term Tax-Free Fund
37. National Tax-Free Fund
38. Nebraska Tax-Free Fund
39. Outlook Today Fund
40. Outlook 2010 Fund
41. Outlook 2020 Fund
42. Outlook 2030 Fund
43. Outlook 2040 Fund
44. Overseas Fund
45. SIFE Specialized Financial Services Fund
46. Small Cap Growth Fund
47. Small Cap Opportunities Fund
48. Small Company Growth Fund
49. Small Company Value Fund
50. Specialized Health Sciences Fund
51. Specialized Technology Fund
52. Stable Income Fund
53. Strategic Growth Allocation Fund
54. Strategic Income Fund
55. Tactical Maturity Bond Fund
56. WealthBuilder Equity Portfolio
57. WealthBuilder Growth Balanced Portfolio
58. WealthBuilder Moderate Balanced Portfolio
59. WealthBuilder Tactical Equity Portfolio
Most Recent annual agreement approval by the Board of Trustees: May 18,
2004
Exhibit A amended: May 18, 2004
EX-99.B(h)(1)
ADMINISTRATION AGREEMENT
Appendix A
Fees for Multi-Class Funds
-------------------------------------------------------------------------------------------------------------
Multi-Class Non-Money Market Class-Level Total
Funds and Classes Fund-Level Fee/1/ Fee Fee
-------------------------------------------------------------------------------------------------------------
Prior to Prior to
8/1/04 Effective 8/1/04 8/1/04 Effective 8/1/04
-------------------------------------------------------------------------------------------------------------
Class A, Class B, Class C and Class 0.05% 0-4.99B 0.05% 0.28% 0.33% 0-4.99B 0.33%
D Shares 5B-9.99B 0.04% 5B-9.99B 0.32%
>9.99B 0.03% >9.99B 0.31%
-------------------------------------------------------------------------------------------------------------
Institutional Class Shares 0.05% 0-4.99B 0.05% 0.20% 0.25% 0-4.99B 0.25%
5B-9.99B 0.04% 5B-9.99B 0.24%
>9.99B 0.03% >9.99B 0.23%
-------------------------------------------------------------------------------------------------------------
Select Class Shares 0.05% 0-4.99B 0.05% 0.10% 0.15% 0-4.99B 0.15%
5B-9.99B 0.04% 5B-9.99B 0.14%
>9.99B 0.03% >9.99B 0.13%
-------------------------------------------------------------------------------------------------------------
|
-------------------------------------------------------------------------------------------------------------
Multi-Class Money Market Class-Level Total
Funds and Classes Fund-Level Fee/1/ Fee Fee
-------------------------------------------------------------------------------------------------------------
Prior to Prior to
8/1/04 Effective 8/1/04 8/1/04 Effective 8/1/04
-------------------------------------------------------------------------------------------------------------
Class A, Class B and Class C Shares 0.05% 0-4.99B 0.05% 0.22% 0.27% 0-4.99B 0.27%
5B-9.99B 0.04% 5B-9.99B 0.26%
>9.99B 0.03% >9.99B 0.25%
-------------------------------------------------------------------------------------------------------------
Service Class Shares 0.05% 0-4.99B 0.05% 0.12% 0.17% 0-4.99B 0.17%
5B-9.99B 0.04% 5B-9.99B 0.16%
>9.99B 0.03% >9.99B 0.15%
-------------------------------------------------------------------------------------------------------------
Administrator Class Shares 0.05% 0-4.99B 0.05% 0.10% 0.15% 0-4.99B 0.15%
5B-9.99B 0.04% 5B-9.99B 0.14%
>9.99B 0.03% >9.99B 0.13%
-------------------------------------------------------------------------------------------------------------
Institutional Class Shares 0.05% 0-4.99B 0.05% 0.08% 0.13% 0-4.99B 0.13%
5B-9.99B 0.04% 5B-9.99B 0.12%
>9.99B 0.03% >9.99B 0.11%
-------------------------------------------------------------------------------------------------------------
|
/1/ The proposed breakpoints are triggered by the total assets of the Fund.
Fees for Single Class Funds
--------------------------------------------------------------------------------
Single Class Non-Money Market Funds Fee
--------------------------------------------------------------------------------
Prior to
8/1/04 Effective 8/1/04
--------------------------------------------------------------------------------
Retail Funds 0.33% 0-4.99B 0.33%
5B-9.99B 0.32%
>9.99B 0.31%
--------------------------------------------------------------------------------
Institutional Funds 0.25% 0-4.99B 0.25%
5B-9.99B 0.24%
>9.99B 0.23%
--------------------------------------------------------------------------------
Select Funds 0.15% 0-4.99B 0.15%
5B-9.99B 0.14%
>9.99B 0.13%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Single Class Money Market Funds Fee
--------------------------------------------------------------------------------
Prior to
8/1/04 Effective 8/1/04
--------------------------------------------------------------------------------
Retail Funds 0.27% 0-4.99B 0.27%
5B-9.99B 0.26%
>9.99B 0.25%
--------------------------------------------------------------------------------
Service/Trust Funds 0.17% 0-4.99B 0.17%
5B-9.99B 0.16%
>9.99B 0.15%
--------------------------------------------------------------------------------
Institutional Funds 0.13% 0-4.99B 0.13%
5B-9.99B 0.12%
>9.99B 0.11%
--------------------------------------------------------------------------------
|
-------------------------
List of Funds and Classes
-------------------------
--------------------------------------------------------------------------------
Fee as % of
Average Daily
Funds/Classes Net Assets/1/
--------------------------------------------------------------------------------
1. Asset Allocation
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
2. California Limited Term Tax-Free
Class A 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
3. California Tax-Free
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
4. California Tax-Free Money Market
Class A 0.27%
Service Class 0.17%
--------------------------------------------------------------------------------
5. California Tax-Free Money Market Trust 0.17%
--------------------------------------------------------------------------------
6. Cash Investment Money Market
Service Class 0.17%
Administrator Class 0.15%
Institutional Class 0.13%
--------------------------------------------------------------------------------
7. C&B Large Cap Value Fund
Class A 0.33%
Class B 0.33%
Class C 0.33%
Class D 0.33%
Institutional Class 0.25%
Select Class 0.15%
--------------------------------------------------------------------------------
8. C&B Mid Cap Value Fund
Class A 0.33%
Class B 0.33%
Class C 0.33%
Class D 0.33%
Institutional Class 0.25%
Select Class 0.15%
--------------------------------------------------------------------------------
9. C&B Tax-Managed Value Fund
Class A 0.33%
Class B 0.33%
Class C 0.33%
Class D 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
10. Colorado Tax-Free
Class A 0.33%
Class B 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Fee as % of
Average Daily
Funds/Classes Net Assets/1/
--------------------------------------------------------------------------------
11. Diversified Bond
Institutional Class 0.25%
--------------------------------------------------------------------------------
12. Diversified Equity
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
13. Diversified Small Cap
Institutional Class 0.25%
--------------------------------------------------------------------------------
14. Equity Income
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
15. Equity Index
Class A 0.33%
Class B 0.33%
--------------------------------------------------------------------------------
16. Government Money Market
Class A 0.27%
Service Class 0.17%
Administrator Class 0.15%
Institutional Class 0.13%
--------------------------------------------------------------------------------
17. Growth Balanced
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
18. Growth Equity
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
19. Growth
Class A 0.33%
Class B 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
20. High Yield Bond
Class A 0.33%
Class B 0.33%
Class C 0.33%
--------------------------------------------------------------------------------
21. Income
Class A 0.33%
Class B 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
22. Income Plus
Class A 0.33%
Class B 0.33%
Class C 0.33%
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Fee as % of
Average Daily
Funds/Classes Net Assets/1/
--------------------------------------------------------------------------------
23. Index
Institutional Class 0.25%
--------------------------------------------------------------------------------
24. Index Allocation
Class A 0.33%
Class B 0.33%
Class C 0.33%
--------------------------------------------------------------------------------
25. Inflation-Protected Bond
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
26. Intermediate Government Income
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
27. International Equity
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
28. Large Cap Appreciation
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
29. Large Cap Value
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
30. Large Company Growth
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
Select Class 0.15%
--------------------------------------------------------------------------------
31. Limited Term Government Income
Class A 0.33%
Class B 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
32. Liquidity Reserve Money Market
Investor Class 0.27%
--------------------------------------------------------------------------------
33. Minnesota Money Market
Class A 0.27%
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Fee as % of
Average Daily
Funds/Classes Net Assets/1/
--------------------------------------------------------------------------------
34. Minnesota Tax-Free
Class A 0.33%
Class B 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
35. Moderate Balanced
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
36. Money Market
Class A 0.27%
Class B 0.27%
--------------------------------------------------------------------------------
37. Money Market Trust 0.17%
--------------------------------------------------------------------------------
38. Montgomery Emerging Markets Focus
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
39. Montgomery Institutional Emerging Markets
Select Class 0.15%
--------------------------------------------------------------------------------
40. Montgomery Mid Cap Growth
Class A 0.33%
Class B 0.33%
Class C 0.33%
--------------------------------------------------------------------------------
41. Montgomery Short Duration Government Bond
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
42. Montgomery Small Cap
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
43. Montgomery Total Return Bond
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
Select Class 0.15%
--------------------------------------------------------------------------------
44. National Limited Term Tax-Free
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Fee as % of
Average Daily
Funds/Classes Net Assets/1/
--------------------------------------------------------------------------------
45. National Tax-Free
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
46. National Tax-Free Money Market
Class A 0.27%
Service Class 0.17%
Institutional Class 0.13%
--------------------------------------------------------------------------------
47. National Tax-Free Money Market Trust 0.17%
--------------------------------------------------------------------------------
48. Nebraska Tax-Free
Institutional Class 0.25%
--------------------------------------------------------------------------------
49. Outlook Today
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
Select Class 0.25%
--------------------------------------------------------------------------------
50. Outlook 2010
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
Select Class 0.25%
--------------------------------------------------------------------------------
51. Outlook 2020
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
Select Class 0.25%
--------------------------------------------------------------------------------
52. Outlook 2030
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
Select Class 0.25%
--------------------------------------------------------------------------------
53. Outlook 2040
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
Select Class 0.25%
--------------------------------------------------------------------------------
54. Overland Express Sweep 0.27%
--------------------------------------------------------------------------------
55. Overseas
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Fee as % of
Average Daily
Funds/Classes Net Assets/1/
--------------------------------------------------------------------------------
56. Prime Investment Money Market
Service Class 0.17%
Institutional Class 0.13%
--------------------------------------------------------------------------------
57. SIFE Specialized Financial Services
Class A 0.33%
Class B 0.33%
Class C 0.33%
--------------------------------------------------------------------------------
58. Small Cap Growth
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
59. Small Cap Opportunities
Institutional Class 0.25%
--------------------------------------------------------------------------------
60. Small Company Growth
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
61. Small Company Value
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
62. Specialized Health Sciences
Class A 0.33%
Class B 0.33%
Class C 0.33%
--------------------------------------------------------------------------------
63. Specialized Technology
Class A 0.33%
Class B 0.33%
Class C 0.33%
--------------------------------------------------------------------------------
64. Stable Income
Class A 0.33%
Class B 0.33%
Class C 0.33%
Institutional Class 0.25%
--------------------------------------------------------------------------------
65. Strategic Growth Allocation
Institutional Class 0.25%
--------------------------------------------------------------------------------
66. Strategic Income
Institutional Class 0.25%
--------------------------------------------------------------------------------
67. Tactical Maturity Bond
Institutional Class 0.25%
--------------------------------------------------------------------------------
68. Treasury Plus Money Market
Class A 0.27%
Service Class 0.17%
Institutional Class 0.13%
--------------------------------------------------------------------------------
69. WealthBuilder Equity 0.33%
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Fee as % of
Average Daily
Funds/Classes Net Assets/1/
--------------------------------------------------------------------------------
70. WealthBuilder Growth Balanced 0.33%
--------------------------------------------------------------------------------
71. WealthBuilder Moderate Balanced 0.33%
--------------------------------------------------------------------------------
72. WealthBuilder Tactical Equity 0.33%
--------------------------------------------------------------------------------
73. 100% Treasury Money Market
Class A 0.27%
Service Class 0.17%
--------------------------------------------------------------------------------
----------
|
/1/ [Effective August 1, 2004, the fee rates for each Class will be subject to breakpoints at $5 billion and $10 billion upon which the fee rates will decrease by 0.01% of average daily net assets at each breakpoint level, as reflected in the schedules on Page A-1 and A-2.
Most Recent annual agreement approval by the Board of Trustees: May 18, 2004 Appendix A amended: May 18, 2004
The foregoing fee schedule is agreed to as of May 18, 2004 and shall remain in effect until changed in writing by the parties.
WELLS FARGO FUNDS TRUST
By: /s/ C. David Messman
-----------------------------------
C. David Messman
Secretary
|
WELLS FARGO FUNDS MANAGEMENT, LLC
By: /s/ Stacie D. DeAngelo
-----------------------------------
Stacie D. DeAngelo
Senior Vice President
|
EX-99.B(h)(2)
ACCOUNTING SERVICES AGREEMENT
EXHIBIT A
Portfolios
THIS EXHIBIT A, dated as of the date set forth below, is Exhibit A to that certain Accounting Services Agreement dated as of September 1, 2002 between PFPC Inc. and each of WELLS FARGO FUNDS TRUST, WELLS FARGO MASTER TRUST (formerly, WELLS FARGO CORE TRUST) and WELLS FARGO VARIABLE TRUST.
WELLS FARGO FUNDS TRUST
Names of Portfolios Existing Classes ------------------- ---------------- Effective 10/1/2002 SIFE Specialized Financial Services Fund A, B, C Effective 11/29/2002 High Yield Bond Fund A, B, C Effective 1/21/2003 California Limited Term Tax-Free Fund A, C, Institutional California Tax-Free Fund A, B, C, Institutional Colorado Tax-Free Fund A, B, Institutional Minnesota Tax-Free Fund A, B, Institutional National Limited Term Tax-Free Fund Institutional National Tax-Free Fund A, B, C, Institutional Nebraska Tax-Free Fund Institutional Effective 1/27/2003 Asset Allocation Fund A, B, C, Institutional Income Fund A, B, Institutional Income Plus Fund A, B, C Index Allocation Fund A, B, C Intermediate Government Income Fund A, B, C, Institutional Limited Term Government Income Fund A, B, Institutional Effective 2/10/2003 California Tax-Free Money Market Fund A, Service California Tax-Free Money Market Trust Single Class |
Cash Investment Money Market Fund Service, Institutional Government Money Market Fund/1/ A, Service, Institutional Liquidity Reserve Money Market Fund Investor Minnesota Money Market Fund A Money Market Fund A, B Money Market Trust Single Class National Tax-Free Money Market Fund/2/ A, Service, Institutional National Tax-Free Money Market Trust Single Class Overland Express Sweep Fund Single Class Prime Investment Money Market Fund/3/ Service, Institutional Treasury Plus Money Market Fund/4/ A, Service, Institutional 100% Treasury Money Market Fund A, Service Effective 2/24/2003 Equity Index Fund A, B Growth Fund A, B, Institutional International Equity Fund A, B, C, Institutional Montgomery Mid Cap Growth Fund A, B, C Small Cap Growth Fund A, B, C, Institutional Small Cap Opportunities Fund Institutional Specialized Health Sciences Fund A, B, C Specialized Technology Fund A, B, C Effective 2/28/2003 Inflation-Protected Bond Fund A, B, C, Institutional Effective 3/3/2003 Outlook Today Fund A, B, C, Institutional, [Select] |
/2/ Effective as of the close of business on July 25, 2003: (i) Class A shares
of the National Tax-Free Institutional Money Market Fund were established,
(ii) the existing Class A shares of the National Tax-Free Money Market Fund
were merged into the newly created Class A shares of the National Tax-Free
Institutional Money Market Fund, and (iii) the name of the National
Tax-Free Institutional Money Market Fund was changed to National Tax-Free
Money Market Fund.
/3/ Effective as of the close of business on July 25, 2003: (i) Institutional Class shares of the Prime Investment Money Market Fund were established, and (ii) the existing Institutional Class shares of the Prime Investment Institutional Money Market Fund were merged into the newly created Institutional Class shares of the Prime Investment Money Market Fund.
/4/ Effective as of the close of business on July 25, 2003: (i) Class A shares of the Treasury Plus Institutional Money Market Fund were established, (ii) the existing Class A shares of the Treasury Plus Money Market Fund were merged into the newly created Class A shares of the Treasury Plus Institutional Money Market Fund, and (iii) the name of the Treasury Plus Institutional Money Market Fund was changed to Treasury Plus Money Market Fund.
Outlook 2010 Fund A, B, C, Institutional, [Select] Outlook 2020 Fund A, B, C, Institutional, [Select] Outlook 2030 Fund A, B, C, Institutional, [Select] Outlook 2040 Fund A, B, C, Institutional, [Select] Effective 3/24/2003 Diversified Bond Fund Institutional Diversified Equity Fund A, B, C, Institutional Diversified Small Cap Fund Institutional Equity Income Fund A, B, C, Institutional Growth Balanced Fund A, B, C, Institutional Growth Equity Fund A, B, C, Institutional Index Fund Institutional Large Cap Appreciation Fund A, B, C, Institutional Large Company Growth Fund A, B, C, Institutional, Select Moderate Balanced Fund Institutional Small Company Growth Fund Institutional Small Company Value Fund A, B, C, Institutional Stable Income Fund A, B, Institutional Strategic Growth Allocation Fund Institutional Strategic Income Fund Institutional Tactical Maturity Bond Fund Institutional WealthBuilder Equity Portfolio Single Class WealthBuilder Growth Balanced Portfolio Single Class WealthBuilder Tactical Equity Portfolio Single Class Effective 6/9/2003 Montgomery Emerging Markets Focus Fund A, B, C, Institutional Montgomery Institutional Emerging Markets Fund Select Montgomery Short Duration Government Bond Fund A, B, C, Institutional Montgomery Small Cap Fund A, B, C, Institutional Montgomery Total Return Bond Fund A, B, C, Institutional, Select Effective 6/30/2003 Stable Income Fund C Effective 7/31/2003 Cash Investment Money Market Fund Administrator Government Money Market Fund Administrator Effective 8/29/03 Large Cap Value Fund A, B, C, Institutional |
Effective 10/31/03 Overseas Fund A, B, C, Institutional To be Effective upon Fund Launch C&B Large Cap Value Fund A, B, C, D, Institutional, Select C&B Mid Cap Value Fund A, B, C, D, Institutional, Select C&B Tax-Managed Value Fund A, B, C, D, Institutional WealthBuilder Moderate Balanced Portfolio Single Class |
WELLS FARGO MASTER TRUST
Names of Portfolios Existing Classes ------------------- ---------------- Effective 3/24/2003 Disciplined Growth Portfolio Single Class Equity Income Portfolio Single Class Index Portfolio Single Class International Equity Portfolio Single Class Large Cap Appreciation Portfolio Single Class Large Company Growth Portfolio Single Class Managed Fixed Income Portfolio Single Class Small Cap Index Portfolio Single Class Small Company Growth Portfolio Single Class Small Company Value Portfolio Single Class Stable Income Portfolio Single Class Strategic Value Bond Portfolio Single Class Tactical Maturity Bond Portfolio Single Class Effective 8/29/2003 Large Cap Value Portfolio Single Class Effective 10/31/03 Overseas Portfolio Single Class |
WELLS FARGO VARIABLE TRUST
Names of Portfolios Existing Classes ------------------- ---------------- Effective 1/13/2003 Asset Allocation Fund Single Class Equity Income Fund Single Class Equity Value Fund Single Class |
Growth Fund Single Class International Equity Fund Single Class Large Company Growth Fund Single Class Money Market Fund Single Class Small Cap Growth Fund Single Class Total Return Bond Fund Single Class |
The foregoing list of Portfolios is agreed to as of May 18, 2004.
WELLS FARGO FUNDS TRUST PFPC INC.
By: /s/ C. David Messman By: /s/ Neal J. Andrews
---------------------------------- -----------------------------------
Name: C. David Messman Name: Neal J. Andrews
Title: Secretary Title: Senior Vice President
|
WELLS FARGO MASTER TRUST
By: /s/ C. David Messman
----------------------------------
Name: C. David Messman
Title: Secretary
|
WELLS FARGO VARIABLE TRUST
By: /s/ C. David Messman
----------------------------------
Name: C. David Messman
Title: Secretary
|
EX-B.99(h)(3)
TRANSFER AGENCY AND SERVICE AGREEMENT
SCHEDULE A
WELLS FARGO FUNDS TRUST
1. Asset Allocation Fund
2. California Limited Term Tax-Free Fund
3. California Tax-Free Fund
4. California Tax-Free Money Market Fund
5. California Tax-Free Money Market Trust
6. Cash Investment Money Market Fund
7. Colorado Tax-Free Fund
8. C&B Large Cap Value Fund
9. C&B Mid Cap Value Fund
10. C&B Tax-Managed Value Fund
11. Diversified Bond Fund
12. Diversified Equity Fund
13. Diversified Small Cap Fund
14. Equity Income Fund
15. Equity Index Fund
16. Government Money Market Fund
17. Growth Balanced Fund
18. Growth Equity Fund
19. Growth Fund
20. High Yield Bond Fund
21. Income Fund
22. Income Plus Fund
23. Index Allocation Fund
24. Index Fund
25. Inflation-Protected Bond Fund
26. Intermediate Government Income Fund
27. International Equity Fund
28. Large Cap Appreciation Fund
29. Large Cap Value Fund
30. Large Company Growth Fund
31. Limited Term Government Income Fund
32. Liquidity Reserve Money Market Fund
33. Minnesota Money Market Fund
34. Minnesota Tax-Free Fund
35. Moderate Balanced Fund
36. Money Market Fund
37. Money Market Trust
38. Montgomery Emerging Markets Focus Fund
39. Montgomery Institutional Emerging Markets Fund
40. Montgomery Mid Cap Growth Fund
41. Montgomery Short Duration Government Bond Fund
42. Montgomery Small Cap Fund
43. Montgomery Total Return Bond Fund
44. National Limited Term Tax-Free Fund
45. National Tax-Free Fund
46. National Tax-Free Money Market Fund
47. National Tax-Free Money Market Trust
48. Nebraska Tax-Free Fund
49. Outlook Today Fund
50. Outlook 2010 Fund
51. Outlook 2020 Fund
52. Outlook 2030 Fund
53. Outlook 2040 Fund
54. Overland Express Sweep Fund
55. Overseas Fund
56. Prime Investment Money Market Fund
57. SIFE Specialized Financial Services Fund
58. Small Cap Growth Fund
59. Small Cap Opportunities Fund
60. Small Company Growth Fund
61. Small Company Value Fund
62. Specialized Health Sciences Fund
63. Specialized Technology Fund
64. Stable Income Fund
65. Strategic Growth Allocation Fund
66. Strategic Income Fund
67. Tactical Maturity Bond Fund
68. Treasury Plus Money Market Fund
69. WealthBuilder Equity Portfolio
70. WealthBuilder Growth Balanced Portfolio
71. WealthBuilder Moderate Balanced Portfolio
72. WealthBuilder Tactical Equity Portfolio
73. 100% Treasury Money Market Fund
Most Recent annual agreement approval by the Board of Trustees: May 18, 2004 Schedule A amended: May 18, 2004
The foregoing fee schedule is agreed to as of May 18, 2004 and shall remain in effect until changed in writing by the parties.
WELLS FARGO FUNDS TRUST BOSTON FINANCIAL DATA SERVICES,
INC.
BY: /s/ C. David Messman BY: /s/ Lynda Kaplan
---------------------------------- -----------------------------------
C. David Messman Lynda Kaplan
Secretary Division Vice President
|
EX-99.B(h)(4)
WELLS FARGO FUNDS TRUST
SHAREHOLDER SERVICING PLAN
APPENDIX A
--------------------------------------------------------------------------------
Maximum
Shareholder
Funds Trust Servicing
Funds and Share Classes Fee
--------------------------------------------------------------------------------
1. Asset Allocation Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
2. California Limited Term Tax-Free Fund
Class A 0.25
Class C 0.25
--------------------------------------------------------------------------------
3. California Tax-Free Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
4. California Tax-Free Money Market Fund
Class A 0.25
Service Class 0.25
--------------------------------------------------------------------------------
5. Cash Investment Money Market Fund
Administrator Class 0.10
Service Class 0.25
--------------------------------------------------------------------------------
6. Colorado Tax-Free Fund
Class A 0.25
Class B 0.25
--------------------------------------------------------------------------------
7. C&B Large Cap Value Fund
Class A 0.25
Class B 0.25
Class C 0.25
Class D 0.25
Institutional Class 0.10
--------------------------------------------------------------------------------
8. C&B Mid Cap Value Fund
Class A 0.25
Class B 0.25
Class C 0.25
Class D 0.25
Institutional Class 0.10
--------------------------------------------------------------------------------
9. C&B Tax-Managed Value Fund
Class A 0.25
Class B 0.25
Class C 0.25
Class D 0.25
--------------------------------------------------------------------------------
10. Diversified Equity Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Maximum
Shareholder
Funds Trust Servicing
Funds and Share Classes Fee
--------------------------------------------------------------------------------
11. Equity Income Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
12. Equity Index Fund
Class A 0.25
Class B 0.25
--------------------------------------------------------------------------------
13. Government Money Market Fund
Administrator Class 0.10
Class A 0.25
Service Class 0.25
--------------------------------------------------------------------------------
14. Growth Balanced Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
15. Growth Equity Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
16. Growth Fund
Class A 0.25
Class B 0.25
--------------------------------------------------------------------------------
17. High Yield Bond Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
18. Income Fund
Class A 0.25
Class B 0.25
--------------------------------------------------------------------------------
19. Income Plus Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
20. Index Allocation Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
21. Inflation-Protected Bond Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
22. Intermediate Government Income Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
23. International Equity Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Maximum
Shareholder
Funds Trust Servicing
Funds and Share Classes Fee
--------------------------------------------------------------------------------
24. Large Cap Appreciation Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
25. Large Cap Value Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
26. Large Company Growth Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
27. Limited Term Government Income Fund
Class A 0.25
Class B 0.25
--------------------------------------------------------------------------------
28. Liquidity Reserve Money Market Fund
Investor Class 0.25
--------------------------------------------------------------------------------
29. Minnesota Money Market Fund
Class A 0.25
--------------------------------------------------------------------------------
30. Minnesota Tax-Free Fund
Class A 0.25
Class B 0.25
--------------------------------------------------------------------------------
31. Moderate Balanced Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
32. Money Market Fund
Class A 0.25
Class B 0.25
--------------------------------------------------------------------------------
33. Montgomery Emerging Markets Focus Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
34. Montgomery Mid Cap Growth Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
35. Montgomery Short Duration Government Bond Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
36. Montgomery Small Cap Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
37. Montgomery Total Return Bond Fund
Class A 0.25
Class B 0.25
Class C 0.25
Institutional Class 0.15
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Maximum
Shareholder
Funds Trust Servicing
Funds and Share Classes Fee
--------------------------------------------------------------------------------
38. National Limited Term Tax-Free Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
39. National Tax-Free Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
40. National Tax-Free Money Market Fund
Class A 0.25
Service Class 0.25
--------------------------------------------------------------------------------
41. Outlook Today Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
42. Outlook 2010 Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
43. Outlook 2020 Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
44. Outlook 2030 Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
45. Outlook 2040 Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
46. Overland Express Sweep Fund 0.25
--------------------------------------------------------------------------------
47. Overseas Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
48. Prime Investment Money Market Fund
Service Class 0.25
--------------------------------------------------------------------------------
49. SIFE Specialized Financial Services Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
50. Small Cap Growth Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
51. Small Company Growth Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Maximum
Shareholder
Funds Trust Servicing
Funds and Share Classes Fee
--------------------------------------------------------------------------------
52. Small Company Value Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
53. Specialized Health Sciences Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
54. Specialized Technology Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
55. Stable Income Fund
Class A 0.25
Class B 0.25
Class C 0.25
--------------------------------------------------------------------------------
56. Treasury Plus Money Market Fund
Class A 0.25
Service Class 0.25
--------------------------------------------------------------------------------
57. 100% Treasury Money Market Fund
Class A 0.25
Service Class 0.25
--------------------------------------------------------------------------------
58. WealthBuilder Equity Portfolio 0.25
--------------------------------------------------------------------------------
59. WealthBuilder Growth Balanced Portfolio 0.25
--------------------------------------------------------------------------------
60. WealthBuilder Moderate Balanced Portfolio 0.25
--------------------------------------------------------------------------------
61. WealthBuilder Tactical Equity Portfolio 0.25
--------------------------------------------------------------------------------
|
Fees payable to a Servicing Agent are expressed as a percentage of the average daily net asset value of the shares of the specified class of the particular Fund beneficially owned by or attributable to clients of the Servicing Agent.
Most Recent annual agreement approval by the Board of Trustees: May 18, 2004 Appendix A amended: May 18, 2004
EX-99.B(i)
Morrison & Foerster LLP
SAN FRANCISCO ATTORNEYS AT LAW NEW YORK
LOS ANGELES WASHINGTON, D.C.
DENVER 2000 PENNSYLVANIA AVENUE, NW NORTHERN VIRGINIA
PALO ALTO WASHINGTON, D.C. 20006-1888 LONDON
WALNUT CREEK TELEPHONE (202) 887-1500 BRUSSELS
SACRAMENTO TELEFACSIMILE (202) 887-0763 HONG KONG
CENTURY CITY BEIJING
ORANGE COUNTY SHANGHAI
SAN DIEGO SINGAPORE
TOKYO
July 26, 2004
Wells Fargo Funds Trust
525 Market Street
|
San Francisco, California 94105
Re: Shares of Beneficial Interest of Wells Fargo Funds Trust
Ladies/Gentlemen:
We refer to the Registration Statement on Form N-1A (SEC File Nos. 333-74295 and 811-09253) (the "Registration Statement") of Wells Fargo Funds Trust (the "Trust") relating to the registration of an indefinite number of shares of beneficial interest in the Trust (collectively, the "Shares").
We have been requested by the Trust to furnish this opinion as Exhibit (i) to the Registration Statement.
We have examined documents relating to the organization of the Trust and the Wells Fargo C&B Large Cap Value Fund, C&B Mid Cap Value Fund and C&B Tax-Managed Value Fund (the "Funds") as series of the Trust, and the authorization and issuance of Shares of the Funds.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance and sale of the Shares of the Funds by the Trust has been duly and validly authorized by all appropriate action of the Trust, and assuming delivery by sale or in accord with the Trust's dividend reinvestment plan in accordance with the description set forth in the Funds' current prospectuses under the Securities Act of 1933, as amended, the Shares will be legally issued, fully paid and nonassessable by the Trust.
We consent to the inclusion of this opinion as an exhibit to the Registration Statement.
In addition, we hereby consent to the use of our name and to the reference to the description of advice rendered by our firm under the heading "Counsel" in the Statement of Additional Information, which is included as part of the Registration Statement.
Very truly yours,
EX-99.B(j)(A)(1)
Consent of Independent Registered Public Accounting Firm
The Board of Trustees of
Wells Fargo Funds Trust:
We consent to the references to our firm under the headings, "Financial Highlights" in the prospectuses and "Independent Registered Public Accounting Firm" in the statement of additional information.
/s/ KPMG LLP KPMG LLP San Francisco, California July 23, 2004 |
EX-99.B(j)(A)(2)
Consent of Independent Registered Public Accounting Firm
The Board of Trustees of
Wells Fargo Funds Trust:
We hereby consent to the incorporation by reference in this Registration Statement for Wells Fargo Funds Trust on Form N-1A of our reports dated December 23, 2003, relating to the financial statements and financial highlights which appears in the October 31, 2003 Annual Report to Shareholders of the C&B Large Cap Value Portfolio, C&B Mid Cap Value Portfolio and C&B Tax-Managed Value Portfolio, which are also incorporated by reference into the Registration Statement. We also consent to the references to our firm under the heading "Financial Highlights" in such Registration Statement.
/s/ KPMG LLP KPMG LLP Philadelphia, PA July 23, 2004 |
EX-99.B(m)
DISTRIBUTION PLAN
APPENDIX A
--------------------------------------------------------------------------------
Funds Trust Maximum
Funds and Share Classes Rule 12b-1 Fee
--------------------------------------------------------------------------------
1. Asset Allocation Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
2. California Limited Term Tax-Free Fund
Class C 0.75
--------------------------------------------------------------------------------
3. California Tax-Free Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
4. Colorado Tax-Free Fund
Class B 0.75
--------------------------------------------------------------------------------
5. C&B Large Cap Value Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
6. C&B Mid Cap Value Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
7. C&B Tax-Managed Value Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
8. Diversified Equity Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
9. Equity Income Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
10. Equity Index Fund
Class B 0.75
--------------------------------------------------------------------------------
11. Growth Balanced Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
12. Growth Equity Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
13. Growth Fund
Class B 0.75
--------------------------------------------------------------------------------
14. High Yield Bond Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
15. Income Fund
Class B 0.75
--------------------------------------------------------------------------------
16. Income Plus Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
17. Index Allocation Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Funds Trust Maximum
Funds and Share Classes Rule 12b-1 Fee
--------------------------------------------------------------------------------
18. Inflation-Protected Bond Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
19. Intermediate Government Income Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
20. International Equity Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
21. Large Cap Appreciation Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
22. Large Cap Value Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
23. Large Company Growth Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
24. Limited Term Government Income Fund
Class B 0.75
--------------------------------------------------------------------------------
25. Liquidity Reserve Money Market Fund
Investor Class 0.25
--------------------------------------------------------------------------------
26. Minnesota Tax-Free Fund
Class B 0.75
--------------------------------------------------------------------------------
27. Moderate Balanced Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
28. Money Market Fund
Class B 0.75
--------------------------------------------------------------------------------
29. Montgomery Emerging Markets Focus Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
30. Montgomery Mid Cap Growth Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
31. Montgomery Short Duration Government Bond Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
32. Montgomery Small Cap Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
33. Montgomery Total Return Bond Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
34. National Limited Term Tax-Free Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
35. National Tax-Free Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
|
--------------------------------------------------------------------------------
Funds Trust Maximum
Funds and Share Classes Rule 12b-1 Fee
--------------------------------------------------------------------------------
36. Outlook Today Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
37. Outlook 2010 Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
38. Outlook 2020 Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
39. Outlook 2030 Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
40. Outlook 2040 Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
41. Overland Express Sweep Fund 0.25
--------------------------------------------------------------------------------
42. Overseas Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
43. SIFE Specialized Financial Services Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
44. Small Cap Growth Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
45. Small Company Growth
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
46. Small Company Value Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
47. Specialized Health Sciences Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
48. Specialized Technology Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
49. Stable Income Fund
Class B 0.75
Class C 0.75
--------------------------------------------------------------------------------
50. WealthBuilder Equity Portfolio 0.75
--------------------------------------------------------------------------------
51. WealthBuilder Growth Balanced Portfolio 0.75
--------------------------------------------------------------------------------
52. WealthBuilder Moderate Balanced Portfolio 0.75
--------------------------------------------------------------------------------
53. WealthBuilder Tactical Equity Portfolio 0.75
--------------------------------------------------------------------------------
|
Most Recent annual agreement approval by the Board of Trustees: May 18, 2004 Appendix A amended: May 18, 2004
EX-99.B(n)
APPENDIX A
------------------------------------------------------------------------------------------------
Maximum Maximum
Funds Trust Initial Sales Maximum Maximum Shareholder
Multi Class Funds Charge CDSC 12b-1 Fee Servicing Fee
------------------------------------------------------------------------------------------------
1. Asset Allocation Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
2. California Limited Term Tax-Free Fund
Class A 3.00 0.50 None 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
3. California Tax-Free Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
4. California Tax-Free Money Market Fund
Class A None None None 0.25
Service Class None None None 0.25
------------------------------------------------------------------------------------------------
5. Cash Investment Money Market Fund
Administrator Class None None None 0.10
Institutional Class None None None None
Service Class None None None 0.25
------------------------------------------------------------------------------------------------
6. Colorado Tax-Free Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
7. C&B Large Cap Value Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Class D None None None 0.25
Institutional Class None None None 0.10
Select Class None None None None
------------------------------------------------------------------------------------------------
8. C&B Mid Cap Value Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Class D None None None 0.25
Institutional Class None None None 0.10
Select Class None None None None
------------------------------------------------------------------------------------------------
9. C&B Tax-Managed Value Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Class D None None None 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------------------
Maximum Maximum
Funds Trust Initial Sales Maximum Maximum Shareholder
Multi Class Funds Charge CDSC 12b-1 Fee Servicing Fee
------------------------------------------------------------------------------------------------
10. Diversified Equity Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
11. Equity Income Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
12. Equity Index Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
------------------------------------------------------------------------------------------------
13. Government Money Market Fund
Administrator Class None None None 0.10
Class A None None None 0.25
Institutional Class None None None None
Service Class None None None 0.25
------------------------------------------------------------------------------------------------
14. Growth Balanced Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
15. Growth Equity Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
16. Growth Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
17. High Yield Bond Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
------------------------------------------------------------------------------------------------
18. Income Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
19. Income Plus Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
------------------------------------------------------------------------------------------------
20. Index Allocation Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
------------------------------------------------------------------------------------------------
21. Inflation-Protected Bond Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------------------
Maximum Maximum
Funds Trust Initial Sales Maximum Maximum Shareholder
Multi Class Funds Charge CDSC 12b-1 Fee Servicing Fee
------------------------------------------------------------------------------------------------
22. Intermediate Government Income Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
23. International Equity Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
24. Large Cap Appreciation Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
25. Large Cap Value Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
26. Large Company Growth Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
Select Class None None None None
------------------------------------------------------------------------------------------------
27. Limited Term Government Income Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
28. Minnesota Tax-Free Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
29. Moderate Balanced Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
30. Money Market Fund
Class A None None None 0.25
Class B None 5.00 0.75 0.25
------------------------------------------------------------------------------------------------
31. Montgomery Emerging Markets Focus Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------------------
Maximum Maximum
Funds Trust Initial Sales Maximum Maximum Shareholder
Multi Class Funds Charge CDSC 12b-1 Fee Servicing Fee
------------------------------------------------------------------------------------------------
32. Montgomery Mid Cap Growth Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
------------------------------------------------------------------------------------------------
33. Montgomery Short Duration Government
Bond Fund
Class A 3.00 0.50* None 0.25
Class B None 3.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
34. Montgomery Small Cap Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
35. Montgomery Total Return Bond Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None 0.15
Select Class None None None None
------------------------------------------------------------------------------------------------
36. National Limited Term Tax-Free Fund
Class A 3.00 0.50* None 0.25
Class B None 3.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
37. National Tax-Free Fund
Class A 4.50 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
38. National Tax-Free Money Market Fund
Class A None None None 0.25
Institutional Class None None None None
Service Class None None None 0.25
------------------------------------------------------------------------------------------------
39. Outlook Today Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
Select Class None None None None
------------------------------------------------------------------------------------------------
40. Outlook 2010 Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
Select Class None None None None
------------------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------------------
Maximum Maximum
Funds Trust Initial Sales Maximum Maximum Shareholder
Multi Class Funds Charge CDSC 12b-1 Fee Servicing Fee
------------------------------------------------------------------------------------------------
41. Outlook 2020 Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
Select Class None None None None
------------------------------------------------------------------------------------------------
42. Outlook 2030 Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
Select Class None None None None
------------------------------------------------------------------------------------------------
43. Outlook 2040 Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
Select Class None None None None
------------------------------------------------------------------------------------------------
44. Overseas Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
45. Prime Investment Money Market Fund
Institutional Class None None None None
Service Class None None None 0.25
------------------------------------------------------------------------------------------------
46. SIFE Specialized Financial Services
Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
------------------------------------------------------------------------------------------------
47. Small Cap Growth Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
48. Small Company Growth Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
49. Small Company Value Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
50. Specialized Health Sciences Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
------------------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------------------
Maximum Maximum
Funds Trust Initial Sales Maximum Maximum Shareholder
Multi Class Funds Charge CDSC 12b-1 Fee Servicing Fee
------------------------------------------------------------------------------------------------
51. Specialized Technology Fund
Class A 5.75 1.00* None 0.25
Class B None 5.00 0.75 0.25
Class C None 1.00 0.75 0.25
------------------------------------------------------------------------------------------------
52. Stable Income Fund
Class A 2.00 0.50* None 0.25
Class B None 1.50 0.75 0.25
Class C None 1.00 0.75 0.25
Institutional Class None None None None
------------------------------------------------------------------------------------------------
53. Treasury Plus Money Market Fund
Class A None None None 0.25
Institutional Class None None None None
Service Class None None None 0.25
------------------------------------------------------------------------------------------------
54. 100% Treasury Money Market Fund
Class A None None None 0.25
Service Class None None None 0.25
------------------------------------------------------------------------------------------------
|
Most Recent annual agreement approval by the Board of Trustees: May 18, 2004 Appendix A most recently amended: May 18, 2004
EX-99.B(p)(15)
CODE OF ETHICS
OF
COOKE & BIELER, L.P.
PREAMBLE
This Code of Ethics is being adopted in compliance with the requirements of
Rule 17j-1 (the "Rule") adopted by the United States Securities and Exchange
Commission under the Investment Company Act of 1940 (the "Act"), and Sections
204A and 206 of the Investment Advisers Act of 1940 (the "Advisers Act"),
specifically Rule 204-2 thereunder, to effectuate the purposes and objectives of
those provisions. Section 204A of the Advisers Act requires the establishment
and enforcement of policies and procedures reasonably designed to prevent the
misuse of material, nonpublic information by investment advisers. Rule 204-2
imposes recordkeeping requirements with respect to personal securities
transactions of advisory representatives (defined below). Rule 17j-1 of the
Investment Company Act and Section 206 of the Advisers Act make the following
activities unlawful for certain persons, including any employee of Cooke &
Bieler, L.P. (the "Firm") in connection with the purchase or sale by such person
of a security held or to be acquired by any Portfolio or any Fund managed by the
Firm:
1. To employ a device, scheme or artifice to defraud a Portfolio, a
Fund, any client or prospective client;
2. To make to a Portfolio, a Fund, any client or prospective client,
any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in
light of the circumstances in which they are made, not
misleading;
3. To engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon a Portfolio,
a Fund, any client or prospective client; or
4. Acting as principal for his/her own account, knowingly to sell
any security to or purchase any security from a client, or acting
as a broker for a person other than such client, knowingly to
effect any sale or purchase of any security for the account of
such client, without disclosing to such client in writing before
the completion of such transaction the capacity in which he/she
is acting and obtaining the consent of the client to such
transaction. The prohibitions of this paragraph (4) shall not
apply to any transaction with a customer of a bank broker or
dealer if such broker or dealer is not acting as an investment
adviser in relation to such transaction; or
5. To engage in any act, practice, or course of business which is
fraudulent, deceptive or manipulative.
This Code contains provisions reasonably necessary to prevent persons from
engaging in acts in violation of the above standard and procedures reasonably
necessary to prevent violations of the Code.
The Board of Directors of the Firm adopts this Code of Ethics. This Code is
based upon the principle that the directors and officers of the Firm, and
certain affiliated persons of the Firm, owe a fiduciary duty to, among others,
the clients of the Firm to conduct their affairs, including their personal
securities
transactions, in such a manner as to avoid (i) serving their own personal
interests ahead of clients; (ii) taking inappropriate advantage of their
position with the Firm; and (iii) any actual or potential conflicts of interest
or any abuse of their position of trust and responsibility. This fiduciary duty
includes the duty of the Compliance Officer of the Firm to report violations of
this Code of Ethics to the Firm's Board of Directors and to the Board of
Directors of any Fund advised or sub-advised by the Firm.
POLICY STATEMENT ON INSIDER TRADING
The Firm forbids any officer, director or employee from trading,
either personally or on behalf of others, including accounts managed by the
Firm, on material nonpublic information or communicating material nonpublic
information to others in violation of the law. This conduct is frequently
referred to as "insider trading." The Firm's policy applies to every officer,
director and employee and extends to activities within and outside their duties
at the Firm. Any questions regarding the Firm's policy and procedures should be
referred to the Compliance Officer.
The term "insider trading" is not defined in the federal securities
laws, but generally is used to refer to the use of material nonpublic
information to trade in securities (whether or not one is an "insider") or to
communications of material nonpublic information to others.
While the law concerning insider trading is not static, it is
generally understood that the law prohibits:
1) trading by an insider, while in possession of material nonpublic
information, or
2) trading by a non-insider, while in possession of material
nonpublic information, where the information either was disclosed
to the non-insider in violation of an insider's duty to keep it
confidential or was misappropriated, or
3) communicating material nonpublic information to others.
The concept of "insider" is broad. It includes officers, directors and
employees of a company. In addition, a person can be a "temporary insider" if he
or she enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely for the
company's purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the employees of
such organizations. In addition, the Firm may become a temporary insider of a
company it advises or for which it performs other services. For that to occur
the company must expect the Firm to keep the disclosed nonpublic information
confidential and the relationship must at least imply such a duty before the
Firm will be considered an insider.
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of a company's securities. Information that officers, directors and
employees should consider material includes, but is not limited to: dividend
changes, earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major litigation,
liquidation problems, and extraordinary management developments.
Information is nonpublic until it has been effectively communicated to
the market place. One must be able to point to some fact to show that the
information is generally public. For example, information found in a report
filed with the SEC, or appearing in Dow Jones, Reuters Economic Services, The
Wall Street Journal or other publications of general circulation would be
considered public.
Before trading for yourself or others in the securities of a company
about which you may have potential inside information, ask yourself the
following questions:
i. Is the information material? Is this information that an investor
would consider important in making his or her investment
decisions? Is this information that would substantially effect
the market price of the securities if generally disclosed?
ii. Is the information nonpublic? To whom has this information been
provided? Has the information been effectively communicated to
the marketplace?
If, after consideration of the above, you believe that the information
is material and nonpublic, or if you have questions as to whether the
information is material and nonpublic, you should take the following steps.
i. Report the matter immediately to the Firm's Compliance Officer.
ii. Do not purchase or sell the securities on behalf of yourself or
others.
iii. Do not communicate the information inside or outside the Firm,
other than to the Firm's Compliance Officer.
iv. After the Firm's Compliance Officer has reviewed the issue, you
will be instructed to continue the prohibitions against trading
and communication, or you will be allowed to trade and
communicate the information.
Information in your possession that you identify as material and
nonpublic may not be communicated to anyone, including persons within the Firm,
except as provided above. In addition, care should be taken so that such
information is secure. For example, files containing material nonpublic
information should be sealed; access to computer files containing material
nonpublic information should be restricted.
The role of the Firm's Compliance Officer is critical to the
implementation and maintenance of the Firm's policy and procedures against
insider trading. The Firm's Supervisory Procedures can be divided into two
classifications - prevention of insider trading and detection of insider
trading.
To prevent insider trading, the Firm will:
i. provide, on a regular basis, an educational program to
familiarize officers, directors and employees with the Firm's
policy and procedures, and
ii. when it has been determined that an officer, director or employee
of the Firm has material nonpublic information,
1. implement measures to prevent dissemination of such
information, and
2. if necessary, restrict officers, directors and employees
from trading the securities.
To detect insider trading, the Compliance Officer will:
i. review the trading activity reports filed by each officer,
director and employee, and
ii. review the trading activity of accounts managed by the Firm.
A. DEFINITIONS
1. "Access person" means any director, officer, general partner or advisory
representative of the Firm.
2. "Advisory representative" means any employee, who in connection with his or
her regular functions or duties, normally makes, participates in, or
otherwise obtains current information regarding the purchase or sale of a
security by the Firm, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and any natural
person in a control relationship to the Firm who obtains information
concerning recommendations made concerning a purchase or sale of a
Security. This definition includes but is not limited to the following:
partner, officer, director, "Investment Person", "Portfolio Manager" and
any other employee of the Adviser designated as an "Advisory
Representative" from time to time by the Compliance Officer.
3. "Non-Advisory Representative" means any individual who has no contact with
information regarding the purchases or sales of Securities made by the Firm
in his or her regular functions or duties. However, such individuals are
subject to the Preamble and Policy Statement on Insider Trading contained
in this Code.
4. "Affiliated company" means a company which is an affiliated person, as
defined in the 1940 Act.
5. "Affiliated person" of another person means (a) any person directly or
indirectly owning, controlling, or holding with power to vote, five (5%)
percent or more of the outstanding voting securities of such other person;
(b) any person five (5%) percent or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held with power
to vote, by such other person; (c) any person directly or indirectly
controlling, controlled by, or under common control with, such other
person; (d) any officer, director, partner, copartner, or employee of such
other person; (e) if such other person is an investment company, any
investment adviser thereof or any member of an advisory board thereof; and
(f) if such other person is an unincorporated investment company not having
a board of directors, the depositor thereof.
6. "Beneficial ownership" shall be interpreted in the same manner as it would
be under Rule 16a-1(a)(2) of the Securities Exchange Act of 1934, as
amended (the "1934 Act") in determining whether a person is the beneficial
owner of a security for purposes of Section 16 of the 1934 Act and the
rules and regulations thereunder, that, generally speaking, encompasses
those situations where the beneficial owner has the right to enjoy a direct
or indirect economic benefit from the ownership of the security. A person
is normally regarded as the beneficial owner of securities held in (i) the
name of his or her spouse, domestic partner, minor children, or other
relatives living in his or her household; (ii) a trust, estate or other
account in which he/she has a present or future interest in the income,
principal or right to obtain title to the securities; or (iii) the name of
another person or entity by reason of any contract, understanding,
relationship, agreement or other arrangement whereby he or she obtains
benefits substantially equivalent to those of ownership.
7. "Control" means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the result
of an official position with such company. Any person who owns
beneficially, either directly or through one or more controlled companies,
more than twenty-five (25%) percent of the voting securities of a company
shall be presumed to control such company. Any person who does not so own
more than twenty-five (25%) percent of the voting securities of any company
shall be presumed not to control such company. A natural person shall be
presumed not to be a controlled person.
8. "Disclosable transaction" means any transaction in a security pursuant to
which an access person would have a beneficial ownership.
9. "Firm" means the investment adviser registered with the Securities and
Exchange Commission under the Investment Advisers Act of 1940, subject to
this Code of Ethics.
10. "Fund" means any investment vehicle registered under the Investment Company
Act of 1940 for which the Firm acts as manager, adviser or subadviser.
11. "Non-interested" Director means a director or trustee who is not an
interested person.
12. "Interested Person" of another person, when used with respect to a Fund,
means (i) any affiliated person of the Fund; (ii) any member of the
immediate family of any natural person who is an affiliated person of the
Fund; (iii) any interested person of any investment adviser of or principal
underwriter for the Fund; (iv) any person or partner or employee of any
person who at any time since the beginning of the last two completed fiscal
years of the Fund has acted as legal counsel for the Fund; (v) any broker
or dealer registered under the Securities Exchange Act of 1934 or any
affiliated person of such a broker or dealer; or (vi) any natural person
whom the Commission by order shall have determined to be an interested
person by reason of having had, at any time since the beginning of the last
two completed fiscal years of the Fund, a material business or professional
relationship with the Fund or with the principal executive officer of such
company or with any other investment company having the same investment
adviser or principal underwriter or with the principal executive officer of
such other investment company, provided, that no person shall be deemed to
be an interested person of an investment company solely by reason of (aa)
his being a member of its Board of Directors or advisory board or an owner
of its securities, or (bb) his membership in the immediate family of any
person specified in clause (aa) of this proviso.
13. "Initial Public Offering" means an offering of securities registered under
the Securities Act of 1933, the issuer of which, immediately before the
registration, was not subject to the reporting requirements of Sections 13
or 15(d) of the 1934 Act.
14. "Investment Personnel" means (a) any Portfolio Manager of the Firm; (b) any
employee of the Firm (or of any company in a control relationship to a Fund
or the Firm) who, in connection with his regular functions or duties, makes
or participates in making recommendations regarding the purchase or sale of
securities by the Firm, including securities analysts and traders; or (c)
any person who controls a Fund or the Firm and who obtains information
concerning recommendations made to any Fund or Portfolio regarding the
purchase or sale of securities by the Fund or Portfolio.
15. "Limited Offering" means an offering that is exempt from registration under
the Securities Act of 1933, as amended (the "Securities Act") pursuant to
Section 4(2) or Section 4(6) or Rules 504, 505 or 506 under the Securities
Act. Limited offerings are commonly referred to as private placements.
16. "Person" means a natural person or a company.
17. "Portfolio" means any account, trust or other investment vehicle (except
"Fund") over which the Firm has investment management discretion.
18. "Portfolio Manager" means an employee of the Firm entrusted with the direct
responsibility and authority to make investment decisions affecting the
Portfolios or Funds managed by the Firm.
19. "Purchase or sale of a security" includes, among other things, the writing
of an option to purchase or sell a Security.
20. "Security Held or to be Acquired" means (i) any security which, within the
most recent 15 days, is or has been held by a Fund or Portfolio, or is
being or has been considered for purchase by a Fund or Portfolio, or (ii)
any option to purchase or sell and any security convertible into or
exchangeable for a Security.
21. "Security" shall have the meaning set forth in Section 202(a)(18) of the
Advisers Act and Section 2(a)(36) of the 1940 Investment Company Act.
Further, for purposes of this Code, "Security" shall include any
commodities contracts as defined in Section 2(a)(1)(A) of the Commodity
Exchange Act. This definition includes but is not limited to futures
contracts on equity indices.
"Security" shall not include direct obligations of the Government of the
United States, bankers' acceptances, bank certificates of deposit, high quality
short-term debt instruments (maturity of less than 366 days at issuance and
rated in one of the two highest rating categories by a Nationally Recognized
Statistical Rating Organization), including repurchase agreements, commercial
paper and shares of money market funds that limit their investments to the
exempted securities enumerated above. Also excluded from the definition are any
registered open-end investment companies (e.g. open-end mutual funds). Advisory
representatives reporting under the Code are obligated to report money market
mutual fund positions in which they have a direct interest as part of the
quarterly reporting requirements. (Exhibit C) Any question as to whether a
particular investment constitutes a "Security" should be referred to the
Compliance Officer of the Firm.
B. PROHIBITED TRANSACTIONS
No access person or advisory representative shall engage in any act,
practice or course of conduct, which would violate the provisions of Rule 17j-1
of the Investment Company Act or Section 206 of the Investment Advisers Act as
set forth above.
1. Access Persons
Except as provided in Section C below, no access person shall:
(a) purchase or sell, directly or indirectly, any security in which
he/she has or by reason of such transaction acquires, any direct
or indirect beneficial ownership and which to his/her actual
knowledge at the time of such purchase or sale:
(1) is being considered for purchase or sale by any Portfolio or
Fund managed by the Firm, or
(2) is being purchased or sold by any Portfolio or Fund managed
by the Firm; or
(b) disclose to other persons the securities activities engaged in or
contemplated for the various Portfolios or Funds managed by the
Firm.
2. Investment Personnel
In addition to the prohibitions listed in Section B(1) above, no investment
personnel shall engage in any of the following:
(a) accept any gift or other thing of more than de minimus value from any
person or entity that does business with or on behalf of the Firm. For
purposes of this Code, "de minimus" shall be considered to be the
annual receipt of gifts from the same source valued at $500 or less
per individual recipient, when the gifts are in relation to the Firm's
business.
(b) acquire a beneficial interest in any securities in an initial public
offering ("IPO") or other limited offerings commonly referred to as
private placements, without prior written approval of the compliance
officer of the Firm and the Management Committee of Cooke & Bieler,
L.P. The compliance officer must maintain a record of any decision,
and the reasons supporting the decision, to approve the investment
personnel's acquisition of an IPO or private placement for at least
five years after the end of the fiscal year in which the approval was
granted.
Before granting such approval the compliance officer (or other
designee) should carefully evaluate such investment to determine that
the investment could create no material conflict between the
investment personnel and a Fund or Portfolio. The compliance officer
may make such determination by looking at, among other things, the
nature of the offering and the particular facts surrounding the
purchase. For example, the compliance officer may consider approving
the transaction if the compliance officer (or designee) can determine
that: (i) the investment did not result from directing Fund, Portfolio
or Firm business to the underwriter or issuer of the security; (ii)
the Investment Personnel is not misappropriating an opportunity that
should have been offered to the Fund or Portfolio; and (iii) an
Investment Person's investment decisions for the Fund or Portfolio
will not be unduly influenced by his or her personal holdings and
investment decisions are based solely on the best interests of Fund or
Portfolio. Any person authorized to purchase securities in an IPO or
private placement shall disclose that investment when they play a part
in a Fund's or Portfolio's subsequent consideration of an investment
in that issuer. In such
circumstances, a Fund's or Portfolio's decision to purchase securities
of the issuer shall be subject to independent review by investment
personnel with no personal interest in the issuer.
(c) profit in the purchase and sale, or sale and purchase, of the same (or
equivalent) securities within sixty (60) calendar days. Trades made in
violation of this prohibition should be unwound, if possible.
Otherwise, any profits realized on such short-term trades shall be
subject to disgorgement to the appropriate Portfolio(s) or Fund(s) of
the Firm.
Exception: The compliance officer of the Firm may allow
exceptions to this policy on a case-by-case basis when the abusive
practices that the policy is designed to prevent, such as front
running or conflicts of interest, are not present and the equity of
the situation strongly supports an exemption. An example is the
involuntary sale of securities due to unforeseen corporate activity
such as a merger. [See Pre-Clearance Procedures below]. The ban on
short-term trading profits is specifically designed to deter potential
conflicts of interest and front running transactions, which typically
involve a quick trading pattern to capitalize on a short-lived market
impact of a trade by one of the Fund's Portfolios. The respective
compliance officer shall consider the policy reasons for the ban on
short-term trades, as stated herein, in determining when an exception
to the prohibition is permissible. The compliance officer may consider
granting an exception to this prohibition if the securities involved
in the transaction are not (i) being considered for purchase or sale
by a Fund or Portfolio that serves as the basis of the individual's
"investment personnel" status or (ii) being purchased or sold by a
Fund or Portfolio that serves as the basis of the individual's
"investment personnel" status and, are not economically related to
such securities. In order for a proposed transaction to be considered
for exemption from the short-term trading prohibitions, the investment
personnel must complete, sign and submit to the compliance officer a
completed Securities Transactions Report Relating to Short-Term
Trading (Exhibit D), certifying that the proposed transaction is in
compliance with this Code of Ethics. The compliance officer shall
retain a record of exceptions granted and the reasons supporting the
decision.
(d) serve on the Board of Directors of any publicly traded company without
prior authorization of the Management Committee of the Firm. Any such
authorization shall be based upon a determination that the board
service would be consistent with the interests of the Firm, any
Portfolios or Funds. Authorization of board service shall be subject
to the implementation by the Firm of "Chinese Wall" or other
procedures to isolate such investment personnel from making decisions
about trading in that company's securities. Notification of such
directorships shall be made to the compliance officer of the Funds.
3. Portfolio Managers
In addition to the prohibitions listed in Sections B(1) and (2) above, no
portfolio manager shall:
(a) buy or sell a security within seven (7) calendar days before or
two (2) calendar days after any portfolio of the Firm trades in
that security. Any trades made within the proscribed period shall
be unwound, if possible. Otherwise, any profits realized on
trades within the proscribed period shall be disgorged to the
appropriate client portfolio.
C. EXEMPTED TRANSACTIONS
Transactions described in Sections B(1), B(2)(c) and B(3) above, which
appear upon reasonable inquiry and investigation to present no reasonable
likelihood of harm to a Fund or Portfolio and
which are otherwise transacted in accordance with Investment Company Act
Rule 17j-1 and Section 206 of the Investment Company Act may be permitted
within the discretion of the compliance officer of the Firm on a
case-by-case basis. Such exempted transactions may include:
1. purchases or sales of securities which are not eligible for purchase
by a Fund or Portfolio and which are not related economically to
securities purchased, sold or held by the Fund or a Portfolio.
2. securities of companies with a market capitalization in excess of $1
billion.
3. purchases or sales of a de minimus amount of securities. A de minimus
amount of securities shall be defined in this section of the Code of
Ethics as:
(a) up to an aggregate $25,000 principal amount of a fixed income
security within any three-consecutive month period;
(b) up to an aggregate 100 shares of an equity security within any
three-consecutive month period; or
(c) any amount of securities if the proposed acquisition or
disposition by a Fund or Portfolio is in the amount of 1,000
shares or less and the security is listed on a national
securities exchange or the National Association of Securities
Dealers Automated Quotation System.
4. Securities which the access person, Fund and/or Portfolio has no
influence or control, including:
(a) purchases or sales effected in any account over which the access
person has no direct or indirect influence or control;
(b) purchases or sales which are non-volitional on the part of either
the access person or the Fund and/or Portfolio;
(c) purchases which are part of an automatic dividend reinvestment
plan or direct stock plan (pending preclearance of the original
purchase); and
(d) securities acquired by the exercise of rights issued pro rata by
an issuer to all holders of a class of its securities (to the
extent such rights were acquired from such issuer), and sales of
such rights so acquired.
5. Holdings in direct obligations of the U.S. government, bankers'
acceptances, bank certificates of deposit, commercial paper, high
quality short-term debt instruments and registered open-end investment
companies.
D. COMPLIANCE PROCEDURES
With respect to the pre-clearance and reporting requirements contained
herein, access persons shall pre-clear through and report to the compliance
officer of the Firm.
1. Pre-clearance Procedures
All access persons must receive prior written approval from the Firm's
compliance officer, or other officer designated by the Board of Directors,
before purchasing or selling securities in an
account that such access person has beneficial ownership. The access person
should request pre-clearance by completing, signing and submitting Personal
Securities Transactions Pre-Clearance Form (Exhibit E) to the compliance
officer.
Pre-clearance approval will expire at the close of business on the trading
date two (2) business days after the date on which authorization is
received. For example, preclearance received Friday at 9:00 a.m. would
expire as of the close of business Monday. If the trade is not completed
before such pre-clearance expires, the access person is required to again
obtain pre-clearance for the trade. In addition, if an access person
becomes aware of any additional information with respect to a transaction
that was precleared, such person is obligated to disclose such information
to the appropriate compliance officer prior to executing the precleared
transaction.
Access persons are excluded from preclearing securities purchased, sold or
acquired in the following transactions:
(a) purchases or sales effected in any account over which the access
person has no direct or indirect influence or control.
(b) purchases or sales which are non-volitional on the part of either the
access person or a Fund or Portfolio.
(c) purchases which are part of an automatic dividend reinvestment plan or
direct stock plan (pending preclearance of the original purchase).
(d) securities acquired by the exercise of rights issued pro rata by an
issuer to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
(e) holdings in direct obligations of the U.S. government, bankers'
acceptances, bank certificates of deposit, commercial paper, high
quality short-term debt instruments and registered open-end investment
companies are not disclosable transactions.
2. Disclosure of Personal Holdings
All access persons shall disclose to the compliance officer:
(a) all personal securities holdings (including securities acquired before
the person became an access person) within ten (10) days upon the
later of commencement of employment or adoption of this Code of
Ethics; and
(b) The name of any broker, dealer or bank with whom the access person
maintains an account in which any securities were held for the direct
or indirect benefit of the access person must also be reported.
Holdings in direct obligations of the U.S. government, bankers'
acceptances, bank certificates of deposit, commercial paper, high quality
short-term debt instruments and registered open-end investment companies
are not disclosable transactions. Access persons do not need to report
transactions effected in any account over which the access person has no
direct or indirect influence or control.
The compliance officer of the Firm may, at its discretion, request access
persons to provide duplicate copies of confirmation of each disclosable
transaction in the accounts and account statements.
In addition to reporting securities holdings, every access person shall
certify in their initial report that:
(a) they have received, read and understand the Code of Ethics and
recognize that they are subject thereto; and
(b) they have no knowledge of the existence of any personal conflict
of interest relationship which may involve a Fund or Portfolio,
such as any economic relationship between their transactions and
securities held or to be acquired by a Fund or a Portfolio.
This initial report shall be made on the form attached as Initial Report of
Access Person (Exhibit A) and shall be delivered to the compliance officer
of Firm.
3. Quarterly Reporting Requirements
All access persons shall disclose to the Firm's compliance officer all
personal securities transactions conducted during the period as of the
calendar quarter ended within ten (10) days after quarter end. Transactions
in direct obligations of the U.S. government, bankers' acceptances, bank
certificates of deposit, commercial paper, high quality short-term debt
instruments and registered open-end investment companies are not
disclosable transactions. Access persons do not need to report transactions
effected in any account over which the access person has no direct or
indirect influence or control.
In addition to reporting securities holdings, every access person shall
disclose quarterly the:
(a) date of the transaction, title of the security, interest rate and
maturity date (if applicable), trade date, number of shares, and
principal amount of each security involved;
(b) the nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(d) the name of the broker, dealer or bank with or through whom the
transaction was effected; and
(d) the date the report is submitted to the compliance officer.
In addition, with respect to any account established by an access person in
which any securities were held during the quarter for the direct or
indirect benefit of the access person, the access person must provide:
(a) the name of the broker, dealer or bank with whom the access
person established the account;
(b) the date the account was established; and
(c) the date the report is submitted by the access person.
This quarterly report shall be made on the form attached as Securities
Transactions for the Calendar Quarter Ended (Exhibit C) and shall be
delivered to the compliance officer of the Firm. In lieu of manually
filling out all of the information required by the form, access persons may
attach confirms and/or account statements to a signed form.
4. Annual Certification of Compliance with Code of Ethics
All access persons shall disclose to the compliance officer of the Firm all
personal securities holdings as of the calendar year ended within thirty
(30) days after year end. Holdings in direct obligations of the U.S.
government, bankers' acceptances, bank certificates of deposit, commercial
paper, high quality short-term debt instruments and registered open-end
investment companies are not disclosable holdings. Access persons do not
need to report transactions effected in any account over which the access
person has no direct or indirect influence or control.
In addition to reporting securities holdings, every access person shall
certify annually that:
(a) they have read and understand the Code of Ethics and recognize
that they are subject thereto;
(b) they have complied with the requirements of the Code of Ethics;
and that they have reported all personal securities transactions
required to be reported pursuant to the requirements of the Code
of Ethics;
(c) they have not disclosed pending "buy" or "sell" orders for a
Portfolio or Fund to any employees of any other Management
Company, except where the disclosure occurred subsequent to the
execution or withdrawal of an order; and
(d) they have no knowledge of the existence of any personal conflict
of interest relationship which may involve any Portfolio or Fund,
such as any economic relationship between their transactions and
securities held or to be acquired by a Fund or Portfolio.
This annual report shall be made on the form attached as Annual Report of
Access Person (Exhibit B) and shall be delivered to the compliance officer
of the Firm.
5. Reports to Compliance Officer
The compliance officer of the Firm shall provide, by the thirtieth (30) day
after each quarter end, certification to the compliance officer of a Fund
that, as of the prior quarter end:
(a) the compliance officer of the Firm has collected all
documentation required by the Code of Ethics and Rule 17j-1 and
is retaining such documentation on behalf of the Fund;
(b) there have been no violations to the Fund's Code of Ethics and,
if there have been violations to the Fund's Code of Ethics, the
violation has been documented and reported to the Fund's
compliance officer; and
(c) the Firm has appointed appropriate management or compliance
personnel, such as the compliance officer to review transactions
and reports filed by access persons under the
Code of Ethics, and adopted procedures reasonably necessary to
prevent Access Persons from violating the Firm's Code of Ethics.
Each quarter the compliance officer of the Firm shall also provide to the
compliance officer of each Fund a list of access persons who are subject to
the Fund's Code of Ethics and the name of the compliance officer of the
Firm responsible for preclearing and reviewing personal securities
transactions.
The compliance officer of the Firm shall provide such information,
including, but not limited to, initial, quarterly and annual reports for
all access persons, preclearance reports and approval for short term
transactions, IPO and private placement securities, as is requested by the
Fund's compliance officer.
6. General Reporting Requirements
The compliance officer of the Firm shall notify each access person that he
or she is subject to this Code of Ethics and the reporting requirements
contained herein, and shall deliver a copy of this Code of Ethics to each
such person when they become an access person, or upon request.
Reports submitted pursuant to this Code of Ethics shall be confidential and
shall be provided only to the officers and Directors of the Firm, and each
Fund, counsel and/or regulatory authorities upon appropriate request.
7. Excessive Trading
The Firm understands that it is appropriate for access persons to
participate in the public securities markets as part of their overall
personal investment programs. As in other areas, however, this should be
done in a way that creates no potential conflicts with the interests of any
Fund or Portfolio. Further, it is important to recognize that otherwise
appropriate trading, if excessive (measured in terms of frequency,
complexity of trading programs, numbers of trades or other measure as
deemed appropriate by the Fund's compliance officer, compliance officer of
the Firm, or senior management at the Firm), may compromise the best
interests of any Funds or Portfolios if such excessive trading is conducted
during work-time or using Fund/Portfolio resources. Accordingly, if
personal trading rising to such dimension as to create an environment that
is not consistent with the Code of Ethics, such personal transactions may
not be approved or may be limited by the compliance officer of the Firm.
8. Conflict of Interest
Every access person shall notify the compliance officer of the Firm of any
personal conflict of interest relationship which may involve a Fund or
Portfolio, such as the existence of any economic relationship between their
transactions and securities held or to be acquired by any Portfolio or
Fund. The Firm's compliance officer shall notify the compliance officer of
a Fund of any personal conflict of interest relationship which may involve
the Fund. Such notification shall occur in the pre-clearance process.
E. REPORTING OF VIOLATIONS TO THE BOARD OF DIRECTORS
The compliance officer of the Firm shall promptly report to the compliance
officer of the Fund and the Board of Directors of the Firm all apparent
violations of this Code of Ethics and the reporting requirements thereunder.
When the compliance officer of the Firm finds that a transaction otherwise
reportable to the Board of Directors pursuant to the Code could not reasonably
be found to have resulted in a fraud, deceit or manipulative practice in
violation of Rule 17j-1(a), he/she may, in his/her discretion, lodge a written
memorandum of such finding and the reasons therefor with the reports made
pursuant to this Code of Ethics, in lieu of reporting the transaction to the
Board of Directors. Such findings shall, however, be reported to the compliance
officer of any respective Funds.
The Board of Directors of the Firm or any Fund, or a Committee of Directors
created by such Board of Directors, for that purpose, shall consider reports
made to the Board of Directors hereunder and shall determine whetheror not this
Code of Ethics has been violated and what sanctions, if any, should be imposed.
F. ANNUAL REPORTING TO THE BOARD OF DIRECTORS
The compliance officer of the Firm shall prepare an annual report relating to
this Code of Ethics to the Board of Directors of the Firm and the Funds. Such
annual report shall:
(a) summarize existing procedures concerning personal investing and any
changes in the procedures made during the past year;
(b) identify any violations requiring significant remedial action during
the past year; and
(c) identify any recommended changes in the existing restrictions or
procedures based upon the Firm's experience under its Code of Ethics,
evolving industry practices or developments in applicable laws or
regulations; and
(d) state that the Firm had adopted procedures reasonably necessary to
prevent access persons from violating the Code.
G. SANCTIONS
Upon discovering a violation of this Code, the Board of Directors of the Firm or
a Fund may impose such sanctions as they deem appropriate, including, among
other things, a letter of censure or suspension or termination of the employment
of the violator.
H. RETENTION OF RECORDS
The Firm shall maintain the following records as required under Rule 17j-1:
(a) a copy of any Code of Ethics in effect within the most recent five
years;
(b) a list of all persons required to make reports hereunder within the
most recent five years and a list of all persons who were responsible
for reviewing the reports, as shall be updated by the compliance
officer of the Firm;
(c) a copy of each report made by an access person hereunder and submitted
to the Firm's compliance officer for a period of five years from the
end of the fiscal year in which it was made;
(d) each memorandum made by the compliance officer of the Firm hereunder,
for a period of five years from the end of the fiscal year in which it
was made;
(e) a record of any violation hereof and any action taken as a result of
such violation, for a period of five years following the end of the
fiscal year in which the violation occurred; and
(f) a copy of every report provided to the Firm's Board of Directors or a
Fund's compliance officer which describes any issues arising under the
Code of Ethics and certifies that the Firm has adopted procedures
reasonably necessary to prevent access persons from violating the Code
of Ethics.
EXHIBIT A
COOKE & BIELER, L.P.
CODE OF ETHICS
INITIAL REPORT OF ACCESS PERSON
1. I hereby acknowledge that (i) I received of a copy of the Code of Ethics
(the "Code") for Cooke & Bieler, L.P. (the "Firm"); (ii) I have read and
understand the Code; (iii) and I recognize that I am subject to the Code as
an "access person" of the Firm.
2. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may
involve the Firm or a Fund or Portfolio, such as any economic relationship
between my transactions and securities held or to be acquired by the Firm,
or a Fund or Portfolio.
3. As of the date below I had a direct or indirect beneficial ownership in the
following securities. You do not need to report transactions in direct
obligations of the U.S. government, bankers' acceptances, bank certificates
of deposit, commercial paper, high quality short-term debt instruments and
unaffiliated registered open-end investment companies (mutual funds).
Please check this box if an addendum is attached listing additional
securities [ ]
----------------------------------------------------------------------------------------------------------------
SECURITY TYPE OF
(include interest rate and NO. OF PRICE PER PRINCIPAL PURCHASE BROKER, DEALER OR BANK
maturity date, if applicable) SHARES SHARE AMOUNT (Direct or Indirect) THROUGH WHOM EFFECTED
----------------------------------------------------------------------------------------------------------------
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BROKER, DEALER OR
BANK THROUGH WHOM BENEFICIAL OWNER OF DATE ACCOUNT
EFFECTED ACCOUNT ACCOUNT NUMBER OPENED
-----------------------------------------------------------------------
-----------------------------------------------------------------------
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Signature: Signature:
----------------------------- --------------------------
Access Person Compliance Officer
Name: Name:
----------------------------- --------------------------
Date: Date:
----------------------------- --------------------------
(First date of access person
status)
|
----------------------------------------------------------------------------------------------------------------
SECURITY TYPE OF
(include interest rate and NO. OF PRICE PER PRINCIPAL PURCHASE BROKER, DEALER OR BANK
maturity date, if applicable) SHARES SHARE AMOUNT (Direct or Indirect) THROUGH WHOM EFFECTED
----------------------------------------------------------------------------------------------------------------
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BROKER, DEALER OR
BANK THROUGH WHOM BENEFICIAL OWNER OF DATE ACCOUNT
EFFECTED ACCOUNT ACCOUNT NUMBER OPENED
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Signature: Signature:
----------------------------- --------------------------
Access Person Compliance Officer
Name: Name:
----------------------------- --------------------------
Date: Date:
----------------------------- --------------------------
(No later than 30 days after
year-end)
|
EXHIBIT B
COOKE & BIELER, L.P.
CODE OF ETHICS
ADDENDUM TO THE
ANNUAL REPORT OF ACCESS PERSON
----------------------------------------------------------------------------------------------------------------
SECURITY TYPE OF
(include interest rate and NO. OF PRICE PER PRINCIPAL PURCHASE BROKER, DEALER OR BANK
maturity date, if applicable) SHARES SHARE AMOUNT (Direct or Indirect) THROUGH WHOM EFFECTED
----------------------------------------------------------------------------------------------------------------
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BENEFICIAL
BROKER, DEALER OR BANK OWNER OF
THROUGH WHOM EFFECTED ACCOUNT ACCOUNT NUMBER DATE ACCOUNT OPENED
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Signature: Signature:
----------------------------- --------------------------
Access Person Compliance Officer
Name: Name:
----------------------------- --------------------------
Date: Date:
----------------------------- --------------------------
|
(No later than 30 days after
year-end)
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SECURITY NATURE OF
(include interest rate TRANSACTION
and maturity date, if NO. OF PRICE PER PRINCIPAL (Purchase, Sale, BROKER, DEALER OR BANK
applicable) DATE OF TRADE SHARES SHARE AMOUNT Other) THROUGH WHOM EFFECTED
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This report (i) excludes transactions with respect to which I had no direct
or indirect influence or control; and (ii) is not an admission that I have
or had any direct or indirect beneficial ownership in the securities listed
above. You are obligated to report money market mutual fund balances as of
the end of the quarter in which you have a beneficial ownership.
2. During the quarter referred to above, I established on the dates indicated
the following accounts in which securities were held during the quarter for
my direct or indirect benefit (if none were opened, write "none"). Please
check this box if an addendum is attached listing additional accounts [ ]
---------------------------------------------------------------------------------------------
BROKER, DEALER OR BANK THROUGH WHOM BENEFICIAL OWNER
EFFECTED OF ACCOUNT ACCOUNT NUMBER DATE ACCOUNT OPENED
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
|
3. Except as noted on the reverse side of this report, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Firm, a Fund or a Portfolio, such as the existence of any economic relationship between my transactions and securities held or to be acquired by the Firm, a Fund or a Portfolio.
Signature: Signature:
----------------------------- --------------------------
Access Person Compliance Officer
Name: Name:
----------------------------- --------------------------
Date: Date:
----------------------------- --------------------------
|
(no later than 10 days after calendar quarter)
---------------------------------------------------------------------------------------------------------------
SECURITY NATURE OF
(include interest rate PRICE TRANSACTION
and maturity date, if NO. OF PER PRINCIPAL (Purchase,Sale, BROKER, DEALER OR BANK
applicable) DATE OF TRADE SHARES SHARE AMOUNT Other) THROUGH WHOM EFFECTED
---------------------------------------------------------------------------------------------------------------
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|
BENEFICIAL
BROKER, DEALER OR BANK OWNER OF
THROUGH WHOM EFFECTED ACCOUNT ACCOUNT NUMBER DATE ACCOUNT OPENED
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Signature: Signature:
----------------------------- --------------------------
Access Person Compliance Officer
Name: Name:
----------------------------- --------------------------
Date: Date:
----------------------------- --------------------------
|
(no later than 10 days after calendar quarter)
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PRICE PER NATURE OF
SHARES RANSACTION BROKER/DEALER
PROPOSED DATE OF NO. OF (or proposed PRINCIPAL (Purchase, Sale, OR BANK THROUGH
SECURITY TRADE SHARES price) AMOUNT Other) WHOM EFFECTED
----------------------------------------------------------------------------------------------------
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|
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control; and (ii) is not an admission that I have or had
any direct or indirect beneficial ownership in the securities listed above.
With respect to the Portfolio or Fund that serves as the basis for my
"investment personnel" status with the Firm, and transactions in the securities
set forth in the table above, I hereby certify that:
(a) I have no knowledge of the existence of any personal conflict of interest
relationship which may involve the Portfolio or Fund, such as frontrunning
transactions or the existence of any economic relationship between my
transactions and securities held or to be acquired by the Portfolio and/or
Fund;
(b) such securities, including securities that are economically related to such
securities, involved in the transaction are not (i) being considered for
purchase or sale by the Portfolio and/or Fund, or (ii) being purchased or
sold by the Portfolio and/or Fund ; and
(c) such transactions are in compliance with the Code of Ethics of the Firm.
Date: Signature:
---------------------- -----------------------------
Investment Personnel
Name:
-----------------------------
|
In accordance with the provisions of Section B(2)(c) of the Code of Ethics of the Firm, the transaction proposed to be effected as set forth in this report is: Authorized: [ ] Unauthorized: [ ]
Date: Signature:
---------------------- -----------------------------
Compliance Officer
Name:
-----------------------------
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EXHIBIT E
COOKE & BIELER, L.P.
CODE OF ETHICS
Personal Securities Transactions Pre-clearance Form
(see Section D(1), Code of Ethics)
I hereby request pre-clearance of the securities listed below. You do not need
to preclear transactions in direct obligations of the U.S. government, bankers'
acceptances, bank certificates of deposit, commercial paper, high quality
short-term debt instruments and unaffiliated registered open-end investment
companies (mutual funds), or transactions listed in Section D of the Code of
Ethics.
-------------------------------------------------------------------------------------------------------------
SECURITY PRICE PER NATURE OF BROKER/ AUTHORIZED
(include interest SHARE TRANSACTION DEALER BY COMPLIANCE
rate and maturity NO. OF (or proposed PRINCIPAL (Purchase, Sale, OR BANK THROUGH OFFICER
date, if applicable) SHARES price) AMOUNT Other) WHOM EFFECTED YES NO
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This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control; and (ii) is not an admission that I have or had
any direct or indirect beneficial ownership in the securities listed above.
Is any proposed transaction described above within sixty (60) days of a prior
transaction in the same or equivalent security? Yes: [ ] No: [ ]
If yes, the access person must submit a Securities Transactions Report Relating
to Short Term Trading (Exhibit D) for preapproval.
Is any proposed transaction described above considered an Initial Public
Offering (IPO) or Private Placement? Yes: [ ] No: [ ]
If yes, the Compliance Officer should prepare a memorandum describing the
reasons for preapproving the transaction pursuant to Section B(2)(b) of the
Code.
Signature: Signature:
----------------------------- --------------------------
Access Person Compliance Officer
Name: Name:
----------------------------- --------------------------
Date: * Date:
----------------------------- --------------------------
|
* This preclearance will expire at the close of business on the second (2nd) trading day after preclearance was approved. The access person is required to obtain additional preclearance if the trade is not completed before the authority expires.