EXHIBIT 99.B5(a)(i)
ADVISORY CONTRACT
for various portfolios of
STAGECOACH FUNDS, INC.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
November 19, 1998
Xxxxx Fargo Bank, N.A.
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
This will confirm the agreement between the undersigned (the "Company"), on
behalf of each of the Company's investment portfolios, each listed on Schedule A
hereto, as such Schedule may be revised from time to time (each, a "Fund" and
collectively, the "Funds"), and Xxxxx Fargo Bank, N.A. (the "Adviser") as
follows:
1. The Company is a registered open-end management investment company
currently consisting of a number of investment portfolios, but which may from
time to time consist of a greater or lesser number of investment portfolios.
The Company proposes to engage in the business of investing and reinvesting the
assets of each Fund in the manner and in accordance with the investment
objective and restrictions specified in the Company's currently effective
prospectus and the currently effective statement of additional information
incorporated by reference therein relating to the Funds and the Company (such
prospectus and such statement of additional information being collectively
referred to as the "Prospectus") included in the Company's Registration
Statement, as amended from time to time (the "Registration Statement"), filed by
the Company under the Investment Company Act of 1940 (the "Act") and the
Securities Act of 1933. Copies of the Registration Statement have been
furnished to the Adviser. Any amendments to the Registration Statement shall be
furnished to the Adviser promptly.
2. The Company is engaging the Adviser to manage the investing and
reinvesting of the assets of each Fund and to provide the advisory services
specified elsewhere in this contract, subject to the overall supervision of the
Board of Directors of the Company. Pursuant to an administration agreement
between the Company and the Advisor, and a co-administration agreement between
the Company and Xxxxxxxx Inc. (the "Administrators") on behalf of the Funds (the
"Administration Agreements"), the Company has engaged the Administrators to
provide the administrative services specified therein.
3. (a) The Adviser shall make investments for the account of each Fund in
accordance with the Adviser's best judgment and consistent with the investment
objective and restrictions set forth in the Company's Prospectus, the Act and
the provisions of the Internal Revenue Code relating to regulated investment
companies, subject to policy decisions adopted by the Company's Board of
Directors. The Adviser shall advise the Company's officers and Board of
Directors, at such times as the Company's Board of Directors may specify, of
investments made for a Fund and shall, when requested by the Company's officers
or Board of Directors, supply the reasons for making particular investments.
(b) The Adviser shall provide to the Company investment guidance and
policy direction in connection with the daily management of the Funds'
portfolios, including oral and written research,
analysis, advice, statistical and economic data and information and judgments,
and shall furnish to the Company's Board of Directors periodic reports on the
investment strategy and performance of the Funds and such additional reports and
information as the Company's Board of Directors and officers shall reasonably
request.
(c) The Adviser shall pay the costs of printing and distributing all
materials relating to the Funds prepared by it, or prepared at its request,
other than such costs relating to proxy statements, prospectuses, shareholder
reports and other materials distributed to existing or prospective shareholders
on behalf of a Fund.
(d) The Adviser shall, at its expense, employ or associate with itself
such persons as the Adviser believes appropriate to assist it in performing its
obligations under this contract.
4. The Company understands that the Adviser, in rendering its services to
the Funds hereunder, may engage a sub-adviser to provide certain sub-advisory
services pursuant to a separate sub-advisory contract. The Adviser will not
seek to amend any sub-advisory contract to materially alter the obligations of
the parties unless the Adviser gives the Company at least 60 days' prior written
notice thereof.
5. Except as provided in each of the advisory contracts and administration
agreements on behalf of the Company's Funds, each Fund of the Company, shall
bear all costs of its operations, except to the extent that such costs are
identified as attributable to a specific class of a Fund ("Class Expenses"),
including the Fund's pro-rata portion of the compensation of the Company's
directors who are not affiliated with the Adviser, the Administrators or any of
their affiliates; advisory and administration fees; governmental fees; 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 any stock certificates, prospectuses (except
the expense of printing and mailing prospectuses used for promotional purposes,
unless otherwise payable pursuant to a Rule 12b-1 Plan), shareholders' reports,
notices, proxy statements and reports to regulatory agencies; travel expenses of
directors, officers and employees; office supplies; insurance premiums and
certain expenses relating to insurance coverage; trade association membership
dues; brokerage and other expenses connected with the execution of portfolio
securities transactions; fees and expenses of any custodian, including those for
keeping books and accounts and calculating the net asset value per share of the
Fund; expenses of shareholders' meetings; expenses relating to the issuance,
registration and qualification of shares of the Fund; expenses relating to any
pricing services; organizational expenses; and any extraordinary expenses;
except that Class Expenses, such as payments related to a servicing plan or
distribution-related expenses pursuant to a Rule 12b-1 Plan, i.e., a plan of
distribution of the Company adopted on behalf of a class of shares of the Fund
pursuant to Rule 12b-1 under the Act, or other such expenses as determined in
accordance with the Company's Rule 18f-3 Plan, shall be borne by the applicable
class of the Fund. Expenses attributable to one or more, but not all, of the
Company's Funds are charged against the assets of the relevant Funds. General
expenses of the Company are allocated among the Funds in a manner proportionate
to the net assets of each Fund, on a transactional basis, or on such other basis
as the Board of Directors deems equitable.
6. The Adviser shall give the Company the benefit of the Adviser's best
judgment and efforts in rendering services under this contract. As an
inducement to the Adviser's undertaking to render these services, the Company
agrees that the Adviser shall not be liable under this contract for any mistake
in judgment or in any other event whatsoever except for lack of good faith,
provided that nothing in this contract shall be deemed to protect or purport to
protect the Adviser against any liability to the Company or its shareholders to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Adviser's duties under
this contract or by reason of reckless disregard of its obligations and duties
hereunder.
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7. In consideration of the services to be rendered by the Adviser under
this contract, the Company shall pay the Adviser a monthly fee at the rates
specified on Schedule A hereto. If the fee payable to the Adviser pursuant to
this paragraph 7 begins to accrue before the end of any month or if this
contract terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness or
termination occurs. For purposes of calculating each such monthly fee, the
value of a Fund's net assets shall be computed in the manner specified in the
Prospectus and the Company's Articles of Incorporation for the computation of
the value of such Fund's net assets in connection with the determination of the
net asset value of Fund shares.
8. If in any fiscal year the total expenses of a Fund incurred by, or
allocated to, such Fund excluding taxes, interest, brokerage commissions and
other portfolio transaction expenses, other expenditures that are capitalized in
accordance with generally accepted accounting principles, extraordinary expenses
and amounts accrued or paid under a Rule 12b-1 Plan of the Fund, but including
the fees provided for in paragraph 7 and those provided for pursuant to the
Fund's Administration Agreements ("includible expenses"), exceed the most
restrictive expense limitation applicable to the Fund imposed by state
securities laws or regulations thereunder, as these limitations may be raised or
lowered from time to time, the Adviser shall waive or reimburse that portion of
the excess derived by multiplying the excess by a fraction, the numerator of
which shall be the percentage at which the excess portion attributable to the
fee payable pursuant to this agreement is calculated under paragraph 7 hereof,
and the denominator of which shall be the sum of such percentage plus the
percentage at which the excess portion attributable to the fee payable pursuant
to the Funds' Administration Agreements is calculated (the "Applicable Ratio"),
but only to the extent of the fee hereunder for the fiscal year. If the fees
payable under this agreement and/or the Funds' Administration Agreements
contributing to such excess portion are calculated at more than one percentage
rate, the Applicable Ratio shall be calculated separately on the basis of, and
applied separately to, the portions of the fees calculated at the different
rates. At the end of each month of the Company's fiscal year, the Company shall
review the includible expenses accrued during that fiscal year to the end of the
period and shall estimate the contemplated includible expenses for the balance
of that fiscal year. If as a result of that review and estimation it appears
likely that the includible expenses will exceed the limitations referred to in
this paragraph 8 for a fiscal year with respect to a Fund, the monthly fee set
forth in paragraph 7 payable to the Adviser for such month shall be reduced,
subject to a later adjustment, by an amount equal to the Applicable Ratio times
the pro rata portion (prorated on the basis of the remaining months of the
fiscal year, including the month just ended) of the amount by which the
includible expenses for the fiscal year are expected to exceed the limitations
provided for in this paragraph 8. For purposes of computing the excess, if any,
over the most restrictive applicable expense limitation, the value of a Fund's
net assets shall be computed in the manner specified in the last sentence of
paragraph 7, and any reimbursements required to be made by the Adviser shall be
made once a year promptly after the end of the Company's fiscal year.
9. This contract shall become effective on its execution date and shall
thereafter continue in effect, provided that this contract shall continue in
effect for a period of more than two years from the date hereof only so long as
the continuance is specifically approved at least annually (a) by the vote of a
majority of the relevant Fund's outstanding voting securities (as defined in the
Act) or by the Company's Board of Directors and (b) by the vote, cast in person
at a meeting called for the purpose, of a majority of the Company's directors
who are not parties to this contract or "interested persons" (as defined in the
Act) of any such party. This contract may be terminated at any time by the
Company, without the payment of any penalty, by a vote of a majority of the
relevant Fund's outstanding voting securities (as defined in the Act) or by a
vote of a majority of the Company's entire Board of Directors on 60 days'
written notice to the Adviser or by the Adviser, at any time after the second
anniversary of the effective date of this contract, on 60 days' written notice
to the Company. This contract shall terminate automatically in the event of its
assignment (as defined in the Act).
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10. Except to the extent necessary to perform the Adviser's obligations
under this contract, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
11. The Adviser and the Company each agree that the words "Stagecoach,"
which comprise a component of the Company's name, is a property right of the
parent of the Adviser. The Company agrees and consents that: (i) it will use
the words "Stagecoach" as a component of its corporate name, the name of any
class, or both and for no other purpose; (ii) it will not grant to any third
party the right to use the words "Stagecoach" 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 "Stagecoach," 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
class, the Company 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
"Stagecoach" and following such change, shall not use the words "Stagecoach," or
any combination thereof, as a part of its corporate name or for any other
commercial purpose, and shall use its best efforts to cause its directors,
officers, and shareholders to take any and all actions that the Adviser may
request to effect the foregoing and to reconvey to the Adviser any and all
rights to such words.
12. This contract shall be governed by and construed in accordance with
the laws of the State of California without giving effect to the choice of law
provisions thereof.
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If the foregoing correctly sets forth the agreement between the Company and
the Adviser, please so indicate by signing and returning to the Company the
enclosed copy hereof.
Very truly yours,
STAGECOACH FUNDS, INC.,
on behalf of each of the Fund's listed on Schedule A
By: /s/ Xxxxxxx X. Xxxxx, Xx.
----------------------------------
Xxxxxxx X. Xxxxx, Xx.
Chief Operating Officer
ACCEPTED as of the date
set forth above:
XXXXX FARGO BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Xxxxxxx X. Xxxxx
Senior Vice President
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
-----------------------------
Xxxxxxxxx X. Xxxxxxxxx
Vice President
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SCHEDULE A
Investment advisory fees shall be paid monthly on the first business day of
each month, at the annual rates specified below of each Fund's average daily
value (as determined on each day that such value is determined for the fund at
the time set forth in the Prospectus for determining net asset value per share)
during the preceding month.
Advisory Fee
Fund (as % of net assets)
---- -------------------
Arizona Tax-Free 0.50%
Asset Allocation 0.50% of first $250 million
0.40% of next $250 million
0.30% over $500 million
Balanced 0.60%
California Tax-Free Bond 0.50%
California Tax-Free Income 0.50%
California Tax-Free Money Market 0.50%
California Tax-Free Money Market Trust 0.50%
Corporate Bond 0.50%
Diversified Equity Income 0.50%
Equity Index 0.25%
Equity Value 0.50%
Government Money Market 0.25%
Growth 0.50% of first $250 million
0.40% of next $250 million
0.30% over $500 million
Index Allocation 0.70% of first $500 million
0.60% over $500 million
International Equity 1.00%
Money Market 0.40%
Money Market Trust 0.25%
National Tax-Free 0.50%
National Tax-Free Money Market 0.30%
National Tax-Free Money Market Trust 0.25%
100% Treasury Money Market Fund 0.25%
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Advisory Fee
Fund (as % of net assets)
---- -------------------
Oregon Tax-Free 0.50%
Overland Express Sweep 0.45%
Prime Money Market 0.25%
Short-Intermediate U.S. Government Income 0.50%
Short-Term Govt-Corporate Income Fund 0.50%
Short-Term Municipal Income Fund 0.50%
Small Cap 0.60%
Strategic Growth 0.50%
Strategic Income 0.60%
Treasury Plus Money Market 0.25%
U.S. Government Allocation 0.50% of first $250 million
0.40% of next $250 million
0.30% over $500 million
U.S. Government Income 0.50% of first $250 million
0.40% of next $250 million
0.30% over $500 million
Variable Rate Government 0.50%
Approved: July 23, 1997 for the Asset Allocation, Index Allocation, National
Tax-Free Money Market, Overland Express Sweep, Short-Term Government-Corporate
Income, Short-Term Municipal Income, Small Cap, Strategic Growth, U.S.
Government Allocation and Variable Rate Government Funds.
Approved as amended: October 30, 1997 for the Equity Index Fund.
Approved as amended: November 19, 1998, as consolidated for all funds.
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