OVERLAND EXPRESS FUNDS INC, 485BPOS, 1996-05-01

OVERLAND EXPRESS FUNDS INC
485BPOS, 1996-05-01

Previous: ARCO CHEMICAL CO, 10-Q/A, 1996-05-01

Next: HIGH YIELD INCOME FUND INC, N-30D, 1996-05-01

<PAGE> 1

As filed with the Securities and Exchange Commission

on May 1, 1996

Registration No. 33-16296; 811-8275

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

----------------------

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
[X]

Post-Effective Amendment No. 33

And

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]

Amendment No. 35 [X]

(Check appropriate box or boxes)

----------------------

OVERLAND EXPRESS FUNDS, INC.
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)

----------------------

Registrant's Telephone Number, including Area Code: (800) 458-6589
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With a copy to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.

Morrison & Foerster LLP

2000 Pennsylvania Ave., N.W.
Washington, D.C. 20006

It is proposed that this filing will become effective (check appropriate box):

[X] Immediately upon filing pursuant [ ] on _________ pursuant
to Rule 485(b), or to Rule 485(b)

[ ] 60 Days after filing pursuant [ ] on _______________ pursuant
to Rule 485(a)(1), or to Rule 485(a)(1)

[ ] 75 days after filing pursuant [ ] on _______________ pursuant
to Rule 485(a)(2), or to Rule 485(a)(2)
<PAGE> 2
If appropriate, check the following box:

[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

The Registrant has registered an indefinite number of shares of its Common
Stock, $.001 par value, under the Securities Act of 1933, pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Rule 24f-2
Notice for the fiscal year ending December 31, 1995, was filed with the
Securities and Exchange Commission on February 29, 1996.

This Post-Effective Amendment to the Registrant's Registration Statement also
has been executed by Master Investment Trust (another registered investment
company with separate series in which certain of the Registrant's series invest
substantially all of their assets) and by such company's trustees and principal
officers.

<PAGE> 3

EXPLANATORY NOTE

This Post-Effective Amendment No. 33 to the Registration Statement
(the "Amendment") of Overland Express Funds, Inc. (the "Company") is being
filed to add to the Company's Registration Statement the audited financial
statements dated December 31, 1995 and certain related financial information
pertaining to the Company's Asset Allocation, California Tax-Free Bond,
California Tax-Free Money Market, Money Market, Municipal Income, Overland
Sweep, Short-Term Municipal Income, Short-Term Government-Corporate Income,
U.S. Government Income, U.S. Treasury Money Market and Variable Rate Government
Funds and to make certain non-material changes to such Funds prospectuses and
statements of additional information. This Amendment does not affect the
Registration Statement for the Company's National Tax-Free Institutional Money
Market and Strategic Growth Funds.

<PAGE> 4
Cross Reference Sheet

Asset Allocation Fund, California Tax-Free Bond Fund,
California Tax-Free Money Market Fund,
Money Market Fund, Municipal Income Fund,
U.S. Government Income Fund,
U.S. Treasury Money Market Fund,
Variable Rate Government Fund

-----------------------------

Form N-1A Item Number

Part A Prospectus Captions

1 Cover Page
2 Prospectus Summary; Summary of Expenses
3 Financial Highlights
4 Advisory, Administration and Distribution Arrangements
5 Investment Objectives and Policies; Additional Permitted
Investment Activities; Distribution Plans; Servicing Plan;
Custodian and Transfer
and Dividend Disbursing Agent
6 Organization and Capital Stock
7 Determination of Net Asset Value; Purchase of Shares; Exchange
Privileges; Dividends and Distributions; Taxes
8 Redemption of Shares
9 Not Applicable

Part B Statement of Additional Information Captions

10 Cover Page
11 Table of Contents
12 Introduction
13 Investment Restrictions; Additional Permitted Investment
Activities; Appendix
14 Management
15 Management
16 Management; Distribution Plans; Servicing Plan; Independent
Auditors
17 Portfolio Transactions
18 Capital Stock; Other
19 Determination of Net Asset Value
20 Federal Income Taxes
21 Distribution Plans
22 Calculation of Yield and Total Return
23 Financial Information

Part C Other Information

24-32 Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Document.
<PAGE> 5

[LOGO]

Telephone: (800) 552-9612

Stephens Inc. -- Sponsor, Administrator and Distributor

Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent

BZW Barclays Global Fund Advisors -- Sub-Adviser

BZW Global Investors, N.A. -- Custodian

Overland Express Funds, Inc. (the "Company") is an open-end, series
investment company. This Prospectus contains information about one of the
Company's funds -- the ASSET ALLOCATION FUND (the "Fund").

The Asset Allocation Fund seeks to earn over the long term a high level of
total investment return (that is, income and capital appreciation combined),
consistent with the assumption of reasonable risk, by pursuing an "asset
allocation" strategy whereby its investments are allocated, based on changes in
market conditions, among three asset classes -- common stocks in the Standard &
Poor's Index of 500 Stocks (the "S&P Index"), U.S. Treasury bonds and money
market instruments.

This Prospectus describes two classes of shares of the Fund -- Class A
Shares and Class D Shares.

This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
("SAI") dated May 1, 1996, containing additional and more detailed information
about the Fund, has been filed with the Securities and Exchange Commission (the
"SEC") and is hereby incorporated by reference into this Prospectus. The SAI is
available without charge and can be obtained by writing the Company at P.O. Box
63084, San Francisco, CA 94163, or by calling the Company at (800) 552-9612.

------------------------

INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.
------------------------

FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED
OR GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK"), BZW
BARCLAYS GLOBAL FUND ADVISORS ("BGFA") OR ANY OF THEIR RESPECTIVE
AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. AN
INVESTMENT IN THE FUND INVOLVES CERTAIN INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER
SERVICES TO THE FUND, FOR WHICH IT IS COMPENSATED. BGFA SERVES AS
SUB-ADVISER TO THE FUND AND BZW GLOBAL INVESTORS, N.A. ("BGI"),
AN AFFILIATE OF BGFA, SERVES AS CUSTODIAN TO THE FUND.
STEPHENS INC. ("STEPHENS"), WHICH IS NOT AFFILIATED
WITH WELLS FARGO BANK, IS THE SPONSOR AND
DISTRIBUTOR FOR THE FUND.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

PROSPECTUS DATED MAY 1, 1996

<PAGE> 6

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................................................... ii
Summary of Expenses......................................................................... v
Financial Highlights........................................................................ vii
Investment Objective and Policies........................................................... 1
Additional Permitted Investment Activities.................................................. 3
Advisory, Administration and Distribution Arrangements...................................... 5
Determination of Net Asset Value............................................................ 8
Purchase of Shares.......................................................................... 9
Exchange Privileges......................................................................... 15
Redemption of Shares........................................................................ 16
Distribution Plans.......................................................................... 19
Servicing Plan.............................................................................. 19
Dividends and Distributions................................................................. 19
Taxes....................................................................................... 20
Custodian and Transfer and Dividend Disbursing Agent........................................ 21
Organization and Capital Stock.............................................................. 21
</TABLE>

i
<PAGE> 7

PROSPECTUS SUMMARY

The Company, as an open-end investment company, provides a convenient way
for you to invest in portfolios of securities selected and supervised by
professional management. The following provides information about the Fund and
its investment objective.

Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

A. The ASSET ALLOCATION FUND seeks to earn over the long term a high level
of total investment return (that is, income and capital appreciation
combined), consistent with the assumption of reasonable risk, by pursuing
an "asset allocation" strategy whereby its investments are allocated,
based on changes in market conditions, among three asset classes -- common
stocks in the S&P Index, U.S. Treasury bonds and money market instruments.
As with all mutual funds, there can be no assurance that the Fund will
achieve its investment objective.

Q. WHAT ARE PERMISSIBLE INVESTMENTS?

A. The Fund may invest in three asset classes: common stocks in the S&P
Index, U.S. Treasury bonds with maturities generally between 20 and 30
years and high-quality money market instruments. The Fund seeks to
maximize its long-term investment results by shifting its investments
periodically among the various asset classes to attempt to achieve a
return that is superior to an investment in any single asset class.

Q. WHO IS THE INVESTMENT ADVISER?

A. Wells Fargo Bank serves as the investment adviser to the Fund. Wells
Fargo Bank is entitled to receive a monthly advisory fee at the annual
rate of 0.70% of the average daily net assets of the Fund up to $500
million, and 0.60% of such assets in excess of $500 million. BZW Barclays
Global Fund Advisors ("BGFA") serves as the sub-adviser to the Fund. BGFA
receives compensation from Wells Fargo Bank for its sub-advisory services.
See "Advisory, Administration and Distribution Arrangements."

Q. WHO IS THE SPONSOR, ADMINISTRATOR AND DISTRIBUTOR?

A. Stephens serves as the sponsor, administrator and distributor for the
Company. Stephens is entitled to receive a monthly administration fee at
the annual rate of 0.10% of the average daily net assets of the Fund;
decreasing to 0.05% of the average daily net assets of the Fund in excess
of $200 million. See "Advisory, Administration and Distribution
Arrangements."

Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?

A. An investment in the Fund is not insured against loss of principal. When
the value of the securities that the Fund owns declines, so does the value
of your Fund shares. Therefore, you should be prepared to accept some risk
with the money you invest in the Fund. Because the Fund may shift its
investment allocations significantly from time to time, its performance
may differ from funds which invest in one asset class or from funds with a
stable mix of assets. Further, shifts among asset classes may result in
relatively high portfolio turnover rates, which may, in turn, result in
increased brokerage and transaction costs, and/or subject shareholders to
increased short-term capital gains or losses. The portfolio debt
securities of the Fund are subject to interest rate risk. Interest rate
risk is the risk that increases in market interest rates may adversely
affect the value of the debt securities in

ii
<PAGE> 8

which the Fund invests and hence the value of your investment in the Fund.
The values of such securities generally change inversely to changes in
market interest rates. During those periods in which a high percentage of
the Fund's portfolio is invested in long-term bonds, the Fund's exposure
to interest rate risk will be greater because the longer maturity of such
securities means they are generally more sensitive to changes in market
interest rates than shorter term securities. The stock investments of the
Fund are subject to equity market risk. Equity market risk is the
possibility that common stock prices will fluctuate or decline over short
or even extended periods. The U.S. stock market tends to be cyclical, with
periods when stock prices generally rise and periods when prices generally
decline. Additionally, the Fund may lend its portfolio securities, which
entails certain risks, although any such loans will be fully
collateralized. As with all mutual funds, there can be no assurance that
the Fund will achieve its investment objective. See "Investment Objective
and Policies."

Q. HOW MAY I PURCHASE SHARES?

A. Shares of the Fund may be purchased on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is a maximum sales
load of 4.50% (4.71% of the net amount invested) for purchasing Class A
Shares of the Fund. Class D Shares are subject to a maximum contingent
deferred sales charge of 1.00% of the lesser of net asset value at
purchase or net asset value at redemption. In most cases, the minimum
initial purchase amount for the Fund is $1,000. The minimum initial
purchase amount is $100 for purchases through the Systematic Purchase Plan
and $250 for purchases through qualified retirement plans. The minimum
subsequent purchase amount is $100. You may purchase shares of the Fund
through Stephens, Wells Fargo Bank, as transfer agent (the "Transfer
Agent"), or any authorized broker/dealer or financial institution. See
"Purchase of Shares."

Q. HOW WILL I RECEIVE DIVIDENDS?

A. Dividends on shares of the Fund are declared and paid quarterly.
Dividends are automatically reinvested in additional shares of the same
class of the Fund unless you elect to receive dividends by check. Any
capital gains will be distributed annually and may be reinvested in Fund
shares of the same class or paid by check at your election. All
reinvestments of dividends and/or capital gain distributions in shares of
the Fund are effected at the then current net asset value free of any
sales load. In addition, you may elect to reinvest Fund dividends and/or
capital gain distributions in shares of the same class of another of the
Company's funds with which you have an established account that has met
the applicable minimum initial investment requirement. See "Dividends and
Distributions."

iii
<PAGE> 9

Q. HOW MAY I REDEEM SHARES?

A. Shares may be redeemed on any day the Exchange is open upon request to
Stephens or the Transfer Agent directly or through any authorized
broker/dealer or financial institution. Shares may be redeemed by a
request in good form in writing or through telephone direction. Proceeds
are payable by check or, for shareholders who make prior arrangements, by
wire. Accounts maintaining less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. Except for
any contingent deferred sales charge which may be applicable upon
redemption of Class D Shares, the Company does not charge for redeeming
your shares. However, the Company reserves the right to impose charges for
wiring your redemption proceeds. See "Redemption of Shares."

iv
<PAGE> 10

SUMMARY OF EXPENSES

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
ASSET ALLOCATION
FUND
------------------
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).... 4.50% 0.00%
Maximum Deferred Sales Load (as a percentage of the lesser of net asset value
at purchase or net asset value at redemption)
Redemption during year 1................................................... 0.00% 1.00%
Redemption after year 1.................................................... 0.00% 0.00%
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
----------- -----------
<S> <C> <C> <C> <C>
Management Fees.......................................................... 0.70% 0.70%
12b-1 Fees............................................................... 0.25% 0.75%
Other Expenses
Servicing Fees......................................................... 0.00% 0.25%
Administrative Fees.................................................... 0.10% 0.10%
Miscellaneous Expenses (after waivers or reimbursements)(1)............ 0.25% 0.25%
Total Other Expenses (after waivers or reimbursements)(1)................ 0.35% 0.60%
---- ----
Total Fund Operating Expenses (after waivers or reimbursements)(1)....... 1.30% 2.05%
</TABLE>

- ---------------

(1) The percentages shown above under "Miscellaneous Expenses," "Total Other
Expenses" and "Total Fund Operating Expenses" are based on amounts incurred
during the most recent fiscal year restated to reflect voluntary fee
waivers and expense reimbursements. The fee waivers and expense
reimbursements are expected to continue to reduce expenses during the
current fiscal year. Absent waivers and reimbursements, the percentages
shown above under "Miscellaneous Expenses," "Total Other Expenses" and
"Total Fund Operating Expenses" would have been 0.30%, 0.40% and 1.35%,
respectively, for the Class A Shares and 0.37%, 0.72% and 2.17%,
respectively, for the Class D Shares.

Stephens and Wells Fargo Bank each may elect, in its sole discretion, to
otherwise waive its respective fees or reimburse expenses. Any such waivers
or reimbursements with respect to the Fund will reduce the total expenses
of the Fund. Long-term shareholders of the Fund could pay more in
distribution related charges than the economic equivalent of the maximum
front-end sales charges applicable to mutual funds sold by members of the
National Association of Securities Dealers, Inc. ("NASD"). Of course, there
can be no assurances that the foregoing voluntary fee waivers and expense
reimbursements will continue.

v
<PAGE> 11

EXAMPLE OF EXPENSES

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment in Class A Shares of the Fund, assuming (1)
a 5% annual return and (2) redemption at the end of
each time period indicated............................. $ 58 $ 84 $ 113 $ 195
You would pay the following expenses on a $1,000
investment in Class D Shares of the Fund, assuming (1)
a 5% annual return and (2) redemption at the end of
each time period indicated............................. $ 31 $ 64 $ 110 $ 238
You would pay the following expenses on the same
investment in Class D Shares of the Fund, assuming no
redemption............................................. $ 21 $ 64 $ 110 $ 238
</TABLE>

------------------------

The purpose of the foregoing tables is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. There are no other sales loads, redemption fees or exchange fees
charged by the Fund. However, the Company reserves the right to impose charges
for wiring redemption proceeds.

THE EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment over the periods shown, based on
the expenses in the table on the previous page and an assumed annual rate of
return of 5%. This rate of return should not be considered an indication of the
actual or expected performance of the fund. In addition, the Examples should not
be considered a representation of past or future expenses; actual expenses and
returns may be greater or lesser than those shown. See "Advisory, Administration
and Distribution Arrangements," "Distribution Plans" and "Purchase of Shares"
for more complete descriptions of the various costs and expenses applicable to
the Fund.

vi
<PAGE> 12

FINANCIAL HIGHLIGHTS

The following information has been derived from the Financial Highlights in
the Fund's 1995 annual financial statements. The financial statements are
incorporated by reference into the SAI and have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated February 14, 1996 also is
incorporated by reference in the SAI. This information should be read in
conjunction with the Fund's 1995 annual financial statements and the notes
thereto. The SAI has been incorporated by reference into this Prospectus.

ASSET ALLOCATION FUND

FOR A CLASS A SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993 1992 1991 1990 1989 1988*
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........ $ 10.67 $ 11.90 $ 11.45 $ 11.95 $ 10.31 $ 10.39 $ 10.17 $ 10.00
Income from investment operations:
Net investment income (loss)................ 0.28 0.31 0.30 0.47 0.57 0.63 0.67 0.28
Net realized and unrealized gain/(loss) on
investments............................... 3.42 (0.39) 1.12 0.36 1.51 0.10 0.33 0.18
======= ======= ======= ======= ======= ======= ======= =======
Total from investment operations............ 3.70 (0.08) 1.42 0.83 2.08 0.73 1.00 0.46
Less distributions:
Dividends from net investment income........ (0.28) (0.31) (0.30) (0.63) (0.44) (0.61) (0.63) (0.27)
Distributions from net realized gain........ (0.33) (0.84) (0.67) (0.70) 0.00 (0.20) (0.15) (0.02)
Tax return of capital....................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- ------- -------
Total from distributions.................... (0.61) (1.15) (0.97) (1.33) (0.44) (0.81) (0.78) (0.29)
Net Asset Value, End of Period.............. $ 13.76 $ 10.67 $ 11.90 $ 11.45 $ 11.95 $ 10.31 $ 10.39 $ 10.17
======= ======= ======= ======= ======= ======= ======= =======
Total return (not annualized)(3)............ 34.71% (0.68)% 12.54% 7.44% 20.69% 7.08% 10.23% 4.60%
Ratios/supplemental data:
Net assets, end of period (000)............. $52,007 $40,308 $53,124 $41,165 $38,663 $27,689 $23,814 $13,220
Number of shares outstanding, end of period
(000)..................................... 3,778 3,779 4,465 3,596 3,235 2,686 2,293 1,300
Ratios to average net assets (annualized):
Ratio of expenses to average net
assets(1)................................. 1.30% 1.30% 1.36% 1.25% 1.38% 1.59% 1.76% 1.76%
Ratio of net investment income to average
net assets(2)............................. 2.07% 2.41% 2.64% 4.08% 5.23% 6.01% 6.44% 4.69%
Portfolio turnover.......................... 47% 50% 53% 38% 18% 94% 62% 200%
- ------------
(1) Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses................................ 1.35% 1.38% 1.47% 1.71% 1.56% 1.74% 2.37% 3.02%
(2) Ratio of net investment income to
average net assets prior to waived fees
and reimbursed expenses................. 2.02% 2.33% 2.53% 3.62% 5.05% 5.86% N/A N/A
</TABLE>

(3) Total returns do not include any sales charges.

* The Fund commenced operations on April 7, 1988.

vii
<PAGE> 13

ASSET ALLOCATION FUND

FOR A CLASS D SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993*
-------- -------- --------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period................................................... $ 13.26 $14.75 $15.00
Income from Investment Operations:
Net investment income (loss)........................................................... 0.20 0.25 0.07
Net realized and unrealized gain/(loss) on investments................................. 4.24 (0.45) 0.61
======= ====== ======
Total from investment operations....................................................... 4.44 (0.20) 0.68
Less distributions:
Dividends from net investment income................................................... (0.20) (0.25) (0.10)
Distributions from net realized gain................................................... (0.40) (1.04) (0.83)
Tax return of capital.................................................................. 0.00 0.00 0.00
------- ------ ------
Total from Distributions............................................................... (0.60) (1.29) (0.93)
Net Asset Value End of Period.......................................................... $ 17.10 $13.26 $14.75
======= ====== ======
Total Return (not annualized)(3)....................................................... 33.72% (1.38)% 4.56%
Ratios/supplemental data:
Net assets, end of Period (000)........................................................ $16,075 $9,798 $8,996
Number of shares outstanding, end of period (000)...................................... 940 739 610
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)............................................. 2.05% 2.01% 0.96%
Ratio of net investment income to average net assets(2)................................ 1.30% 1.75% 0.53%
Portfolio Turnover..................................................................... 47% 50% 53%
- ------------
(1) Ratio of expenses to average net assets prior to waived fees and reimbursed
expenses........................................................................... 2.17% 2.20% 1.12%
(2) Ratio of net investment income to average net assets prior to waived fees and
reimbursed expenses................................................................ 1.18% 1.56% 0.37%
</TABLE>

(3) Total returns do not include the 1% contingent deferred sales charge.

* This class commenced operations on July 1, 1993.

viii
<PAGE> 14

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE. The Asset Allocation Fund seeks to earn over the long
term a high level of total investment return (that is, income and capital
appreciation combined), consistent with the assumption of reasonable risk, by
pursuing an "asset allocation" strategy whereby its investments are allocated,
based on changes in market conditions, among three asset classes -- common
stocks in the S&P Index, U.S. Treasury bonds and money market instruments.(1) As
with all mutual funds, there can be no assurance that the Fund, which is a
diversified portfolio, will achieve its investment objective.

The asset allocation strategy is based upon the premise that, from time to
time, certain asset classes are more attractive long-term investments than
others and, accordingly, that timely shifts among common stocks, U.S. Treasury
bonds with maturities of 20 to 30 years and money market instruments, as
determined by their relative over-valuation or under-valuation, can produce
superior investment returns.

Subject to the direction of the Company's Board of Directors and the
overall supervision and control of Wells Fargo Bank and the Company, BGFA, as
sub-adviser to the Fund, uses a proprietary investment model to determine the
appropriate mix of asset classes within the Fund's portfolio in accordance with
the investment objective, policies and restrictions set forth herein and in the
Fund's SAI. The investment model has been developed over the past 17 years, and,
as of January 1, 1996, investments totalling approximately $20 billion were
managed by BGFA and its affiliates using this investment model. The investment
model analyzes extensive financial data from numerous sources, and, based on
such data, recommends a portfolio among common stocks, U.S. Treasury bonds and
money market instruments.

The principal financial data used by BGFA in connection with the investment
model currently are: (i) consensus estimates of the earnings, dividends and
payout ratios on a broad cross-section of common stocks as reported by
independent financial reporting services that survey over 1,000 Wall Street
analysts; (ii) the estimated current yield to maturity on new long-term
corporate bonds rated "AA" by Standard & Poor's Corporation ("S&P") or on
long-term U.S. Treasury bonds; (iii) the present yield on money market
instruments; (iv) the historical standard statistical deviation in investment
return for each class of assets; and (v) the historical standard statistical
correlation of investment return among the various asset classes.

Stocks. Common stocks purchased by the Fund generally will not be
individually selected. Rather, the goal will be to achieve a representative
holding of publicly traded common stocks by investing, to the extent permissible
under applicable law, in the stocks of the S&P Index on a capitalization
weighted basis (the same basis used by the S&P Index). If, and to the extent
that the common stock of Wells Fargo & Company, an affiliate of Wells Fargo
Bank, is contained in the S&P Index, the Fund is permitted to invest in such
securities with the stock portion of its portfolio. The S&P Index is an
unmanaged index of common stocks widely used as a measure of stock market price
movements. If a particular industry grows to represent more than 25% of the S&P
Index, the Fund may, consistent with its concentration policy (as set forth in
the SAI), continue to invest in all industry components of this index. When the
total of the Fund's

- ---------------

(1) The S&P Index is an unmanaged index of stocks comprised of 500 industrial,
financial, utility and transportation companies. "Standard & Poor's(R)",
"S&P(R)", "S&P 500(R)" and "Standard & Poor's 500(R)" are trademarks of
McGraw-Hill, Inc. and have been licensed. The Fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes
no representation regarding the advisability of investing in the Fund.

1
<PAGE> 15

assets allocated to stocks is less than the amount needed for a full investment
in round (100-share) lots, the Fund will either utilize odd (less than
100-share) lots, which may increase transaction costs, or will not purchase some
stocks, with relatively low capitalizations, that make up the S&P Index, or
both. These factors will likely result in the performance of the Fund's common
stocks deviating from the performance of the stocks composing the full S&P
Index.

Bonds. The Fund purchases U.S. Treasury bonds with maturities generally
ranging from 20 to 30 years. This form of debt instrument has been selected
because of the high quality of, and the relatively low cost of buying and
selling, U.S. Treasury bonds. The value of the bonds in which the Fund invests
varies inversely with changes in market interest rates. In general, the
variations in market value associated with bonds with remaining average
maturities of 20 to 30 years can be expected to be greater than variations in
the value of shorter term U.S. Treasury bonds, notes and bills.

Money Market Instruments. The money market instrument portion of the Fund's
portfolio will generally be invested in the following money market instruments
that have remaining maturities not exceeding one year: (i) obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities (including
government-sponsored enterprises); (ii) negotiable certificates of deposit,
bankers' acceptances, 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 Federal Deposit Insurance Corporation; (iii) commercial paper rated at
the date of purchase "Prime-1" by Moody's Investors Service, Inc. ("Moody's") or
"A-1" or better by S&P; (iv) certain repurchase agreements; and (v) high-quality
municipal obligations, the income from which may or may not be exempt from
federal income tax. The Fund also may invest in short-term U.S.
dollar-denominated obligations of foreign banks (including U.S. branches) that
at the time of investment: (i) have more than $10 billion, or the equivalent in
other currencies, in total assets; (ii) are among the 75 largest foreign banks
in the world as determined on the basis of assets; and (iii) have branches or
agencies in the United States. The value of the money market instruments in
which the Fund may invest varies inversely with changes in market interest
rates.

How the Allocation Computer Model is Used by BGFA. BGFA compares the Fund's
portfolio investments to the investment model's recommended asset allocation on
a daily basis. The investment model recommends allocations among each asset
class in 10% increments only. Any recommended reallocation will be implemented
in accordance with trading policies that have been designed to take advantage of
market opportunities and to reduce transaction costs. Under current trading
policies employed by BGFA, recommended reallocations may be implemented promptly
upon receipt of recommendations or may not be acted upon for as long as two to
three months thereafter depending on factors such as the percentage change from
previous recommendations and the consistency of recommended reallocations over a
period of time. In addition, the Fund generally invests the net proceeds from
the sale of shares of the Fund and will liquidate existing Fund investments to
meet net redemption requirements in a manner that best allows the Fund's
existing asset allocation to follow that recommended by the investment model.
Notwithstanding any recommendation of the investment model to the contrary, the
Fund will generally maintain at least that portion of its assets in money market
instruments reasonably considered necessary to meet redemption requirements.
There is no requirement that the Fund maintain positions in any particular asset
class or classes.

2
<PAGE> 16

BGFA, as sub-adviser, intends generally to allocate investments among the
asset classes of the Fund in accordance with its trading policies used in
connection with implementing the investment model's recommendations. BGFA will,
however, independently evaluate each recommended allocation and may under
certain circumstances vary the allocation from that recommended by the model.
For example, BGFA may determine not to follow the model if to do so would result
in the Fund's ceasing to be qualified as a regulated investment company under
the Internal Revenue Code of 1986, as amended (the "Code"), if BGFA believes
that the Fund would incur unreasonable transaction costs in reallocating among
asset classes in a highly erratic market environment, or if necessary to satisfy
liquidity requirements.

The allocation of investments within the portfolio of the Fund is based
solely on the recommendation of the investment model. No person is primarily
responsible for recommending the mix of asset classes held by the Fund or the
mix of securities within any such asset class. Decisions relating to the
Investment Model are made by various BGFA investment committees.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

FLOATING- AND VARIABLE-RATE INSTRUMENTS

Certain of the debt instruments that the Fund may purchase bear interest at
rates that are not fixed, but vary with changes in specified market rates or
indices or at specified intervals. Certain of these instruments may carry a
demand feature that would permit the holder to tender them back to the issuer at
par value prior to maturity. The Fund may purchase certificates of participation
in pools of floating- and variable-rate obligations from banks and other
financial institutions. Wells Fargo Bank, as investment adviser, monitors on an
ongoing basis the ability of an issuer of a demand instrument to pay principal
and interest on demand. Events occurring between the date the Fund elects to
demand payment and the date payment is due may affect the ability of the issuer
of the instrument to make payment when due, and unless such demand instrument
permits same-day settlement, such events may affect the Fund's right to obtain
payment at par. Demand instruments whose demand features cannot be exercised
within seven days may be treated as liquid, provided that an active secondary
market exists.

LOANS OF PORTFOLIO SECURITIES

The Fund may lend securities from its portfolio to brokers, dealers and
financial institutions (but not individuals) if cash, U.S. Government securities
or other high grade debt instruments equal to at least 100% of the current
market value of the securities loaned (including accrued interest thereon) plus
the interest payable to the Fund with respect to the loan is maintained with the
Fund. In determining whether to lend a security to a particular broker, dealer
or financial institution, the Fund's investment adviser will consider all
relevant facts and circumstances, including the creditworthiness of the broker,
dealer or financial institution. Any loans of portfolio securities will be fully
collateralized based on values that are marked to market daily. The Fund will
not enter into any portfolio security lending arrangement having a duration of
longer than one year. Any securities that the Fund may receive as collateral
will not become part of the Fund's portfolio at the time of the loan and, in the
event of a default by the borrower, the Fund will, if permitted by law, dispose
of such collateral except for such part thereof that is a security in which the
Fund is permitted to invest. During the time securities are on loan, the
borrower will pay the Fund any accrued income on those securities, and the Fund
may invest the cash collateral in U.S. Government securities or other high

3
<PAGE> 17

grade debt obligations and earn additional income or receive an agreed-upon fee
from a borrower that has delivered cash-equivalent collateral. The Fund will not
lend securities having a value that exceeds one-third of the current value of
its total assets. Loans of securities by the Fund will be subject to termination
at the Fund's or the borrower's option. The Fund may pay reasonable
administrative and custodial fees in connection with a securities loan and may
pay a negotiated portion of the interest or fee earned with respect to the
collateral to the borrower or the placing broker. Borrowers and placing brokers
may not be affiliated, directly or indirectly, with the Company, its investment
adviser, or its distributor.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements wherein the seller of a
security to the Fund agrees to repurchase that security from the Fund at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. The Fund may enter into repurchase agreements only with respect to U.S.
Government obligations and other securities that are permissible investments for
the Fund. All repurchase agreements will be fully collateralized based on values
that are marked to market daily. The maturities of the underlying securities in
a repurchase agreement transaction may be greater than twelve months, although
the maximum term of a repurchase agreement will always be less than twelve
months. If the seller defaults and the value of the underlying securities has
declined, the Fund may incur a loss. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, the Fund's disposition of
the security may be delayed or limited.

The Fund may not enter into a repurchase agreement with a maturity of more
than seven days, if, as a result, more than 10% of the market value of the
Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. The Fund will only enter into repurchase agreements with registered
broker/dealers and commercial banks that meet guidelines established by the
Board of Directors and are not affiliated with the investment adviser. The Fund
may participate in pooled repurchase agreement transactions with other funds
advised by Wells Fargo Bank.

INVESTMENT IN FOREIGN SECURITIES

The Fund may invest in securities of foreign governmental and private
issuers that are denominated in and pay interest in U.S. dollars. Investments in
foreign securities involve certain considerations that are not typically
associated with investing in domestic securities. There may be less publicly
available information about a foreign issuer than about a domestic issuer.
Foreign issuers also are not generally subject to the same accounting, auditing
and financial reporting standards or governmental supervision as domestic
issuers. In addition, with respect to certain foreign countries, taxes may be
withheld at the source under foreign income tax laws, and there is a possibility
of expropriation or confiscatory taxation, political or social instability or
diplomatic developments that could adversely affect investments in, the
liquidity of, and the ability to enforce contractual obligations with respect
to, securities of issuers located in those countries.

------------------------

4
<PAGE> 18

under "Capital Stock" in the SAI. If the Board of Directors determines, however,
that the Fund's investment objective can best be achieved by a substantive
change in a non-fundamental investment policy or strategy, the Company may make
such change without shareholder approval and will disclose any such material
changes in the then current prospectus.

In addition, as matters of fundamental policy, the Fund may: (i) borrow
from banks up to 10% of the current value of its net assets for temporary
purposes only in order to meet redemptions, and these borrowings may be secured
by the pledge of up to 10% of the current value of its net assets (but
investments may not be purchased while any such borrowing exists); (ii) make
loans of portfolio securities; (iii) invest up to 10% of the current value of
its net assets in repurchase agreements having maturities of more than seven
days, restricted securities and illiquid securities; and (iv) invest up to 10%
of the current value of its net assets in fixed time deposits that are subject
to withdrawal penalties and that have maturities of more than seven days.

ADVISORY, ADMINISTRATION AND
DISTRIBUTION ARRANGEMENTS

The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decides
upon matters of general policy.

INVESTMENT ADVISER

Pursuant to an Amended Advisory Contract, the Fund is advised by Wells
Fargo Bank, 420 Montgomery Street, San Francisco, California 94104, a wholly
owned subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the largest
banks in the United States, was founded in 1852 and is the oldest bank in the
western United States. As of April 1, 1996, Wells Fargo Bank and its affiliates
provided investment advisory services for approximately $56 billion of assets of
individuals, trusts, estates and institutions. Wells Fargo Bank is the
investment adviser to other separately managed series of the Company and serves
as investment adviser or sub-adviser to five other registered open-end
management investment companies, each of which consists of several separately
managed investment portfolios.

The Amended Advisory Contract provides that Wells Fargo Bank shall furnish
to the Fund investment guidance and policy direction in connection with the
daily portfolio management of the Fund. Pursuant to the Amended Advisory
Contract, Wells Fargo Bank furnishes to the Board of Directors periodic reports
on the investment strategy and performance of the Fund.

Wells Fargo Bank, pursuant to a Sub-Advisory Contract between the Fund,
Wells Fargo Bank and BGFA, has engaged BGFA to provide sub-advisory services to
the Fund. BGFA is located at 45 Fremont Street, San Francisco, California 94105.
BGFA is a wholly owned subsidiary of BGI and an indirect subsidiary of Barclays
Bank PLC ("Barclays"). As of January 1, 1996, BGFA and its affiliates provided
investment advisory services for over $220 billion of assets. BGFA was created
by the reorganization of Wells Fargo Nikko Investment Advisors ("WFNIA"), the
former sub-adviser to the Fund and a former affiliate of Wells Fargo Bank, with
and into an affiliate of BGI. BGFA serves as investment adviser or sub-adviser
to three other open-end management investment companies.

5
<PAGE> 19

BGFA, subject to the supervision and approval of Wells Fargo Bank, provides
investment advisory assistance and the day-to-day management of the Fund's
assets, subject to the overall authority of the Company's Board of Directors.
Prior to January 1, 1996, WFNIA served as sub-adviser to the Fund and provided
sub-advisory services substantially similar to those currently provided by BGFA.

For its services under the Amended Advisory Contract, Wells Fargo Bank is
entitled to monthly advisory fees at the annual rate of 0.70% of the average
daily net assets of the Fund up to $500 million and 0.60% of average daily net
assets in excess of $500 million. From time to time Wells Fargo Bank may waive
such fees in whole or in part. Any such waiver would reduce expenses of the Fund
and, accordingly, have a favorable impact on the performance of the Fund. Wells
Fargo Bank pays BGFA for its sub-advisory services an annual fee equal to
$60,000 plus a monthly fee at the annual rate of 0.20% of the average daily net
assets of the Fund. Prior to January 1, 1996, Wells Fargo Bank paid WFNIA the
same contractual rate for its sub-advisory services.

For the year ended December 31, 1995, Wells Fargo Bank was paid 0.70% of
the average daily net assets of the Fund as compensation for its services as
investment adviser. For the same period, Wells Fargo Bank paid WFNIA 0.20% of
the average daily net assets of the Fund as compensation for its services as
sub-adviser.

Purchase and sale orders of the securities held by the Fund may be combined
with those of other accounts that Wells Fargo Bank manages, and for which it has
brokerage placement authority, in the interest of seeking the most favorable
overall net results. When Wells Fargo Bank determines that a particular security
should be bought or sold for the Fund and other accounts managed by Wells Fargo
Bank, Wells Fargo Bank undertakes to allocate those transaction costs among the
participants equitably. From time to time, the Fund, to the extent consistent
with its investment objective, policies and restrictions, may invest in
securities of companies with which Wells Fargo Bank has a lending relationship.

Morrison & Foerster LLP, counsel to the Company and special counsel to
Wells Fargo Bank and BGFA, has advised the Company, Wells Fargo Bank and BGFA
that Wells Fargo Bank, BGFA and their affiliates may perform the services
contemplated by the Advisory and Sub-Advisory Contracts and this Prospectus
without violation of the Glass-Steagall Act. Such counsel has pointed out,
however, that there are no controlling judicial or administrative
interpretations of, or decisions relating to, present federal or state statutes,
including the Glass-Steagall Act, and regulations relating to the permissible
activities of banks and their subsidiaries or affiliates, as well as future
changes in such statutes, regulations and judicial or administrative decisions
or interpretations, could prevent such entities from continuing to perform, in
whole or in part, such services. If any such entity were prohibited from
performing any such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR

Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with the Fund under which Stephens acts as administrator for the
Fund. For these administrative services, Stephens is entitled to receive from
the Fund a monthly fee at the annual rate of 0.10% of its average daily net
assets; decreasing to 0.05% of the average daily net assets of the Fund in
excess of $200 million. From time to time Stephens may waive fees from the Fund
in whole or in part. Any such waiver will reduce expenses of the Fund and,
accordingly, have a favorable impact on the performance of the Fund.

6
<PAGE> 20

The Administration Agreement between Stephens and the Fund states that
Stephens shall provide as administrative services, among other things, (i)
general supervision of the operation of the Fund, including coordination of the
services performed by the Fund's investment adviser, transfer agent, custodian,
independent auditors and legal counsel, (ii) general supervision of regulatory
compliance matters, including the compilation of information for documents such
as reports to, and filings with, the SEC and state securities commissions and
preparation of proxy statements and shareholder reports for the Fund; and (iii)
general supervision of the compilation of data required for the preparation of
periodic reports distributed to the Company's officers and Board of Directors.
Stephens also furnishes office space and certain facilities required for
conducting the business of the Fund and pays the compensation of the Company's
directors, officers and employees who are affiliated with Stephens.

Stephens, as the principal underwriter of the Fund within the meaning of
the Investment Company Act of 1940 (the "1940 Act"), has also entered into a
Distribution Agreement with the Company pursuant to which Stephens has the
responsibility for distributing Class A Shares and Class D Shares of the Fund.
Stephens bears the cost of printing and mailing prospectuses to potential
investors and any advertising expenses incurred by it in connection with the
distribution of Class A Shares and Class D Shares, subject to the terms of the
distribution plans described below.

Under the Distribution Agreement, Stephens is entitled to receive from the
Fund a monthly fee at an annual rate of up to 0.25% of the average daily net
assets of the Class A Shares of the Fund and a monthly fee at an annual rate of
up to 0.75% of the average daily net assets of the Class D Shares of the Fund.
The actual fee payable to Stephens is determined, within such limits, from time
to time by mutual agreement between the Company and Stephens, and may not exceed
the maximum amount payable under the Rules of Fair Practice of the NASD.
Stephens may enter into selling agreements with one or more selling agents under
which such agents may receive from Stephens compensation for sales support
services. Such compensation may include, but is not limited to, commissions or
other payments based on the average daily net assets of Fund shares attributable
to such agents. The principal sales support service provided to the Fund are
services provided by selling agents in exchange for commissions and other
payments to selling agents. Stephens may retain any portion of the total
distribution fee payable under the Distribution Agreement to compensate it for
distribution-related services provided by Stephens or to reimburse it for other
distribution-related expenses. Since the Distribution Agreement provides for
fees that are used by Stephens to pay for distribution services, a plan of
distribution for each class of shares (individually a "Plan", collectively the
"Plans") and the Distribution Agreement are approved and reviewed in accordance
with Rule 12b-1 under the 1940 Act, which regulates the manner in which an
investment company may, directly or indirectly, bear the expense of distributing
its shares.

Stephens is a full service broker/dealer and investment advisory firm.
Stephens and its predecessor have been providing securities and investment
services for more than sixty years. Additionally, they have been providing
discretionary portfolio management services since 1983. Stephens currently
manages investment portfolios for pension and profit sharing plans, individual
investors, foundations, insurance companies and university endowments.

SERVICING AGENTS

7
<PAGE> 21

ments, and provide such other related services as the Fund or a Class D
Shareholder may reasonably request. For these services, a servicing agent
receives a fee which will not exceed, on an annualized basis for the Fund's then
current fiscal year, the lesser of 0.25% of the average daily net assets of the
Class D Shares of the Fund represented by Class D Shares owned by investors with
whom the servicing agent maintains a servicing relationship, or an amount which
equals the maximum amount payable to the servicing agent under applicable laws,
regulations or rules.

------------------------

DETERMINATION OF NET ASSET VALUE

Net asset value per share for the Fund is determined by Wells Fargo Bank on
each day that the Exchange is open for trading. The net asset value of a share
of a class of a Fund is the value of total net assets attributable to such class
divided by the number of outstanding shares of that class. The value of net
assets per class is determined daily by adjusting the net assets per class at
the beginning of the day by the value of each class's shareholder activity, net
investment income and net realized and unrealized gains or losses for that day.
Net investment income is calculated each day for each class by attributing to
each class a pro rata share of daily income and common expenses, and by
assigning class-specific expenses to each class as appropriate. The net asset
value of each class is expected to fluctuate daily.

The value of assets of the Fund (other than debt obligations maturing in 60
days or less) is determined as of the close of regular trading on the Exchange
(referred to hereafter as the "close of the Exchange"), which is currently 4:00
p.m. New York time. Except for debt obligations with remaining maturities of 60
days or less, which are valued at amortized cost, assets are valued at current
market prices, or if such prices are not readily available, at fair value as
determined in good faith by the Board of Directors. Prices used for such
valuations may be provided by independent pricing services.

PERFORMANCE DATA

From time to time, the Company may advertise various total return
information with respect to a class of shares of the Fund. Total return of a
class of shares is based on the historical earnings and performance of such
class of shares and should not be considered representative of future
performance.

The total return of a class of shares of the Fund is calculated by
subtracting (i) the public offering price of the class of shares (which includes
the maximum sales charge for the class of shares) of one share of the class of
shares at the beginning of the period, from (ii) the net asset value of all
shares of the class of shares an investor would own at the end of the period for
the share held at the beginning of the period (assuming reinvestment of all
dividends and capital gain distributions), and dividing by (iii) the public
offering price per share of the class of shares at the beginning of the period.
The resulting percentage indicates the positive or negative rate of return that
an investor would have earned from reinvested dividends and capital gain
distributions and changes in share price during the period for the class of
shares. The Fund may also, at times, calculate total return of a class of shares
based on net asset value per share of a class of shares (rather than the public
offering price), in which case the figures would not reflect the effect of any
sales charges that would have been paid by an investor in the class of shares,
provided that total return data derived pursuant to the calculation described
above are also presented.

8
<PAGE> 22

Because of differences in the fees and/or expenses borne by Class D Shares
of the Fund, the total return on such shares can be expected, at any given time,
to differ from the total return on Class A Shares. Performance information will
be computed separately for Class A Shares and Class D Shares.

Additional information about the performance of the Fund is contained in
the Annual Report for the Fund. The Annual Report may be obtained free of charge
by calling the Company at 800-552-9612.

PURCHASE OF SHARES

Shares of the Fund may be purchased on any day the Exchange is open for
trading through Stephens, the Transfer Agent, or any authorized broker/dealers
or financial institutions with which Stephens has entered into agreements. Such
broker/dealers or financial institutions are responsible for the prompt
transmission of purchase, exchange or redemption orders, and may independently
establish and charge additional fees to their clients for such services, other
than services related to purchase orders, which would reduce the clients'
overall yield or return. The Exchange is closed on New Year's 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 Saturday, the
Exchange usually is closed the preceding Friday, and when any Holiday falls on a
Sunday, the Exchange is usually closed the following Monday.

In most cases, the minimum initial purchase amount for the Fund is $1,000.
The minimum initial purchase amount is $100 for purchases through the Systematic
Purchase Plan and $250 for purchases through a retirement plan qualified under
the Code. The minimum subsequent purchase amount is generally $100. The minimum
initial or subsequent purchase amount requirements may be waived or lowered for
investments effected on a group basis by certain entities and their employees,
such as pursuant to a payroll deduction or other accumulation plan. The Company
reserves the right to reject any purchase order. All funds, net of sales loads,
will be invested in full and fractional shares. Checks will be accepted for the
purchase of the Fund's shares subject to collection at full face value in U.S.
dollars. Inquiries concerning purchases may be directed to the Company at (800)
572-7797 or at the address on the front cover of the Prospectus.

Shares of the Fund are offered continuously at the applicable offering
price (including any sales load) next determined after a purchase order is
received. Payment for shares purchased through a broker/dealer will not be due
from the broker/dealer until the settlement date, currently three business days
after the order is placed. It is the broker/dealer's responsibility to forward
payment for shares being purchased to the Fund promptly. Payment for orders
placed directly through the Transfer Agent must accompany the order.

------------------------

When payment for shares of the Fund through the Transfer Agent is by a
check that is drawn on any domestic bank, federal funds normally become
available to the Fund on the business day after the day the check is deposited.
Checks drawn on a non-member bank or a foreign bank may take substantially
longer to be converted into federal funds and, accordingly, may delay the
execution of an order.

9
<PAGE> 23

destinations, tickets to sporting events, theater or other entertainment,
opportunities to participate in golf or other outings and gift certificates for
meals or merchandise. If all sales charges are paid or reallowed to a
broker/dealer or financial institution, it may be deemed an "underwriter" under
the Securities Act of 1933. When shares are purchased directly through the
Transfer Agent and no broker/dealer or financial institution is involved with
the purchase, the entire sales load is paid to Stephens.

Sales loads relating to the purchase of Class A Shares in the Fund are as
follows:

<TABLE>
<CAPTION>
DEALER
SALES LOAD SALES LOAD ALLOWANCE
AS % OF AS % OF AS % OF
AMOUNT OF OFFERING NET AMOUNT OFFERING
PURCHASE PRICE INVESTED PRICE
- ----------------------------------------------------------- ---------- ---------- ---------
<S> <C> <C> <C>
Less than $100,000......................................... 4.50% 4.71% 4.05%
$100,000 up to $199,999.................................... 4.00 4.17 3.60
$200,000 up to $399,999.................................... 3.50 3.63 3.15
$400,000 up to $599,999.................................... 2.50 2.56 2.25
$600,000 up to $799,999.................................... 2.00 2.04 1.80
$800,000 up to $999,999.................................... 1.00 1.01 0.90
$1,000,000 up to $2,499,999................................ 0.60 0.60 0.50
$2,500,000 up to $4,999,999................................ 0.40 0.40 0.40
$5,000,000 up to $8,999,999................................ 0.25 0.25 0.25
$9,000,000 and over........................................ 0.00 0.00 0.00
</TABLE>

Class D Shares are not subject to a front-end sales load. However, Class D
Shares which are redeemed within one year from the receipt of a purchase order
will be subject to a contingent deferred sales charge equal to 1.00% of the
dollar amount equal to the lesser of the net asset value at the time of purchase
of the shares being redeemed or the net asset value of such shares at the time
of redemption.

A selling agent or servicing agent and any other person entitled to receive
compensation for selling or servicing shares may receive different compensation
for selling or servicing Class A Shares as compared with Class D Shares.

REDUCED SALES CHARGE -- CLASS A SHARES

The above Volume Discounts are also available to you based on the combined
dollar amount being invested in Class A Shares of the Fund or of Class A Shares
of other portfolios of the Company which assess a sales load (the "Load Funds").
Because Class D Shares are not subject to a front-end sales charge, the amount
of Class D Shares you hold is not considered in determining any volume discount.

The Right of Accumulation allows you to combine the amount being invested
in Class A Shares of the Fund with the total net asset value of Class A Shares
in any of the Load Funds to determine reduced sales loads in accordance with the
above sales load schedule. For example, if you own Class A Shares of the Load
Funds with an aggregate net asset value of $90,000 and invest an additional
$20,000 in Class A Shares of the Fund, the sales load on the entire additional
amount would be 4.00% of the offering price. To obtain such discount, you must
provide sufficient information at the time of purchase to permit verification
that the purchase qualifies for the reduced sales load, and confirmation of the
order is subject to such

10
<PAGE> 24

verification. The Right of Accumulation may be modified or discontinued at any
time with respect to all Class A Shares purchased thereafter.

You may Reinvest proceeds from a redemption of Class A Shares of the Fund
in Class A Shares of the Fund or in Class A Shares of another of the Company's
investment portfolios that offers Class A Shares at net asset value, without a
sales load, within 120 days after such redemption. However, if the other
investment portfolio charges a sales load that is higher than the sales load
that you have paid in connection with the Class A Shares you have redeemed, you
pay the difference. In addition, the Class A Shares of the investment portfolio
to be acquired must be registered for sale in the shareholder's state of
residence. The amount that may be so reinvested may not exceed the amount of the
redemption proceeds, and a written order for the purchase of the Class A Shares
must be received by the Fund or the Transfer Agent within 120 days after the
effective date of the redemption.

If you realized a gain on your redemption, the reinvestment will not alter
the amount of any federal capital gains tax payable on the gain. If you realized
a loss on your redemption, the reinvestment may cause some or all of the loss to
be disallowed as a tax deduction, depending on the number of Class A Shares
purchased by reinvestment, the period of time that has elapsed after the
redemption and which funds' shares are purchased. Although for federal income
tax purposes, the amount disallowed is added to the cost of the Class A Shares
acquired upon the reinvestment.

Reductions in front-end sales loads apply to purchases by a single
"person," including an individual, members of a family unit, consisting of a
husband, wife, and children under the age of 21 purchasing securities for their
own account, or a trustee or other fiduciary purchasing for a single fiduciary
account or single trust estate.

Reductions in front-end sales loads also apply to purchases by individual
members of a "qualified group." The reductions are based on the aggregate dollar
amount of Class A Shares purchased by all members of the qualified group. For
purposes of this paragraph, a qualified group consists of a "company," as
defined in the 1940 Act, which has been in existence for more than six months
and which has a primary purpose other than acquiring shares of the Fund at a
reduced sales load, and the "related parties" of such company. For purposes of
this paragraph, a "related party" of a company is: (i) any individual or other
company who directly or indirectly owns, controls or has the power to vote five
percent or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls or has
the power to vote five percent of more of its outstanding voting securities;
(iii) any other company under common control with such company; (iv) any
executive officer, director or partner of such company or of a related party;
and (v) any partnership of which such company is a partner.

Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by directors, officers
and employees (and their spouses, parents, children and siblings) of the
Company, Stephens, its affiliates and other broker-dealers that have entered
into

11
<PAGE> 25

agreements with Stephens to sell such shares. Class A Shares of the Fund also
may be purchased at a purchase price equal to the net asset value of such
shares, without a sales load, by present and retired directors, officers and
employees (and their spouses, parents, children and siblings) of Wells Fargo
Bank and its affiliates if Wells Fargo Bank and/or the respective affiliates
agree. Such shares also may be purchased at such price by employee benefit and
thrift plans for such persons and by any investment advisory, trust or other
fiduciary account (other than an individual retirement account) that is
maintained, managed or advised by Wells Fargo Bank or Stephens or their
affiliates.

Class A Shares of the Fund may be purchased at net asset value (without
payment of a sales load) by the following types of investors when the trades are
placed through an omnibus account maintained with the Fund by a
broker/dealer -- trust companies; retirement and deferred compensation plans and
the trusts used to fund these plans; investment advisers and financial planners
who charge a management, consulting or other fee for their services and who
place trades on their own behalf or on behalf of their clients; and clients of
such investment advisers or financial planners who place trades on their own
behalf if the clients' accounts are linked to the master account of such
investment adviser or financial planner on the books and records of the
broker/dealer.

By investing in the Fund, you appoint the Transfer Agent, as agent, to
establish an open account to which all shares purchased will be credited,
together with any dividends and capital gain distributions that are paid in
additional shares. See "Dividends and Distributions." Although most shareholders
elect not to receive stock certificates, certificates for full shares of the
Fund can be obtained on request. It is more complicated to redeem shares held in
certificated form, and the expedited redemption described below is not available
with respect to certificated shares.

CONTINGENT DEFERRED SALES CHARGE -- CLASS D SHARES

Class D Shares which are redeemed within one year of the receipt of a
purchase order affecting such shares will be subject to a contingent deferred
sales charge equal to 1.00% of an amount equal to the lesser of the net asset
value at the time of purchase for the Class D Shares being redeemed or the net
asset value of such shares at the time of redemption. Accordingly, a contingent
deferred sales charge will not be imposed on amounts representing increases in
net asset value above the net asset value at the time of purchase. In addition a
charge will not be assessed on Class D Shares purchased through reinvestment of
dividends or capital gain distributions. In determining whether a contingent
deferred sales charge is applicable to a redemption, Class D Shares are
considered redeemed on a first-in, first-out basis so that Class D Shares held
for a longer period of time are considered redeemed prior to more recently
acquired shares.

The contingent deferred sales charge is waived on redemptions of Class D
Shares (i) following the death or disability (as defined in the Code) of a
shareholder, (ii) to the extent that the redemption represents a minimum
required distribution from an individual retirement account or other retirement
plan to a shareholder who has reached age 70 1/2, (iii) effected pursuant to the
Company's right to liquidate a shareholder's account if the aggregate net asset
value of the shareholder's account is less than the minimum account size, or
(iv) in connection with the combination of the Company with any other registered
investment company by a merger, acquisition of assets, or by any other
reorganization transaction.

Investors who are entitled to purchase Class A Shares of the Fund at net
asset value without a sales load should not purchase Class D Shares. Other
investors including those who are entitled to purchase

12
<PAGE> 26

Class A Shares of the Fund at a reduced sales load, should compare the fees
assessed on Class A Shares against those assessed on Class D Shares (including
potential deferred sales charges and higher Rule 12b-1 fees) in light of the
amount to be invested and the anticipated time that the shares will be owned.

Shares of the Fund may be purchased by any of the methods described below.

INITIAL PURCHASES OF FUND SHARES BY WIRE

1. Telephone toll free (800) 572-7797. Give the name of the Fund in which
the investment is to be made, the class of shares to be purchased, and the
name(s) in which the shares are to be registered, address and social security
number (or tax identification number, where applicable) of the person or entity
in whose name(s) the shares are to be registered, dividend payment election,
amount to be wired, name of the wiring bank and name and telephone number of the
person to be contacted in connection with the order. An account number will be
assigned.

2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($1,000 or more) to:

Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express Asset Allocation Fund (designate Class A or
D)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)

3. A completed Account Application should be mailed, or sent by
telefacsimile with the original subsequently mailed, to the following address
immediately after the funds are wired and must be received and accepted by the
Transfer Agent before an account can be opened:

Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082

4. Share purchases are effected at the public offering price, or, in the
case of Class D Shares, at the net asset value, next determined after the
Account Application is received and accepted.

INITIAL PURCHASES OF FUND SHARES BY MAIL

1. Complete an Account Application. Indicate the services to be used.

2. Mail the Account Application and a check for $1,000 or more, payable to
"Overland Express Asset Allocation Fund (designate Class A or D)" at its mailing
address set forth above.

13
<PAGE> 27

ADDITIONAL PURCHASES

Additional purchases of $100 or more may be made by instructing the Fund's
Transfer Agent to debit an approved account designated in the Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Overland Express Asset Allocation Fund (designate Class A or D)" to the
above address. Write the Fund account number on the check and include the
detachable stub from a Statement of Account or a letter providing the account
number.

SYSTEMATIC PURCHASE PLAN

The Company's Systematic Purchase Plan provides you with a convenient way
to establish or add to your existing accounts on a monthly basis. If you elect
to participate in this plan, you must specify an amount ($100 or more) to be
withdrawn automatically by the Transfer Agent on a monthly basis from an
approved bank account designated in your Account Application (an "Approved Bank
Account"). The Transfer Agent withdraws and uses this amount to purchase shares
of the designated Fund on or about the fifth business day of each month. The
Transfer Agent requires a minimum of ten (10) business days to implement your
Systematic Purchase Plan purchases. There are no additional fees charged for
participating in this plan.

You may change the investment amount, the date on which your Systematic
Purchase is effected and suspend purchases or terminate your participation in
the Systematic Purchase Plan at any time by providing written notice to the
Transfer Agent at least five (5) business days prior to any scheduled
transaction. An election will be terminated automatically if your Approved Bank
Account balance is insufficient to make a scheduled withdrawal, or if either
your Approved Bank Account or your Fund account is closed.

PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Purchase orders for shares in the Fund placed through authorized
broker/dealers and financial institutions by the close of the Exchange on any
day that the Fund's shares are offered for sale, including orders for which
payment is to be made from free cash credit balances in securities accounts held
by a dealer, will be effective on the same day the order is placed if received
by the Transfer Agent before the close of business. Purchase orders that are
received by a dealer or financial institution after the close of the Exchange or
by the Transfer Agent after the close of business generally will be effective on
the next day that shares are offered. The broker/dealer or financial institution
is responsible for the prompt transmission of purchase orders to the Transfer
Agent. Payment for Fund shares is not due until settlement date. Broker/dealers
and financial institutions may benefit from temporary use of payments to the
Fund during this time. A broker/dealer or financial institution that is involved
in a purchase transaction may charge separate account, service or transaction
fees. Financial institutions may be required to register as dealers pursuant to
applicable state securities laws, which may differ from federal law and any
interpretations expressed herein.

14
<PAGE> 28

EXCHANGE PRIVILEGES

You may exchange Class A Shares of the Fund for shares of the same class of
the Company's other investment portfolios or for shares of the California
Tax-Free Money Market, Money Market, National Tax-Free Institutional Money
Market or U.S. Treasury Money Market Funds in an identically registered account
at respective net asset values, provided that, if the other investment portfolio
charges a sales load on the purchase of the class of shares being exchanged that
is higher than the sales load that you have paid in connection with the shares
you are exchanging, you pay the difference between the sales loads. Class D
Shares of the Fund may be exchanged for Class D Shares of one of the Company's
other investment portfolios that offer Class D Shares or for Class A Shares of
the Money Market Fund in an identically registered account at respective net
asset values. You are not charged a contingent deferred sales charge on
exchanges of Class D Shares for shares of the same class of another of the
Company's investment portfolios or for Class A Shares of the Money Market Fund.
If you exchange Class D Shares for shares of the same class of another
investment portfolio, or for Class A Shares of the Money Market Fund, the
remaining period of time (if any) that the contingent deferred sales charge is
in effect will be computed from the time of the initial purchase of the
previously held shares. Accordingly, if you exchange Class D Shares for Class A
Shares of the Money Market Fund, and redeem the shares of the Money Market Fund
within one year of the receipt of the purchase order for the exchanged Class D
Shares, you will have to pay a deferred sales charge equal to the contingent
deferred sales charge applicable to the previously exchanged Class D Shares. If
you exchange Class D Shares of an investment portfolio for Class A Shares of the
Money Market Fund you may subsequently re-exchange the acquired shares only for
Class D Shares. If you re-exchange the Class A Shares of the Money Market Fund
for Class D Shares, the remaining period of time (if any) that the contingent
deferred sales charge is in effect will be computed from the time of your
initial purchase of Class D Shares. In addition, shares of the investment
portfolio to be acquired must be registered for sale in your state of residence.
Investors should obtain, read and retain the Prospectus for the investment
portfolio into which they desire to exchange before submitting an exchange
order.

You may exchange shares by writing the Transfer Agent as indicated below
under "Redemption by Mail," or by calling the Transfer Agent or your authorized
broker/dealer or financial institution or servicing agent, unless you have
elected not to authorize telephone exchanges in your Account Application (in
which case you may subsequently authorize such telephone exchanges by completing
a Telephone Exchange Authorization Form and submitting it to the Transfer Agent
in advance of the first such exchange). Shares held in certificated form may not
be exchanged by telephone. The Transfer Agent's telephone number for exchanges
is (800) 572-7797.

Procedures applicable to redemption of the Fund's shares are also
applicable to exchanging shares, except that, with respect to an exchange
transaction between accounts registered in identical names, no signature
guarantee is required unless the amount being exchanged exceeds $25,000. The
Company reserves the right to limit the number of times shares may be exchanged
between Funds, or to reject in whole or in part any exchange request into a fund
when management believes that such action would be in the best interest of the
Fund's other shareholders, such as when management believes that such action
would be appropriate to protect such fund against disruptions in portfolio
management resulting from frequent transactions by those seeking to time market
fluctuations. Any such rejection will be made by management on a prospective
basis only, upon notice to the shareholder given not later than 10 days
following such shareholder's most recent exchange. The Company reserves the
right to modify or discontinue exchange

15
<PAGE> 29

privileges at any time. Under SEC rules, 60 days prior notice of any amendments
or termination of exchange privileges will be given to shareholders, except
under certain extraordinary circumstances. A capital gain or loss for federal
income tax purposes may be realized upon an exchange, depending upon the cost or
other basis of shares exchanged.

Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you decline such privileges. These
privileges authorize the Transfer Agent to act on telephone instructions from
any person representing himself or herself to be the investor and reasonably
believed by the Transfer Agent to be genuine. The Company will require the
Transfer Agent to employ reasonable procedures, such as requiring a form of
personal identification, to confirm that instructions are genuine. If the
Transfer Agent does not follow such procedures, the Company and the Transfer
Agent may be liable for any losses attributable to unauthorized or fraudulent
instructions. Neither the Company nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.

REDEMPTION OF SHARES

Shares may be redeemed at their next determined net asset value after
receipt of a request in proper form by the Transfer Agent directly or through
any authorized broker/dealer or financial institution.

Except for any contingent deferred sales charge which may be applicable
upon redemption of Class D Shares, as described under "Purchase of Shares," the
Company does not charge for redemption transactions. However, a broker/dealer or
financial institution that is involved in a redemption transaction may charge
separate account, service or transaction fees. On a day the Fund is open for
business, redemption orders received by an authorized broker/dealer or financial
institution before the close of the Exchange received by the Transfer Agent
before the close of business on the same day will be executed at the net asset
value per share determined at the close of the Exchange on that day. Redemption
orders received by authorized broker/dealers or financial institutions after the
close of the Exchange, or not received by the Transfer Agent prior to the close
of business, will be executed at the net asset value determined at the close of
the Exchange on the next business day.

Redemption proceeds, net of any contingent deferred sales charge applicable
with respect to Class D Shares, ordinarily will be remitted within seven days
after the order is received in proper form, except proceeds may be remitted over
a longer period to the extent permitted by the SEC under extraordinary
circumstances. If an expedited redemption is requested, redemption proceeds will
be distributed only if the check used for investment is deemed to be cleared for
payment by your bank, currently considered by the Company to be a period of
ten(10) days after investment. The proceeds, of course, may be more or less than
cost. Payment of redemption proceeds may be made in securities, subject to
regulation by some state securities commissions.

REDEMPTION BY MAIL

1. Write a letter of instruction. Indicate the dollar amount or number of
shares to be redeemed. Refer to your Fund account number and provide either a
social security or a tax identification number (as applicable).

16
<PAGE> 30

2. Sign the letter in exactly the same way the account is registered. If
there is more than one owner of the shares, all must sign.

3. If shares to be redeemed have a value of $5,000 or more, or redemption
proceeds are to be paid to someone other than you at your address of record, the
signature(s) must be guaranteed by an "eligible guarantor institution," which
includes a commercial bank that is a member of the Federal Deposit Insurance
Corporation, a trust company, a member firm of a domestic stock exchange, a
savings association, or a credit union that is authorized by its charter to
provide a signature guarantee. Signature guarantees by notaries public are not
acceptable. Further documentation will be requested from corporations,
administrators, executors, personal representatives, trustees or custodians.

4. If shares to be redeemed are held in certificated form, enclose the
certificates with the letter. Do not sign the certificates and for protection
use registered mail.

5. Mail the letter to the Transfer Agent at the mailing address set forth
under "Purchase of Shares."

Unless other instructions are given in proper form, a check for the
proceeds of redemption, net of any contingent deferred sales charge applicable
with respect to Class D Shares, will be sent to your address of record.

SYSTEMATIC WITHDRAWAL PLAN

The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your account and the proceeds, net of any contingent
deferred sales charge applicable with respect to Class D Shares, distributed to
you on a monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of the date of the election to
participate and are not also a participant in the Company's Systematic Purchase
Plan at any time while participating in this plan. To participate in the plan
you must specify an amount ($100 or more) to be distributed by check to your
address of record or deposited in your Approved Bank Account. The Transfer Agent
redeems sufficient shares and mails or deposits the proceeds of the redemption,
net of any contingent deferred sales charge applicable with respect to Class D
Shares, as instructed on or about the fifth business day prior to the end of
each month. There are no additional fees charged for participating in this plan.

It may take up to ten (10) business days after receipt of your request to
establish your participation in the Systematic Withdrawal Plan. You may change
the withdrawal amount, suspend withdrawals or terminate your participation in
the Systematic Withdrawal Plan at any time by providing written notice to the
Transfer Agent at least five (5) business days prior to a scheduled transaction.
An election will be terminated automatically if your account balance is
insufficient to make a scheduled withdrawal or if your Fund account or Approved
Bank Account is closed.

EXPEDITED REDEMPTIONS BY LETTER AND TELEPHONE

If shares are not held in certificated form, you may request an expedited
redemption of shares by letter or telephone (unless you have elected not to
authorize telephone redemptions on the Account Application or other form that is
on file with the Transfer Agent) on any day the Fund is open for business. See
"Exchange Privileges" for additional information regarding telephone redemption
privileges.

You may request expedited redemption by telephone by calling the Transfer
Agent at (800) 572-7797.

17
<PAGE> 31

You may request expedited redemption by mail by mailing your expedited
redemption request to the Transfer Agent at the mailing address set forth under
"Purchase of Shares -- Initial Purchases of Fund Shares by Wire."

Upon request, proceeds of expedited redemptions of $5,000 or more, net of
any contingent deferred sales charge applicable with respect to Class D Shares,
will be wired or credited to your Approved Bank Account or wired to an
authorized broker/dealer or financial institution designated in your Account
Application. The Company reserves the right to impose charges for wiring
redemption proceeds. When proceeds of an expedited redemption are to be paid to
someone other than yourself, to an address other than that of record, or to a
bank, broker/dealer or other financial institution that has not been
predesignated, the expedited redemption request must be made by letter and the
signature(s) on the letter must be guaranteed, regardless of the amount of the
redemption. If an expedited redemption request is received by the Transfer Agent
by the close of business on any day the Fund is open for business, the
redemption proceeds will be transmitted to your bank or predesignated
broker/dealer or financial institution on the next business day (assuming the
investment check has cleared as described above), absent extraordinary
circumstances. A check for proceeds of less than $5,000 will be mailed to your
address of record, except that, in the case of investments in the Company that
have been effected through broker/dealers, banks and other institutions that
have entered into special arrangements with the Company, the full amount of the
redemption proceeds may be transmitted by wire or credited to a designated
account.

REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Redemption requests placed through authorized broker/dealers and financial
institutions by the close of the Exchange on any day the Fund's shares are
offered for sale will be effective on the same day the request is placed if
received by the Transfer Agent before the close of business. Redemption requests
that are received after the close of business generally will be effective on the
next day that shares are offered. The broker/dealer or financial institution is
responsible for the prompt transmission of redemption requests to the Transfer
Agent. Unless you have made other arrangements, and have informed the Transfer
Agent of such arrangements, proceeds of redemptions made through authorized
broker/dealers and financial institutions will be credited to your account with
such broker/dealer or institution. You may request a check from the
broker/dealer or financial institution or may elect to retain the redemption
proceeds in your account. The broker/dealer or financial institution may benefit
from the use of the redemption proceeds prior to the clearance of a check issued
to you for such proceeds or prior to disbursement or reinvestment of such
proceeds on your behalf.
------------------------

The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.

Due to the high cost of maintaining small accounts, the Company reserves
the right to redeem accounts that fall below $1,000. Prior to such a redemption,
you will be notified in writing and permitted 30 days to make additional
investments to raise the account balance to the specified minimum.

18
<PAGE> 32

DISTRIBUTION PLANS

The Company's Board of Directors has adopted a Distribution Plan (the
"Plan") on behalf of each class of shares of the Fund. Under the Plans and
pursuant to the Distribution Agreement, the Fund may pay the distributor a
monthly fee at an annual rate of up to 0.25% of the average daily net assets of
the Class A Shares of the Fund and a monthly fee at an annual rate of up to
0.75% of the average daily net assets of the Class D Shares of the Fund as
compensation for distribution-related services. The actual fee payable to the
distributor shall, within such limits, be determined from time to time by mutual
agreement between the Company and the distributor. Under the Plans, the
distributor may enter into selling agreements with one or more selling agents
under which such agents may receive compensation for distribution-related
services from the distributor, including, but not limited to, commissions or
other payments to such agents based on the average daily net assets of Class A
Shares and Class D Shares attributable to them. The distributor may retain any
portion of the total distribution fee payable under the Plans to compensate it
for distribution-related services provided by it or to reimburse it for other
distribution-related expenses. The Fund may participate in joint distribution
activities with any other portfolio of the Company, in which event expenses
reimbursed out of the assets of the Fund may be attributable, in part, to the
distribution-related activities of another portfolio. Generally, the expenses
attributable to joint distribution activities will be allocated among the Fund
and any other portfolio of the Company in proportion to their relative net asset
sizes, although the Board of Directors may allocate such expenses in any other
manner that it deems fair and equitable.

SERVICING PLAN

The Company's Board of Directors has adopted a servicing plan ("Servicing
Plan") on behalf of the Class D Shares of the Fund. Pursuant to the Servicing
Plan the Fund may enter into servicing agreements with one or more servicing
agents who agree to provide administrative support services to their customers
who are the record or beneficial owners of Class D Shares. Such servicing agents
will be compensated at an annual rate of up to 0.25% of the average daily net
asset value of the Class D Shares held of record or beneficially by such
customers.

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to declare a quarterly dividend of substantially all of
its net investment income to all shareholders of record at 4:00 p.m. (New York
time) on the day of declaration. Net capital gains of the Fund, if any, will be
distributed annually (or more frequently to the extent permitted to avoid
imposition of the 4.00% excise tax described in the SAI).

Dividends and/or capital gain distributions paid by the Fund will be
invested in additional shares of the same class of the Fund at net asset value
(without any sales load) and credited to your account on the reinvestment date
or, at your election, paid by check. Dividend checks and Statements of Account
will be mailed within approximately three business days after the payment date.
In addition, you may elect to reinvest Fund dividends and/or capital gain
distributions in shares of another portfolio of the Company with which you have
an established account that has met the applicable minimum initial investment
requirement.

19
<PAGE> 33

The Fund's net investment income available for distribution to the holders
of Class D Shares will be reduced by the amount of shareholder servicing fees
payable to shareholder servicing agents under the Servicing Plan and by the
incremental distribution fees payable under the Distribution Plan. There may be
certain other differences in fees (e.g. transfer agent fees) between Class A
Shares and Class D Shares that would affect their relative dividends.

DIVIDEND AND DISTRIBUTION OPTIONS

When you fill out an Account Application, you can choose from three
dividend and distribution options:

A. The Automatic Reinvestment Option provides for the reinvestment of
dividends and capital gain distributions in additional shares of the same
class of the Fund. Dividends and distributions declared in a month are
reinvested at net asset value early in the following month. You are
assigned this option automatically if you make no choice on your Account
Application.

B. The Automatic Clearing House Option permits you to have dividends
and capital gain distributions deposited in an Approved Bank Account. In
the event your Approved Bank Account is closed, and such distribution is
returned to the Fund's dividend disbursing agent, the distribution will be
reinvested in your Fund account at the net asset value next determined
after the distribution has been returned. Your Automatic Clearing House
Option will be converted to the Automatic Reinvestment Option.

C. The Check Payment Option allows you to receive a check for a
dividend or capital gain distribution, which is mailed either to the
designated address, or your Approved Bank Account, early in the month
following declaration. If the U.S. Postal Service cannot deliver such
checks, or if such checks remain uncashed for six months, those checks will
be reinvested in your Fund account at the net asset value next determined
after the earlier of the date the checks have been returned to the dividend
disbursing agent or the date six months after the payment of such dividend
or distribution. Your Check Payment Option will be converted to the
Automatic Reinvestment Option.

The Company takes reasonable efforts to locate investors whose checks are
returned or uncashed after six months. The Company forwards moneys to the
dividend disbursing agent so that it may issue investors dividend checks under
the Check Payment Option. The dividend disbursing agent may benefit from the
temporary use of such moneys until these checks clear.

TAXES

The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code, as long as such qualification is the best interest of
each Fund's shareholders. The Fund will be treated as a separate entity for tax
purposes and thus the provisions of the Code applicable to regulated investment
companies generally will be applied to each of the Company's funds, rather than
to the Company as a whole. By complying with the applicable provisions of the
Code, the Fund will not be subject to federal income taxes with respect to net
investment income and net capital gains distributed to its shareholders. The
Fund intends to pay out substantially all of its net investment income and net
capital gains for each year. Dividends from net investment income (which
includes net short-term capital gains, if any) declared and

20
<PAGE> 34

paid by the Fund will be taxable as ordinary income to the Fund's shareholders.
Whether you take such dividend payments and distributions of capital gain in
cash or have them automatically reinvested in additional shares, they will be
taxable to you. Generally, dividends and distributions of capital gain are
taxable to shareholders at the time they are paid. However, such dividends and
distributions declared payable in October, November and December and made
payable to shareholders of record in such a month are treated as paid and are
thereby taxable as of December 31, provided that such dividends and
distributions are actually paid no later than January 31 of the following year.
You may be eligible to defer the taxation of dividends and capital gain
distributions on shares of the Fund which are held under a qualified tax
deferred retirement plan.

Corporate shareholders may be eligible for the dividends-received deduction
on the dividends paid by the Fund to the extent such Fund's income is derived
from certain dividends received from domestic corporations. In order to qualify
for dividends-received deduction, a corporate shareholder must hold the Fund
shares paying the dividends upon which a dividend-received deduction is based
for at least 46 days.

The Fund will inform you by January 31 of each year of the amount and
nature of dividends and capital gain distributions with respect to the previous
year. You should keep all statements you receive to assist in your personal
record keeping. The Company is required to withhold, subject to certain
exemptions, at a rate of 31% on taxable dividends, capital gain distributions,
and redemption proceeds (including proceeds from exchanges) paid or credited to
individual shareholders of the Fund, if a shareholder has not complied with IRS
regulations or if a correct taxpayer identification number, certified when
required, is not on file with the Company or the Transfer Agent. In connection
with this withholding requirement, you will be asked to certify on your Account
Application that the social security or taxpayer identification number you
provide is correct and that you are not subject to 31% backup withholding for
previous underreporting to the IRS.

Foreign shareholders may be subject to different tax treatment, excluding a
withholding tax. See "Federal Income Taxes -- Foreign Shareholders" in the SAI.

The foregoing discussion is based on tax laws and regulations which were in
effect as of the date of this Prospectus and summarizes only some of the
important federal income tax considerations generally affecting the Fund and its
shareholders. It is not intended as a substitute for careful tax planning; you
should consult your tax advisor with respect to your specific tax situation as
well as with respect to state and local taxes. Further federal tax
considerations are discussed in the SAI.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Wells Fargo Bank has been retained to act as the Fund's transfer and
dividend disbursing agent. Its principal place of business is 420 Montgomery
Street, San Francisco, California 94104 and its transfer and dividend disbursing
agency activities are managed at 525 Market Street, San Francisco, California
94105. BGI serves as the Fund's custodian. BGI, located at 45 Fremont Street,
San Francisco, California 94105, is a special purpose trust company that is
owned indirectly by Barclays. BGFA is a wholly owned subsidiary of BGI.

ORGANIZATION AND CAPITAL STOCK

21
<PAGE> 35

of the following funds -- the Asset Allocation, California Tax-Free Bond,
California Tax-Free Money Market, Money Market, Municipal Income, National
Tax-Free Institutional Money Market, Overland Sweep, Short-Term
Government-Corporate Income, Short-Term Municipal Income, Strategic Growth, U.S.
Government Income, U.S. Treasury Money Market and Variable-Rate Government
Funds. The Board of Directors may, in the future, authorize the issuance of
other series of capital stock representing shares of additional investment
portfolios or funds. All shares of the Company have equal voting rights and will
be voted in the aggregate, and not by series or class, except where voting by
series or class is required by law or where the matter involved affects only one
series or class. The Company may dispense with the annual meeting of
shareholders in any fiscal year in which it is not required by the 1940 Act to
elect Directors; however, shareholders are entitled to call a meeting of
shareholders for purposes of voting on removal of a Director or Directors. A
more detailed statement of the voting rights of shareholders is contained in the
SAI. All shares of the Company, when issued, will be fully paid and
nonassessable.

22
<PAGE> 36
ASSET ALLOCATION FUND
C/O OVERLAND EXPRESS SHAREHOLDER SERVICES, WELLS FARGO BANK, N.A.
POST OFFICE BOX 63084, SAN FRANCISCO, CALIFORNIA 94163
FOR PERSONAL SERVICE PLEASE CALL
[LOGO] YOUR INVESTMENT ADVISOR OR 1-800-572-7797

ACCOUNT APPLICATION PAGE 1 OF 5
ASSET ALLOCATION FUND
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / ADDITIONAL INVESTMENT OR CHANGE TO ACCOUNT # ___________
- ---------------------------------------------------------------------------------------------------------
/ / INDIVIDUAL 1. Individual _________________________________ ________-______-__________
USE LINE 1 First Name Initial Last Name Soc. Security No.

/ / JOINT OWNERS 2. Joint Owner _________________________________ (Only one Soc. Security No. is
USE LINES 1 & 2 First Name Initial Last Name required for Joint Owners)
Joint Tenancy with right of survivorship is presumed unless Tenancy in Common
is indicated:
/ / Tenants in Common

/ / TRANSFER TO 3. Uniform _______________________________________________________________
MINORS Transfer Custodian's Name (only one) Minor's State of Residence
USE LINE 3 to Minors _________________________________ ________-______-__________
Minor's Name (only one) Minor's Soc. Security No.

/ / TRUST* 4. Trust Name _______________________________________________________________
USE LINE 4 Trustee(s) _______________________________________________________________
(If you would like Trustee's name included in registration.)

Trust ID Number_____________________________________________
Please attach title page, the page(s) allowing investment in a mutual fund
("powers page") and signature page, and complete Section 7, "Authorization
for Trusts and Organizations."
/ / ORGANIZATION* 5. Organization Name ___________________________________ ________-__________
USE LINE 5 *Complete "Authorization for Trusts and Tax I.D. No.
Organizations" (Section 7).
- ---------------------------------------------------------------------------------------------------------
ADDRESS:
Number and Street ____________________________________________________ Apartment No. _____
City ______________________________________________ State ___________ Zip Code ___________
Telephone Numbers: (DAY) ________-______-__________ (EVENING) ________-______-__________
(Area Code) (Area Code)
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(CONTINUED)
<PAGE> 37
[LOGO]
ACCOUNT APPLICATION PAGE 2 OF 5
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $1,000.)
- --------------------------------------------------------------------------------
INVESTMENT AMOUNT: $____________________
TYPE OF ACCOUNT (CHOOSE ONE ONLY):

/ / Class A Shares, or

/ / Class D Shares (not available for purchases of
$9,000,000 or more)

Note: If no choice is indicated, Class A Shares will be selected.

METHOD OF PAYMENT: / / Debit bank account designated in Section 3.

/ / Check attached (payable to Overland Express Asset
Allocation Fund (designate Class A or D))

/ / Funds have been wired to Overland Express

- --------------------------------------------------------------------------------
SETTLEMENT ARRANGEMENTS: (Check only one if applicable)

/ / Automatic debit/credit of an account with a bank that has been authorized
by the Transfer Agent. (If you check this box, your initial and/or
subsequent purchases and redemptions can be settled through the bank
account you designate in Section 3.) Please attach a voided check or
deposit slip and fill in bank account information in Section 3.

/ / Bank wire instructions. (If you check this box, redemptions can be
settled by wire through the bank account you designate in Section 3. Some
banks impose fees for wires; check with your bank to determine policy.
The Company reserves the right to impose a charge for wiring redemption
proceeds.) Please attach a voided check or deposit slip and fill in bank
account information in Section 3.

- --------------------------------------------------------------------------------
SYSTEMATIC PURCHASE PLAN:

/ / I hereby authorize you to systematically withdraw from the bank account
designated in Section 3 the following amount to purchase shares of the
Fund. I understand and agree that the designated account will be debited
on or about the fifth business day of each month to effect the Fund
purchase and that such monthly investments shall continue until my
written notice to cancel has been received by you at least five (5)
business days prior to the next scheduled Fund purchase.
Monthly Investment Amount: $____________________ (minimum $100)
- --------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWAL PLAN:

/ / I hereby authorize you to systematically redeem a sufficient number of
shares from my Overland Express account and to distribute the amount
specified below by check to the registration address set forth in Section
1 or the bank account designated in Section 3. I understand and agree
that the redemption of shares and mailing or depositing of proceeds will
occur on or about the fifth business day prior to the end of each month
and that such monthly payments shall continue until my written notice to
cancel has been received by you at least five (5) business days prior to
the next scheduled withdrawal.
Monthly Withdrawal Amount: $____________________ (minimum $100)
/ / Mail check to registration set forth in Section 1.
/ / Distribute funds to bank account designated in Section 3.
- --------------------------------------------------------------------------------
3. BANK ACCOUNT INFORMATION
- --------------------------------------------------------------------------------

_____________________________________________________________________________
Bank Name

_____________________________________________________________________________
Address City State Zip

_____________________________________________________________________________
Bank Account Number Bank Routing Number
- --------------------------------------------------------------------------------
(CONTINUED)
<PAGE> 38
[LOGO]
ACCOUNT APPLICATION PAGE 3 OF 5
ASSET ALLOCATION FUND

- --------------------------------------------------------------------------------
4. REDUCED SALES CHARGES (If Applicable.)
- --------------------------------------------------------------------------------

LETTER OF INTENT -- CLASS A SHARES

I may qualify for a reduced sales charge based on the total amount I intend to
invest over a 13-month period (the "Period"), plus the value of any shares I
already own, by agreeing to this Letter of Intent (the "Letter"). Stephens
Inc. will hold in escrow shares registered in my name equal to 5% of the
amount invested. Dividends and distributions on the escrowed shares will be
paid to me or credited to my Account. Upon completion of the specified minimum
purchase within the Period, all shares held in escrow will be deposited in my
Account or delivered to me. I may include the combined asset value of shares
of any of the portfolios of the Overland Express Funds which assess a sales
charge ("Load Funds"), owned as of the date of the Letter toward the
completion of the total purchase. If the total amount invested within the
Period does not equal or exceed the specified minimum purchase, I will be
requested to pay the difference between the amount of the sales charge paid
and the amount of the sales charge applicable to the total purchases made. If,
within 20 days following the mailing of a written request, I have not paid
this additional sales charge to Stephens Inc., sufficient escrowed shares will
be redeemed for payment of the additional sales charge. Shares remaining in
escrow after this payment will be deposited in my Account. The intended
purchase amount may be increased at any time during the Period by filing a
revised Letter for the Period.

/ / I agree to the Letter of Intent set forth above. It is my intention to
invest over a 13-month period in the Load Funds an aggregate amount equal
to at least:

/ / $100,000 / / $200,000 / / $400,000 / / $600,000

/ / $800,000 / / $1,000,000 / / $2,500,000 / / $5,000,000
/ / $9,000,000

Existing accounts must be identified in advance. If the value of currently
owned shares is to be applied towards completion of this Letter of Intent,
please list accounts below.

Account # ____________________ Account # ____________________

RIGHT OF ACCUMULATION -- CLASS A SHARES

Account # ____________________ Account # ____________________
- --------------------------------------------------------------------------------
5. TELEPHONE INSTRUCTIONS (Do NOT check this box if you wish to authorize
telephone instructions.)
- --------------------------------------------------------------------------------

/ / If this box is checked, you are NOT authorized to honor my telephone
instructions for purchase of additional Fund shares, redemptions of Fund
shares and exchanges of shares between Overland Express Funds. If this
box is not checked, I understand that telephone instructions will be
effected by debiting/crediting the account designated in Section 3 (if
approved) and that if a designated account has not been authorized and
approved, a check or wire transfer will be required for a purchase and a
check will be sent for a redemption.
- --------------------------------------------------------------------------------
6. DISTRIBUTIONS (Do NOT check boxes if you want reinvestment.)
- --------------------------------------------------------------------------------

All dividends and capital gain distributions will be automatically reinvested
in shares of the same class of the Fund unless otherwise indicated:

/ / Invest dividends in Account #____________________ of ________________ Fund

of the Overland Express Funds.

/ / Invest capital gain distributions in Account #____________________ of

______________________________ Fund of the Overland Express Funds.

/ / Pay dividends by check and/or / / pay capital gain distributions by check

AND MAIL CHECKS TO:

/ / The registration address set forth in Section 1. / / The bank account
designated in Section 3.

* Please verify that your bank participates in the ACH system.

- --------------------------------------------------------------------------------
(CONTINUED)
<PAGE> 39
[LOGO]
ACCOUNT APPLICATION PAGE 4 OF 5
ASSET ALLOCATION FUND

- --------------------------------------------------------------------------------
7. AUTHORIZATION FOR TRUSTS AND ORGANIZATIONS (If Applicable.)
- --------------------------------------------------------------------------------

CORPORATIONS, TRUSTS, PARTNERSHIPS OR OTHER ORGANIZATIONS MUST COMPLETE
THIS SECTION.

<TABLE>
<S> <C> <C> <C> <C>
Registered Owner is a: / / Trust / / Corporation, Incorporated Association
/ / Partnership / / Other:________________________________________________________________
(such as Non-Profit Organization, Religious Organization, Sole
Proprietorship, Investment Club, Non-incorporated Association, etc.)
</TABLE>

The following named persons are currently officers/trustees/general
partners/other authorized signatories of the Registered Owner; this(these)
Authorized Person(s) is(are) currently authorized under the applicable
governing document to act with full power to sell, assign or transfer
securities of Overland Express Funds, Inc. for the Registered Owner and to
execute and deliver any instrument necessary to effectuate the authority
hereby conferred:

<TABLE>
<S> <C> <C>
Name Title Specimen Signature
---------------------------------- ---------------------------------- ----------------------------------
---------------------------------- ---------------------------------- ----------------------------------
---------------------------------- ---------------------------------- ----------------------------------
</TABLE>

Overland Express Funds, Inc., Stephens Inc. and Wells Fargo Bank, N.A.
may, without inquiry, act upon the instruction of ANY PERSON(S) purporting
to be (an) Authorized Person(s) as named in the Authorization Form last
received by you, and shall not be liable for any claims, expenses
(including legal fees) or losses resulting from acting upon any
instructions reasonably believed to be genuine.

FOR CORPORATIONS AND INCORPORATED ASSOCIATIONS:
I, , Secretary of the
above-named Registered Owner, do hereby certify that at a meeting on
at which a quorum was present throughout, the Board of
Directors of the corporation/the officers of the association duly adopted
a resolution, which is in full force and effect and in accordance with the
Registered Owner's charter and by-laws, which resolution: (1) empowered
the above-named Authorized Person(s) to effect securities transactions for
the Registered Owner on the terms described above; (2) authorized the
Secretary to certify, from time to time, the names and titles of the
officers of the Registered Owner and to notify you when changes in the
office occur; and (3) authorized the Secretary to certify that such a
resolution has been duly adopted and will remain in full force and effect
until you receive a duly executed amendment to the Authorization Form.
Witness my hand on behalf of the corporation/association on this
day of ,19

------------------------------------------------
Secretary (Signature Guarantee or
Corporate Seal is Required)

FOR ALL OTHER ORGANIZATIONS: ------------------------------------------------
Certifying Trustee, General Partner, or Other
</TABLE>
- --------------------------------------------------------------------------------
(CONTINUED)
<PAGE> 40
[LOGO]
ACCOUNT APPLICATION PAGE 5 OF 5
ASSET ALLOCATION FUND

---------------------------------------------------------------------------------------------------------------
8. SIGNATURE, TAX INFORMATION & CERTIFICATION
---------------------------------------------------------------------------------------------------------------
/ / U.S. CITIZEN OR RESIDENT
I understand that the Federal Government requires Overland Express Funds, Inc. to withhold and pay to
the Internal Revenue Service 31% from all interest, dividends, capital gains distributions and
proceeds from redemptions UNLESS I have provided a certified taxpayer identification (Social Security
or Employer Identification) number and certify in the Withholding Status below that I am NOT subject
to backup withholding. The taxpayer identification number I provided in Section 1 will be the number
under which any taxable earnings will be reported to the IRS.
WITHHOLDING STATUS: Unless I indicate that I am subject to backup withholding by checking the box
below, I certify that 1) I have NOT been notified by the IRS that I am subject to backup withholding
as a result of a failure to report all interest or dividends, OR 2) I have been notified by the IRS
that I am no longer subject to backup withholding: / / I am currently subject to backup withholding.
/ / NON-RESIDENT ALIEN (In order to claim this exemption, ALL owners on the account must be non-resident
aliens and sign below.)
I am not a U.S. citizen or resident (nor is this account held by a foreign corporation, partnership,
estate or trust) and my permanent address is:

____________________________________________________________ Country:_______________________________
By signing below, I (we) certify, under penalties of perjury, that I (we) have full authority and legal
capacity to purchase shares of the Fund and affirm that I (we) have received a current prospectus and agree
to be bound by its terms and further certify that 1) the correct taxpayer identification number has been
provided in Section 1 of this Application and that the Withholding Status information, above, is correct OR
2) all owners are entitled to claim non-resident alien status. Investors should be aware that the failure to
check the box under "Telephone Instructions" above means that the telephone exchange and redemption
privileges will be provided. A shareholder would bear the risk of loss in the event of the fraudulent use of
the pre-authorized redemption or exchange privileges. Please see "Exchange Privileges" and "Redemption of
Shares" in the Prospectus for more information on these privileges.
X ________________________________________________________ SIGNATURE GUARANTEE: NOT REQUIRED WHEN
Individual (or Custodian) date ESTABLISHING NEW ACCOUNTS. Required only if
establishing privileges in Block 2 on an
X ________________________________________________________ existing account. Signature Guarantee may be
Joint Owner (if any) date provided by an "eligible guarantor
institution," which includes a commercial bank,
X ________________________________________________________ trust company, member firm of a domestic stock
Corporate Officer or Trustee date exchange, savings association, or credit union
that is authorized by its charter to provide a
signature guarantee.

AFFIX SIGNATURE GUARANTEE STAMP

________________________________________________________ _______________________________________________
Title of Corporate Officer or Trustee Signature Guaranteed By
---------------------------------------------------------------------------------------------------------------
</TABLE>

DEALER INFORMATION

<TABLE>
<S> <C> <C>
___________________________________________________ __________________________
Dealer Name Branch ID #
___________________________________________________ __________________________ ______________________
Representative's Last Name Rep ID # Rep Phone #
X_________________________________________________________________________________________________________
Authorized signature of Broker/Dealer Title date
</TABLE>
<PAGE> 41

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201

INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163

SUB-ADVISER

BZW Barclays Global Fund Advisors

45 Fremont Street
San Francisco, California 94105

CUSTODIAN

BZW Global Investors, N.A.

45 Fremont Street
San Francisco, California 94105

LEGAL COUNSEL

Morrison & Foerster LLP

2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111
NOT FDIC INSURED

FOR MORE INFORMATION ABOUT THE FUND,
SIMPLY CALL (800) 552-9612,
OR WRITE:

OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS SHAREHOLDER
SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163

LOGO

------------------------

PROSPECTUS
------------------------

Asset Allocation Fund
------------------------

May 1, 1996

------------------------
NOT FDIC INSURED

77P 5/96

<PAGE> 42

Telephone: (800) 552-9612 LOGO

Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian

Overland Express Funds, Inc. (the "Company") is an open-end, series
investment company. This Prospectus contains information about one of the
Company's funds -- the CALIFORNIA TAX-FREE BOND FUND (the "Fund").

The CALIFORNIA TAX-FREE BOND FUND seeks to provide investors with a high
level of income exempt from federal income taxes and from California personal
income taxes, while preserving capital, by investing in medium- to long-term,
investment-grade municipal securities. Under ordinary market conditions, this
Fund's assets will consist exclusively of securities the interest on which is
exempt from federal and California personal income taxes.

This Prospectus describes two classes of shares of the Fund -- Class A
Shares and Class D Shares.

------------------------

INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.

------------------------

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. SUCH SHARES ARE NOT INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL
AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN
INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.

WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER
SERVICES TO THE FUND, FOR WHICH IT IS COMPENSATED. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO
BANK, IS THE SPONSOR AND DISTRIBUTOR FOR THE FUND.

PROSPECTUS DATED MAY 1, 1996

<PAGE> 43

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................................................... ii
Summary of Expenses......................................................................... v
Financial Highlights........................................................................ vii
Investment Objective and Policies........................................................... 1
Additional Permitted Investment Activities.................................................. 2
Advisory, Administration and Distribution Arrangements...................................... 3
Determination of Net Asset Value............................................................ 6
Purchase of Shares.......................................................................... 7
Exchange Privileges......................................................................... 13
Redemption of Shares........................................................................ 14
Distribution Plans.......................................................................... 17
Servicing Plan.............................................................................. 17
Dividends and Distributions................................................................. 18
Taxes....................................................................................... 19
Custodian and Transfer and Dividend Disbursing Agent........................................ 20
Organization and Capital Stock.............................................................. 20
</TABLE>

i
<PAGE> 44

PROSPECTUS SUMMARY

Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

A. The CALIFORNIA TAX-FREE BOND FUND seeks to provide investors with a high
level of income exempt from federal income taxes and from California
personal income taxes, while preserving capital, by investing in medium-
to long-term, investment-grade municipal securities. As with all mutual
funds, there can be no assurance that the Fund will achieve its investment
objective. See "Investment Objective and Policies."

Q. WHAT ARE PERMISSIBLE INVESTMENTS?

A. The Fund invests in medium- to long-term, investment-grade municipal
securities, the interest on which is exempt from federal income taxes and
from California personal income taxes. Under ordinary market conditions,
(i) 100% of the Fund's investment portfolio consists of municipal
securities, the interest on which is exempt from California personal
income taxes, and (ii) at least 80% of the Fund's investment portfolio
consists of municipal securities, the interest on which is exempt from
federal income taxes. Certain additional risks may arise due to the Fund's
concentration of investments in California municipal securities. See
"Special Factors Affecting the California Tax-Free Bond Fund" in the
Fund's SAI. Shares of the Fund may not be suitable investments for
tax-exempt institutions or tax-exempt retirement plans, since such
investors would not benefit from the exempt status of the Fund's
dividends. See "Federal Income Taxes -- Special Tax Considerations for the
California Tax-Free Bond Fund" in the SAI.

Q. WHO IS THE INVESTMENT ADVISER?

A. Wells Fargo Bank serves as the investment adviser to the Fund. Wells
Fargo Bank is entitled to receive a monthly advisory fee at the annual
rate of 0.50% of the average daily net assets of the Fund. See "Advisory,
Administration and Distribution Arrangements."

Q. WHO IS THE SPONSOR, ADMINISTRATOR AND DISTRIBUTOR?

A. Stephens serves as the sponsor, administrator and distributor for the
Company. Stephens is entitled to receive a monthly administration fee at
the annual rate of 0.15% of the average daily net assets of the Fund;
decreasing to 0.10% of the average daily net assets of the Fund in excess
of $200 million. See "Advisory, Administration and Distribution
Arrangements."

ii
<PAGE> 45

Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?

A. An investment in the Fund is not insured against loss of principal. When
the value of the securities that the Fund owns declines, so does the value
of your investment in the Fund. The portfolio securities of the Fund are
subject to interest rate risk. Interest rate risk is the risk that
increases in market interest rates may adversely affect the value of the
long-term and medium-term municipal securities in which the Fund invests
and hence the value of your investment in the Fund. The values of such
securities generally change inversely to changes in market interest rates.
The Fund also is subject to credit risk. Credit risk is the risk that the
issuers of the debt securities in which the Fund invests may default on
the payment of principal and/or interest. In addition, certain of the
municipal securities in which the Fund invests may be considered to have
speculative characteristics. Since the Fund invests primarily in
securities issued by California, its agencies and municipalities, events
in California are more likely to affect the Fund's investments. See
"Investment Objective and Policies" in this Prospectus, and "Special
Factors affecting the California Tax-Free Bond Fund" in the SAI. Also, the
Fund is non-diversified, which means the Fund is subject to concentration
risk, which is the risk that events impacting a single issuer may have a
significant effect on the value of the Fund's portfolio. You should be
prepared to accept some risk with the money you invest in the Fund. As
with all mutual funds, there can be no assurance that the Fund will
achieve its investment objective.

Q. HOW MAY I PURCHASE SHARES?

A. Shares of the Fund may be purchased on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is a maximum sales
load of 4.50% (4.71% of the net amount invested) for purchasing Class A
Shares of the Fund. Class D Shares are subject to a maximum contingent
deferred sales charge of 1.00% of the lesser of net asset value at
purchase or net asset value at redemption. In most cases, the minimum
initial purchase amount for the Fund is $1,000. The minimum initial
purchase amount is $100 for shares purchased through the Systematic
Purchase Plan and $250 for shares purchased through qualified retirement
plans. The minimum subsequent purchase amount is $100. You may purchase
shares of the Fund through Stephens, Wells Fargo Bank, as transfer agent
(the "Transfer Agent"), or any authorized broker/dealer or financial
institution. Purchases of Fund shares may be made by wire directly to the
Transfer Agent.

Q. HOW WILL I RECEIVE DIVIDENDS?

A. Dividends on shares of the Fund are declared daily and paid monthly.
Dividends are automatically reinvested in additional shares of the same
class of the Fund, unless you elect to receive dividends by check. Any
capital gains will be distributed annually and may be reinvested in Fund
shares of the same class or paid by check at your election. All
reinvestments of dividends and/or capital gain distributions in shares of
the Fund are effected at the then current net asset value free of any
sales load. In addition, you may elect to reinvest Fund dividends and/or
capital gain distributions in shares of the same class of another of the
Company's funds with which you have an established account that has met
the applicable minimum initial investment requirement. See "Dividends and
Distributions."

iii
<PAGE> 46

Q. HOW MAY I REDEEM SHARES?

A. Shares may be redeemed on any day the Exchange is open upon request to
Stephens or the Transfer Agent directly or through any authorized
broker/dealer or financial institution. You may redeem shares by a request
in good form in writing or through telephone direction. Proceeds are
payable by check or, for shareholders who make prior arrangements, by
wire. Accounts maintaining less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. Except for
any contingent deferred sales charge which may be applicable upon
redemption of Class D Shares, the Company does not charge for redeeming
its shares. However, the Company reserves the right to impose charges for
wiring redemption proceeds. See "Redemption of Shares."

Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?

A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or
rate. Some of the permissible investments described in this Prospectus,
such as variable-rate instruments which have an interest rate that is
reset periodically based on an index, can be considered derivatives. Some
derivatives may be more sensitive than direct securities to changes in
interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value due to their structure or
contract terms.

Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES-RELATED RISKS?

A. Wells Fargo Bank, as investment adviser to the Fund, uses a variety of
internal risk management procedures to ensure that derivatives use is
consistent with the Fund's investment objective, does not expose the Fund
to undue risks and is closely monitored. These procedures include
providing periodic reports to the Board of Directors concerning the use of
derivatives. Derivatives use by the Fund also is subject to broadly
applicable investment policies. For example, the Fund may not invest more
than a specified percentage of its assets in "illiquid securities,"
including those derivatives that do not have active secondary markets. Nor
may the Fund use certain derivatives without establishing adequate "cover"
in compliance with SEC rules limiting the use of leverage.

iv
<PAGE> 47

SUMMARY OF EXPENSES

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE
BOND FUND
--------------------
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)... 4.50% 0.00%
Maximum Deferred Sales Load (as a percentage of the lesser of net asset value
at purchase or net asset value at redemption)
Redemption during year 1.................................................... 0.00% 1.00%
Redemption after year 1..................................................... 0.00% 0.00%
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
----------- -----------
<S> <C> <C> <C> <C>
Management Fees........................................................ 0.50% 0.50%
12b-1 Fees............................................................. 0.00% 0.50%
Other Expenses
Servicing Fees....................................................... 0.00% 0.25%
Administrative Fees.................................................. 0.14% 0.14%
Miscellaneous Expenses (after waivers or reimbursements)(1).......... 0.10% 0.10%
Total Other Expenses (after waivers or reimbursements)(1).............. 0.24% 0.49%
---- ----
Total Fund Operating Expenses (after waivers or reimbursements)(1)..... 0.74% 1.49%
</TABLE>

- ---------------

(1) The percentages shown above for the Class A and D Shares under
"Miscellaneous Expenses," "Total Other Expenses" and "Total Fund Operating
Expenses" reflect current fees and anticipated voluntary fee waivers and
expense reimbursements expected to continue through the current fiscal year.
For the year ended December 31, 1995, the percentages shown above under
"Miscellaneous Expenses," "Total Other Expenses" and "Total Fund Operating
Expenses" would have been, prior to any waivers or reimbursements then in
effect, 0.14%, 0.28% and 0.78%, respectively, for the Class A Shares and
0.18%, 0.57% and 1.57%, respectively, for the Class D Shares.

Stephens and Wells Fargo Bank each may elect, in its sole discretion, to
otherwise waive its respective fees or reimburse expenses. Any such waivers
or reimbursements with respect to the Fund reduces the total expenses of the
Fund. Long-term shareholders of the Fund could pay more in distribution
related charges than the economic equivalent of the maximum front-end sales
charges applicable to mutual funds sold by members of the National
Association of Securities Dealers, Inc. ("NASD"). There can be no assurances
that the voluntary fee waivers and expense reimbursements will continue.

v
<PAGE> 48

EXAMPLE OF EXPENSES

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment in Class A Shares of the Fund, assuming (1)
a 5% annual return and (2) redemption at the end of
each time period indicated............................. $ 52 $ 68 $ 84 $ 133
You would pay the following expenses on a $1,000
investment in Class D Shares of the Fund, assuming (1)
a 5% annual return and (2) redemption at the end of
each time period indicated............................. $ 25 $ 47 $ 81 $ 178
You would pay the following expenses on the same
investment in Class D Shares of the Fund, assuming no
redemption............................................. $ 15 $ 47 $ 81 $ 178
</TABLE>

------------------------

vi
<PAGE> 49

FINANCIAL HIGHLIGHTS

CALIFORNIA TAX-FREE BOND FUND

FOR A CLASS A SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED PERIOD
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, ENDED DEC. 31,
1995 1994 1993 1992 1991 1990 1989 1988*
--------- --------- --------- --------- --------- --------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period...................... $ 10.20 $ 11.47 $ 10.92 $ 10.73 $ 10.27 $ 10.35 $ 10.03 $ 10.00
--------- --------- --------- --------- --------- --------- ------- ---------
Income from investment
operations:
Net investment income
(loss)..................... 0.60 0.64 0.63 0.68 0.69 0.71 0.72 0.21
Net realized and unrealized
gain (loss) on
investments................ 1.03 (1.13) 0.75 0.26 0.46 (0.08) 0.32 0.03
--------- --------- --------- --------- --------- --------- ------- ---------
Total from investment
operations................. 1.63 (0.49) 1.38 0.94 1.15 0.63 1.04 0.24
Less distributions:
Dividends from net investment
income..................... (0.60) (0.64) (0.63) (0.68) (0.69) (0.71) (0.72) (0.21)
Distributions from net
realized gain.............. (0.39) (0.14) (0.20) (0.07) 0.00 0.00 0.00 0.00
Tax return of capital........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- --------- ------- ---------
Total from distributions..... (0.99) (0.78) (0.83) (0.75) (0.69) (0.71) (0.72) (0.21)
--------- --------- --------- --------- --------- --------- ------- ---------
Net Asset Value, end of
period..................... $ 10.84 $ 10.20 $ 11.47 $ 10.92 $ 10.73 $ 10.27 $ 10.35 $ 10.03
========= ========= ========= ========= ========= ========= ======= =========
Total Return (not
annualized)(3)............. 16.38% (4.32)% 12.98% 9.01% 11.62% 6.48% 10.73% 2.44%
Ratios/supplemental data:
Net assets, end of period
(000)...................... $ 268,352 $ 273,105 $ 361,779 $ 375,376 $ 332,845 $ 201,138 $70,412 $ 10,577
Number of shares outstanding,
end of period (000)........ 24,750 26,780 31,529 34,376 31,008 19,576 6,803 1,055
Ratios to average net assets
(annualized):
Ratio of expenses to average
net assets(1).............. 0.58% 0.50% 0.69% 0.50% 0.45% 0.29% 0.30% 0.08%
Ratio of net investment
income to average net
assets(2).................. 5.59% 5.87% 5.54% 6.24% 6.56% 6.97% 6.85% 6.61%
Portfolio turnover........... 38% 4% 10% 24% 8% 35% 26% N/A**
- ------------
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses...... 0.78% 0.95% 0.85% 0.85% 0.87% 0.95% 1.18% 4.07%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses................. 5.39% 5.42% 5.38% 5.89% 6.14% 6.31% N/A N/A
</TABLE>

(3) Total returns do not include any sales charges.

* The Fund commenced operations on October 6, 1988.

** The Fund sold no securities during this period.

vii
<PAGE> 50

CALIFORNIA TAX-FREE BOND FUND

FOR A CLASS D SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993*
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period..................................................... $13.32 $14.98 $15.00
------ ------ ------
Income from investment operations:
Net investment income (loss)............................................................. 0.68 0.73 0.34
Net realized and unrealized gain/(loss) on investments................................... 1.35 (1.47) 0.24
------ ------ ------
Total from investment operations......................................................... 2.03 (0.74) 0.58
Less distributions:
Dividends from net investment income..................................................... (0.68) (0.73) (0.34)
Distributions from net realized gain..................................................... (0.51) (0.19) (0.26)
Tax return of capital.................................................................... 0.00 0.00 0.00
------ ------ ------
Total from distributions................................................................. (1.19) (0.92) (0.60)
------ ------ ------
Net Asset Value, end of period........................................................... $14.16 $13.32 $14.98
====== ====== ======
Total Return (not annualized)(3)......................................................... 15.58% (5.00)% 3.92%
Ratios/supplemental data:
Net assets, end of period (000).......................................................... $7,063 $7,346 $7,641
Number of shares outstanding, end of period (000)........................................ 499 552 510
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)............................................... 1.30% 1.20% 1.32%
Ratio of net investment income to average net assets(2).................................. 4.87% 5.15% 4.50%
Portfolio turnover....................................................................... 38% 4% 10%
- ------------
(1) Ratio of expenses to average net assets prior to waived fees and reimbursed
expenses............................................................................. 1.57% 1.82% 1.61%
(2) Ratio of net investment income to average net assets prior to waived fees and
reimbursed expenses.................................................................. 4.60% 4.53% 4.21%
(3) Total returns do not include any sales charges.
* This class commenced operations on July 1, 1993.
</TABLE>

viii

<PAGE> 51

INVESTMENT OBJECTIVE AND POLICIES

Set forth below is a description of the investment objective and related
policies of the Fund. As with all mutual funds, there can be no assurance that
the Fund, which is a non-diversified portfolio, will achieve its investment
objective.

INVESTMENT OBJECTIVE. The California Tax-Free Bond Fund seeks to provide
investors with a high level of income exempt from federal income taxes and from
California personal income taxes, while preserving capital, by investing in
medium- to long-term, investment-grade municipal securities.

As a matter of fundamental policy, the Fund, under normal market
conditions, invests at least 80% of its net assets in municipal securities, the
interest on which is exempt from federal income taxes and not subject to the
federal alternative minimum tax ("AMT"). Under ordinary market conditions, at
least 65% of the value of the total assets of the Fund will be invested in
municipal bonds, as opposed to municipal notes or commercial paper. In addition,
under normal market conditions, the Fund intends to invest all of its assets in
securities issued by the State of California, and its cities, municipalities and
other public authorities. As described further in the SAI, the Fund may purchase
certain securities on a when-issued basis.

The municipal securities which the California Tax-Free Bond Fund may
purchase include:

Municipal Bonds. The municipal bonds in which the Fund invests generally
have a maturity at the time of issuance of up to thirty years. The California
Tax-Free Bond Fund may invest in municipal bonds that are rated at the date of
purchase "Baa" or better by Moody's Investors Service, Inc. ("Moody's") or "BBB"
or better by Standard & Poor's Ratings Group ("S&P"), or bonds that are not
rated but that are considered by Wells Fargo Bank, as investment adviser, to be
of comparable quality. Bonds rated at the minimum permitted level have
speculative characteristics and are more likely than higher rated bonds to have
a weakened capacity to pay principal and interest in times of adverse economic
conditions; all are considered investment grade. A description of the ratings is
contained in the Appendix to the SAI.

Municipal Notes. The municipal notes in which the Fund invests generally
have maturities at the time of issuance of three years or less. The Fund may
invest in municipal notes that are rated at the date of purchase "MIG 3" (or
"VMIG 3" in the case of an issue having a variable rate demand feature) or
better by Moody's or "SP-2" or better by S&P, or notes that are not rated but
that are considered by Wells Fargo Bank, as investment adviser, to be of
comparable quality. Municipal notes generally are issued in anticipation of the
receipt of tax funds, of the proceeds of bond placements or of other revenues.
The ability of an issuer to make payments is, therefore, dependent on such tax
receipts, proceeds from bond sales or other revenues, as the case may be.

Municipal Commercial Paper. Municipal commercial paper is a debt obligation
with a stated maturity of 270 days or less that is issued to finance seasonal
working capital needs or as short-term financing in anticipation of longer-term
debt. The Fund may invest in municipal commercial paper that is rated at the
date of purchase "Prime-1" or "Prime-2" by Moody's or "A-1+," "A-1" or "A-2" by
S&P, or municipal commercial paper that is not rated but is considered by Wells
Fargo Bank, as investment adviser, to be of comparable quality.

The Fund also may invest in certain "private activity bonds" or notes, the
interest on which may be subject to the AMT, such as pollution control bonds;
provided that such investments will be made only to

1
<PAGE> 52

the extent they are consistent with the Fund's fundamental policy, described
above, of investing, under normal market conditions, at least 80% of its net
assets in municipal securities, the interest on which is exempt from federal
income taxes and not subject to the AMT.

Because the Fund will "concentrate," i.e., invest at least 25% of its total
assets, in securities issued by or on behalf of the State of California, its
cities, municipalities and other public authorities, it is particularly
dependent on, and may be adversely affected by, general economic conditions in
California. See "Special Factors Affecting the California Tax-Free Bond Fund" in
the SAI. California is experiencing recurring budget deficits caused by lower
than anticipated tax-revenues and increased expenditures for certain programs.
These budget deficits have depleted the state's available cash resources, and
the state has recently had to use a series of external borrowings to meet its
cash needs. In addition, since 1992 some of the credit rating agencies have
assigned their third highest rating to certain of the state's debt obligations.
On July 15, 1994, three of the ratings agencies rating California's long-term
debt lowered their ratings of the state's general obligation bonds. Moody's
lowered its rating from "Aa" to "A1," S&P lowered its rating from "A+" to "A"
and termed its outlook as "stable," and Fitch Investors Service lowered its
rating from "AA" to "A." The Fund's investment adviser continues to monitor and
evaluate the Fund's investments in light of the events in California and the
Fund's investment objective and investment policies. The rating agencies also
continue to monitor events in the state and the state and local governments'
responses to budget shortfalls.

From time to time the California Tax-Free Bond Fund also may concentrate
its investments in municipal securities that are related in such a way that an
economic, business or political development or change affecting one such
security would also affect the other securities -- for example, municipal
securities the interest on which is paid from revenues of similar type projects.

The Fund, pending the investment of proceeds from the sale of Fund shares
or proceeds from the sale of portfolio securities, in anticipation of
redemptions or to maintain a "defensive" posture when, in the opinion of Wells
Fargo Bank, as investment adviser, it is advisable to do so because of market
conditions, may elect to invest temporarily up to 20% of the current value of
its net assets in cash reserves or in taxable securities in which the U.S.
Government Income Fund, another fund in the Overland Express Family of Funds,
may invest, or in instruments the interest on which is exempt from federal
income taxes, but not from California personal income taxes.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

FLOATING- AND VARIABLE-RATE INSTRUMENTS

2
<PAGE> 53

between the date the Fund elects to demand payment on a floating- or
variable-rate instrument and the date payment is due may affect the ability of
the issuer of the instrument to make payment when due, and unless such demand
instrument permits same-day settlement, such events may affect the Fund's
ability to obtain payment at par. Demand instruments whose demand feature is not
exercisable within seven days may be treated as liquid, provided that an active
secondary market exists.

------------------------

The Fund's investment objective, as set forth in the first paragraph of the
subsection describing the Fund's objective and policies, is fundamental; that
is, the investment objective may not be changed without approval by the vote of
the holders of a majority of the Fund's outstanding voting securities, as
described under "Capital Stock" in the SAI. If the Board of Directors
determines, however, that the Fund's investment objective can best be achieved
by a substantive change in a non-fundamental investment policy or strategy, the
Company may make such change without shareholder approval and will disclose any
such material changes in the then current prospectus.

ADVISORY, ADMINISTRATION AND
DISTRIBUTION ARRANGEMENTS

The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decides
upon matters of general policy.

INVESTMENT ADVISER

Pursuant to an Advisory Contract, the Fund is advised by Wells Fargo Bank,
420 Montgomery Street, San Francisco, California 94104, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the largest banks
in the United States, was founded in 1852 and is the oldest bank in the western
United States. As of April 1, 1996, Wells Fargo Bank and its affiliates provided
investment advisory services for approximately $56 billion of assets of
individuals, trusts, estates and institutions. Wells Fargo Bank is the
investment adviser to other separately managed portfolios of the Company and
serves as investment adviser or sub-adviser to five other registered open-end
management investment companies, each of which consists of several separately
managed investment portfolios.

The Advisory Contract provides that Wells Fargo Bank shall furnish to the
Fund investment guidance and policy direction in connection with the daily
portfolio management of the Fund. Pursuant to the Advisory Contract, Wells Fargo
Bank furnishes to the Board of Directors periodic reports on the investment
strategy and performance of the Fund.

3
<PAGE> 54

For its services under the Advisory Contract, Wells Fargo Bank is entitled
to monthly advisory fees at the annual rate of 0.50% of the average daily net
assets of the Fund. From time to time, Wells Fargo Bank may waive such fees in
whole or in part. Any such waiver would reduce expenses of the Fund and,
accordingly, have a favorable impact on the Fund's performance. For the year
ended December 31, 1995, Wells Fargo Bank was paid 0.41% of the average daily
net assets of the Fund as compensation for its services as investment adviser.

Mr. David Klug is responsible for the day-to-day management of the Fund.
Mr. Klug has managed municipal bond portfolios for Wells Fargo Bank for over ten
years. Prior to joining Wells Fargo Bank, he managed the municipal bond
portfolio for a major property and casualty insurance company. His investment
experience exceeds 20 years and includes all aspects of tax-exempt fixed-income
investments. He holds an M.B.A. from the University of Chicago and is a member
of The National Federation of Municipal Analysts and its California Chapter. Mr.
Klug has co-managed the Fund's portfolio since October 1988.

Ms. Laura L. Milner also is responsible for the day-to-day management of
the Fund. Ms. Milner joined Wells Fargo Bank in 1988. Her background includes
over seven years experience specializing in short- and long-term municipal
securities with Salomon Brothers. She is a member of the National Federation of
Municipal Analysts and its California Chapter. Ms. Milner has co-managed the
Fund's portfolio since May 1, 1996.

Morrison & Foerster LLP, counsel to the Company and special counsel to
Wells Fargo Bank, has advised the Company and Wells Fargo Bank that Wells Fargo
Bank and its affiliates may perform the services contemplated by the Advisory
Contract and this Prospectus without violation of the Glass-Steagall Act. Such
counsel has pointed out, however, that there are no controlling judicial or
administrative interpretations or decisions and that future judicial or
administrative interpretations of, or decisions relating to, present federal or
state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in such statutes, regulations and judicial or
administrative decisions or interpretations, could prevent such entities from
continuing to perform, in whole or in part, such services. If any such entity
were prohibited from performing any such services, it is expected that new
agreements would be proposed or entered into with another entity or entities
qualified to perform such services.

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR

Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with the Fund under which Stephens acts as administrator for the
Funds. For these administrative services, Stephens is entitled to receive from
the Fund a monthly administrative fee at an annual rate of 0.15% of its average
daily net assets; decreasing to 0.10% of the average daily net assets of the
Fund in excess of $200

4
<PAGE> 55

million. From time to time Stephens may waive fees from the Fund in whole or in
part. Any such waiver will reduce expenses of the Fund and, accordingly, have a
favorable impact on the performance of the Fund.

The Administration Agreement between Stephens and the Fund states that
Stephens shall provide as administrative services, among other things, (i)
general supervision of the operation of the Fund, including coordination of the
services performed by the Fund's investment adviser, transfer agent, custodian,
independent auditors and legal counsel; (ii) general supervision of regulatory
compliance matters, including the compilation of information for documents such
as reports to, and filings with, the SEC and state securities commissions; and
preparation of proxy statements and shareholder reports for the Funds; and (iii)
general supervision of the compilation of data required for the preparation of
periodic reports distributed to the Company's officers and Board of Directors.
Stephens also furnishes office space and certain facilities required for
conducting the business of the Fund and pays the compensation of the Company's
Directors, officers and employees who are affiliated with Stephens.

Stephens, as the principal underwriter of the Fund within the meaning of
the Investment Company Act of 1940 (the "1940 Act"), has also entered into a
Distribution Agreement with the Company pursuant to which Stephens has the
responsibility for distributing Class A Shares and Class D Shares of the Fund.
The Distribution Agreement provides that Stephens shall act as agent for the
Fund for the sale of Class A Shares and Class D Shares and may enter into
selling agreements with broker/dealers or financial institutions to market and
make available Class A Shares and Class D Shares to their respective customers.

Under the Distribution Agreement, Stephens is entitled to receive from the
Fund a monthly fee at an annual rate of up to the greater of $100,000 or 0.05%
of the average daily net assets of the Class A Shares of the Fund and a monthly
fee at an annual rate of up to 0.50% of the average daily net assets of the
Class D Shares of the Fund. The actual fee payable to Stephens is determined,
within such limits, from time to time by mutual agreement between the Company
and Stephens, and may not exceed the maximum amount payable under the Rules of
Fair Practice of the NASD. With respect to the Class D Shares of the Fund,
Stephens may enter into selling agreements with one or more selling agents under
which such agents may receive from Stephens compensation for sales support
services. Such compensation may include, but is not limited to, commissions or
other payments to such agents based on the average daily net assets of Class D
Shares of the Fund attributable to them. Services provided by selling agents in
exchange for commissions and other payments to selling agents are the principal
sales support services provided to the Fund. Stephens may retain any portion of
the total distribution fee payable under the Distribution Agreement to
compensate it for distribution-related services provided by it or to reimburse
it for other distribution-related expenses. Since the Distribution Agreement
provides for fees that are used by Stephens to pay for distribution services, a
plan of distribution for each class of shares (individually a "Plan" and
collectively the "Plans") and the Distribution Agreement are approved and
reviewed in accordance with Rule 12b-1 under the 1940 Act, which regulates the
manner in which an investment company may, directly or indirectly, bear the
expense of distributing its shares. See the Prospectus section captioned
"Distribution Plans" for a more complete description of the Plans.

5
<PAGE> 56

SERVICING AGENTS

The Fund may enter into servicing agreements with one or more servicing
agents on behalf of the Class D Shares of the Fund. Under such agreements,
servicing agents provide shareholder liaison services, which may include
responding to customer inquiries and providing information on shareholder
investments, and provide such other related services as the Fund or a Class D
shareholder may reasonably request. For these services, a servicing agent
receives a fee which will not exceed, on an annualized basis for the Fund's then
current fiscal year, the lesser of 0.25% of the average daily net assets of the
Class D Shares of the Fund (represented by Class D Shares owned by investors
with whom the servicing agent maintains a servicing relationship), or an amount
which equals the maximum amount payable to the servicing agent under applicable
laws, regulations or rules.

DETERMINATION OF NET ASSET VALUE

Net asset value per share for the Fund is determined by Wells Fargo Bank on
each day that the Exchange is open for trading. The net asset value of a share
of a class of the Fund is the value of total net assets attributable to such
class divided by the number of outstanding shares of that class. The value of
net assets per class is determined daily by adjusting the net assets per class
at the beginning of the day by the value of each class's shareholder activity,
net investment income and net realized and unrealized gains or losses for that
day. Net investment income is calculated each day for each class by attributing
to each class a pro rata share of daily income and common expenses, and by
assigning class-specific expenses to each class as appropriate. The net asset
value of each class is expected to fluctuate daily.

PERFORMANCE DATA

From time to time, the Company may advertise yield and total return
information with respect to a class of shares of the Fund. Total return and
yield information of a class of shares are based on the historical earnings and
performance of such class of shares and should not be considered representative
of future performance.

6
<PAGE> 57

(rather than the public offering price), in which case the figures would not
reflect the effect of any sales charges that would have been paid by an investor
in the class of shares or by assuming that a sales charge other than the maximum
sales charge (reflecting the Volume Discounts set forth below) is assessed,
provided that total return data derived pursuant to the calculation described
above are also presented.

The yield of a class of shares will be computed by dividing its net
investment income per share of the class earned during a specified period by its
public offering price per share (which includes the maximum sales charge) on the
last day of such period and annualizing the result. Tax-equivalent yield for the
Fund, which assumes that a stated income tax rate has been applied to non-exempt
income to derive the tax-exempt portion of the Fund's yield, also may be
advertised. For purposes of sales literature, these yields may also, at times,
be calculated on the basis of the net asset value per share of the class (rather
than the public offering price), in which case the figures would not reflect the
effect of any sales charges that would have been paid by an investor in the
class of shares, or by assuming that a sales charge other than the maximum sales
charge (reflecting the Volume Discounts set forth below) is assessed, provided
that yield data derived pursuant to the calculation described above are also
presented.

Because of differences in the fees and/or expenses borne by Class D Shares
of the Fund, the net yield on such shares can be expected, at any given time, to
differ from the net yield on Class A Shares. Performance information will be
computed separately for Class A Shares and Class D Shares.

Additional information about the Fund's performance is contained in the
Annual Report. The Annual Report may be obtained free of charge by calling the
Company at 800-552-9612.

PURCHASE OF SHARES

In most cases, the minimum initial purchase amount for the Fund is $1,000.
The minimum initial purchase amount is $100 for shares purchased through the
Systematic Purchase Plan and $250 for shares purchased through a retirement plan
qualified under the Internal Revenue Code of 1986, as amended (the "Code"). The
minimum subsequent purchase amount is generally $100. The minimum initial or
subsequent purchase amount requirements may be waived or lowered for investments
effected on a group basis by certain entities and their employees, such as
pursuant to a payroll deduction or other accumulation plan. The Company reserves
the right to reject any purchase order. All funds, net of sales loads, will be
invested in full and fractional shares. Checks will be accepted for the purchase
of the Fund's shares subject to collection at full face value in U.S. dollars.
Inquiries concerning purchases may be directed to the Company at (800) 572-7797
or at the address on the front cover of the Prospectus.

7
<PAGE> 58

------------------------

When payment for shares of the Fund through the Transfer Agent is by a
check that is drawn on any member bank of the Federal Reserve System, federal
funds normally become available to the Fund on the business day after the day
the check is deposited. Checks drawn on a non-member bank or a foreign bank may
take substantially longer to be converted into federal funds and, accordingly,
may delay the execution of an order.

When shares of the Fund are purchased through a broker/dealer or financial
institution, Stephens reallows that portion of the sales load designated below
as the Dealer Allowance. Stephens has established a non-cash compensation
program, pursuant to which broker/dealers or financial institutions that sell
shares of the Fund may earn additional compensation in the form of trips to
sales seminars or vacation destinations, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or merchandise. If all sales charges are paid or
reallowed to a broker/dealer or financial institution, it may be deemed an
"underwriter" under the Securities Act of 1933. When shares are purchased
directly through the Transfer Agent and no broker/dealer or financial
institution is involved with the purchase, the entire sales load is paid to
Stephens.

Sales loads relating to the purchase of Class A Shares in the Fund are as
follows:

Class D Shares are not subject to a front-end sales load. However, Class D
Shares which are redeemed within one year from the receipt of a purchase order
will be subject to a contingent deferred sales charge equal to 1% of the dollar
amount equal to the lesser of the net asset value at the time of purchase of the
shares being redeemed or the net asset value of such shares at the time of
redemption.

8
<PAGE> 59

REDUCED SALES CHARGE -- CLASS A SHARES

The above Volume Discounts are also available to you based on the combined
dollar amount being invested in Class A Shares of the Fund or of Class A Shares
of other portfolios of the Company which assess a sales load (the "Load Funds").
Because Class D Shares are not subject to a front-end sales charge, the amount
of Class D shares you hold is not considered in determining any volume discount.

The Right of Accumulation allows you to combine the amount being invested
in Class A Shares of the Fund with the total net asset value of Class A Shares
in any of the Load Funds already owned in accordance with the above sales load
schedule to reduce the sales load. For example, if you own Class A Shares of the
Load Funds with an aggregate net asset value of $90,000 and invest an additional
$20,000 in Class A Shares of the Fund, the sales load on the entire additional
amount would be 4.00% of the offering price. To obtain such discount, you must
provide sufficient information at the time of purchase to permit verification
that the purchase qualifies for the reduced sales load, and confirmation of the
order is subject to such verification. The Right of Accumulation may be modified
or discontinued at any time with respect to all Class A Shares purchased
thereafter.

You may Reinvest proceeds from a redemption of Class A Shares of the Fund
in Class A Shares of the Fund or in Class A Shares of another of the Company's
investment portfolios that offers Class A Shares at net asset value, without a
sales load, within 120 days after such redemption. However, if the other
investment portfolio charges a sales load that is higher than the sales load
that you have paid in connection with the Class A Shares you have redeemed, you
pay the difference. In addition, the Class A Shares of the investment portfolio
to be acquired must be registered for sale in your state of residence. The
amount that may be so reinvested may not exceed the amount of the redemption
proceeds, and a written order for the purchase of the Class A Shares must be
received by the Fund or the Transfer Agent within 120 days after the effective
date of the redemption.

9
<PAGE> 60

securities for their own account, or a trustee or other fiduciary purchasing for
a single fiduciary account or single trust estate.

Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by Directors, officers
and employees (and their spouses, parents, children and siblings) of the
Company, Stephens, its affiliates and other broker-dealers that have entered
into agreements with Stephens to sell such shares. Class A Shares of the Fund
also may be purchased at a purchase price equal to the net asset value of such
shares, without a sales load, by present and retired Directors, officers and
employees (and their spouses, parents, children and siblings) of Wells Fargo
Bank and its affiliates if Wells Fargo Bank and/or the respective affiliates
agree. Such shares also may be purchased at such price by employee benefit and
thrift plans for such persons and by any investment advisory, trust or other
fiduciary account (other than an individual retirement account) that is
maintained, managed or advised by Wells Fargo Bank or Stephens or their
affiliates.

Class A Shares of the Fund may be purchased at net asset value (without
payment of a sales load) by the following types of investors when the trades are
placed through an omnibus account maintained with the Fund by a
broker/dealer -- trust companies; deferred compensation plans and the trusts
used to fund these plans; investment advisers and financial planners who charge
a management, consulting or other fee for their services and who place trades on
their own behalf or on behalf of their clients; and clients of such investment
advisers or financial planners who place trades on their own behalf if the
clients' accounts are linked to the master account of such investment adviser or
financial planner on the books and records of the broker/dealer.

CONTINGENT DEFERRED SALES CHARGE -- CLASS D SHARES

10
<PAGE> 61

shares at the time of redemption. Accordingly, a contingent deferred sales
charge will not be imposed on amounts representing increases in net asset value
above the net asset value at the time of purchase. In addition, a charge will
not be assessed on Class D Shares purchased through reinvestment of dividends or
capital gain distributions. In determining whether a contingent deferred sales
charge is applicable to a redemption, Class D Shares are considered redeemed on
a first-in, first-out basis so that Class D Shares held for a longer period of
time are considered redeemed prior to more recently acquired shares.

Investors who are entitled to purchase Class A Shares at net asset value
without a sales load should not purchase Class D Shares. Other investors,
including those who are entitled to purchase Class A Shares of the Fund at a
reduced sales load, should compare the fees assessed on Class A Shares against
those assessed on Class D Shares (including potential contingent deferred sales
charges and higher Rule 12b-1 fees) in light of the amount to be invested and
the anticipated time that the shares will be owned.

Shares of the Fund may be purchased by any of the methods described below.

INITIAL PURCHASES OF FUND SHARES BY WIRE

1. Telephone toll free (800) 572-7797. Give the name of the Fund in which
the investment is to be made, the class of shares to be purchased, the name(s)
in which the shares are to be registered, the address and social security number
(or tax identification number, where applicable) of the person or entity in
whose name(s) the shares are to be registered, dividend payment election, amount
to be wired, name of the wiring bank and name and telephone number of the person
to be contacted in connection with the order. An account number will be
assigned.

2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($1,000 or more) to:

Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express California Tax-Free Bond Fund (designate
Class A or D)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)

11
<PAGE> 62

Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082

4. Share purchases are effected at the public offering price, or, in the
case of Class D Shares, the net asset value next determined after the Account
Application is received and accepted.

INITIAL PURCHASES OF FUND SHARES BY MAIL

1. Complete an Account Application. Indicate the services to be used.

2. Mail the Account Application and a check for $1,000 or more, payable to
"Overland Express California Tax-Free Bond Fund (designate Class A or D)" at its
mailing address set forth above.

ADDITIONAL PURCHASES

Additional purchases of $100 or more may be made by instructing the Fund's
Transfer Agent to debit an approved account designated in your Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Overland Express California Tax-Free Bond Fund (designate Class A or D)" to
the above address. Write the Fund account number on the check and include the
detachable stub from a Statement of Account or a letter providing the account
number.

SYSTEMATIC PURCHASE PLAN

The Company's Systematic Purchase Plan provides you with a convenient way
to establish and automatically add to your existing accounts on a monthly basis.
If you elect to participate in this plan, you must specify an amount ($100 or
more) to be withdrawn automatically by the Transfer Agent on a monthly basis
from an approved bank account designated in your Account Application (an
"Approved Bank Account"). The Transfer Agent withdraws and uses this amount to
purchase shares of the designated Fund on or about the fifth business day of
each month. The Transfer Agent requires a minimum of ten (10) business days to
implement your Systematic Purchase Plan purchases. There are no additional fees
charged for participating in this plan.

You may change the investment amount, the date on which your Systematic
Purchase is effected, suspend purchases or terminate the election at any time by
providing written notice to the Transfer Agent at least five (5) business days
prior to any scheduled transaction. An election will be terminated automatically
if your Approved Bank Account balance is insufficient to make a scheduled
withdrawal, or if either your Approved Bank Account or your Fund account is
closed.

12
<PAGE> 63

PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Purchase orders for shares in the Fund placed through authorized
broker/dealers and financial institutions by the close of the Exchange on any
day that the Fund's shares are offered for sale, including orders for which
payment is to be made from free cash credit balances in securities accounts held
by a dealer, will be effective on the same day the order is placed if received
by the Transfer Agent before the close of business. Purchase orders that are
received by a dealer or financial institution after the close of the Exchange or
by the Transfer Agent after the close of business generally will be effective on
the next day that shares are offered. The broker/dealer or financial institution
is responsible for the prompt transmission of purchase orders to the Transfer
Agent. Payment for Fund shares is not due until settlement date. Broker/dealers
and financial institutions may benefit from temporary use of payments to the
Fund during the settlement period. A broker/dealer or financial institution that
is involved in a purchase transaction may charge separate account, service or
transaction fees. Financial institutions may be required to register as dealers
pursuant to applicable state securities laws, which may differ from federal law
and any interpretations expressed herein.

EXCHANGE PRIVILEGES

You may exchange Class A Shares of the Fund for shares of the same class of
the Company's other investment portfolios or for shares of the California
Tax-Free Money Market, Money Market, National Tax-Free Institutional Money
Market or U.S. Treasury Money Market Funds in an identically registered account
at respective net asset values. If the other investment portfolio charges a
sales load on the purchase of the class of shares being exchanged that is higher
than the sales load that you have paid in connection with the shares you are
exchanging, you pay the difference between the sales loads. Class D Shares of
the Fund may be exchanged for Class D Shares of one of the Company's other
investment portfolios that offer Class D Shares or for Class A Shares of the
Money Market Fund in an identically registered account at respective net asset
values. You are not charged a contingent deferred sales charge on exchanges of
Class D Shares for shares of the same class of another of the Company's
investment portfolios or for Class A Shares of the Money Market Fund. If you
exchange Class D Shares for shares of the same class of another investment
portfolio, or for Class A Shares of the Money Market Fund, the remaining period
of time (if any) that the contingent deferred sales charge is in effect will be
computed from the time of the initial purchase of the previously held shares.
Accordingly, if you exchange Class D Shares for Class A Shares of the Money
Market Fund, and redeem the shares of the Money Market Fund within one year of
the receipt of the purchase order for the exchanged Class D Shares, you will
have to pay a deferred sales charge equal to the contingent deferred sales
charge applicable to the previously exchanged Class D Shares. If you exchange
Class D Shares of an investment portfolio for Class A Shares of the Money Market
Fund, you may subsequently re-exchange the acquired Class A Shares only for
Class D Shares. If you re-exchange the Class A Shares of the Money Market Fund
for Class D Shares, the remaining period of time (if any) that the contingent
deferred sales charge is in effect will be computed from the time of your
initial purchase of Class D Shares. In addition, shares of the investment
portfolio to be acquired must be registered for sale in your state of residence.
You should obtain, read and retain the Prospectus for the investment portfolio
into which you desire to exchange before submitting an exchange order.

13
<PAGE> 64

case you may subsequently authorize such telephone exchanges by completing a
Telephone Exchange Authorization Form and submitting it to the Transfer Agent in
advance of the first such exchange). Shares held in certificated form may not be
exchanged by telephone. The Transfer Agent's telephone number for exchanges is
(800) 572-7797.

Procedures applicable to redemption of the Fund's shares are also
applicable to exchanging shares, except that, with respect to an exchange
transaction between accounts registered in identical names, no signature
guarantee is required unless the amount being exchanged exceeds $25,000. The
Company reserves the right to limit the number of times shares may be exchanged
between Funds, or to reject in whole or in part any exchange request into a fund
when management believes that such action would be in the best interest of the
fund's other shareholders, such as when management believes that such action
would be appropriate to protect such fund against disruptions in portfolio
management resulting from frequent transactions by those seeking to time market
fluctuations. Any such rejection will be made by management on a prospective
basis only, upon notice to the shareholder given not later than 10 days
following such shareholder's most recent exchange. The Company reserves the
right to modify or discontinue exchange privileges at any time. Under SEC rules,
60 days prior notice of any amendments or termination of exchange privileges
will be given to shareholders, except under certain extraordinary circumstances.
A capital gain or loss for federal income tax purposes may be realized upon an
exchange, depending upon the cost or other basis of shares exchanged.

REDEMPTION OF SHARES

Except for any contingent deferred sales charge, which may be applicable
upon redemption of Class D Shares, as described under "Purchase of Shares," the
Company does not charge for redemption transactions. However, a broker/dealer or
financial institution that is involved in a redemption transaction may charge
separate account, service or transaction fees. On a day the Fund is open for
business, redemption orders received by an authorized broker/dealer or financial
institution before the close of the Exchange and received by the Transfer Agent
before the close of business on the same day will be executed at the net asset
value per share determined at the close of the Exchange on that day. Redemption
orders received by authorized broker/dealers or financial institutions after the
close of the Exchange, or not received by the Transfer Agent prior to the close
of business, will be executed at the net asset value determined at the close of
the Exchange on the next business day.

14
<PAGE> 65

Redemption proceeds, net of any contingent deferred sales charge applicable
with respect to Class D Shares, ordinarily will be remitted within seven days
after the order is received in proper form, except proceeds may be remitted over
a longer period to the extent permitted by the SEC under extraordinary
circumstances. If an expedited redemption is requested, redemption proceeds will
be distributed only if the check used for investment is deemed to be cleared for
payment by your bank, currently considered by the Company to be a period of ten
(10) days after investment. The proceeds, of course, may be more or less than
cost. Payment of redemption proceeds may be made in securities, subject to
regulation by some state securities commissions.

REDEMPTION BY MAIL

2. Sign the letter in exactly the same way the account is registered. If
there is more than one owner of the shares, all must sign.

4. If shares to be redeemed are held in certificated form, enclose the
certificates with the letter. Do not sign the certificates and for protection
use registered mail.

5. Mail the letter to the Transfer Agent at the mailing address set forth
under "Purchase of Shares -- Initial Purchase of Fund Shares by Wire."

SYSTEMATIC WITHDRAWAL PLAN

The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your account and the proceeds, net of any contingent
deferred sales charge applicable with respect to Class D Shares, distributed to
you on a monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of the date of your election to
participate and are not also a participant in the Company's Systematic Purchase
Plan at any time while participating in this plan. To participate in the plan
you must specify an amount ($100 or more) to be distributed by check to your
address of record or deposited in your Approved Bank Account. The Transfer Agent
redeems sufficient shares and mails or deposits the proceeds of the redemption,
net of any contingent deferred sales charge applicable with respect to Class D
Shares, as instructed, on or about the fifth business day prior to the end of
each month. There are no additional fees charged for participating in this plan.

15
<PAGE> 66

It may take up to ten (10) business days after receipt of your request to
establish your participation in the Systematic Withdrawal Plan. You may change
the withdrawal amount, suspend withdrawals or terminate your participation in
the Systematic Withdrawal Plan at any time by providing written notice to the
Transfer Agent at least five business days prior to a scheduled transaction. An
election will be terminated automatically if your Fund account balance is
insufficient to make a scheduled withdrawal or if your Fund account or Approved
Bank Account is closed.

EXPEDITED REDEMPTIONS BY LETTER AND TELEPHONE

If shares are not held in certificated form, you may request an expedited
redemption of shares by letter or telephone (unless you have elected not to
authorize telephone redemptions on your Account Application or other form that
is on file with the Transfer Agent) on any day the Fund is open for business.
See "Exchange Privileges" for additional information regarding telephone
redemption privileges.

You may request expedited redemption by telephone by calling the Transfer
Agent at (800) 572-7797.

REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

16
<PAGE> 67

institutions will be credited to your account with such broker/dealer or
institution. You may request a check from the broker/dealer or financial
institution or may elect to retain the redemption proceeds in your account. The
broker/dealer or financial institution may benefit from the use of the
redemption proceeds prior to the clearance of a check issued to you for such
proceeds or prior to disbursement or reinvestment of such proceeds on your
behalf.
------------------------

The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.

DISTRIBUTION PLANS

The Company's Board of Directors has adopted a Distribution Plan (the
"Plans") on behalf of each class of shares of the Fund. Under the Plans and
pursuant to the Distribution Agreement, the Fund may defray all or part of the
cost of preparing and printing prospectuses and other promotional materials and
of delivering prospectuses and those materials to prospective shareholders of
the Fund, by paying on an annual basis up to the greater of $100,000 or 0.05% of
the average daily net assets of the Class A Shares of the Fund and a monthly fee
at an annual rate of 0.50% of the average daily net assets of the Class D Shares
of the Fund to the distributor. Under the Plan for the Class D Shares of the
Fund, the distributor may enter into selling agreements with one or more selling
agents under which such agents may receive compensation for distribution-related
services from the distributor, including, but not limited to, commissions or
other payments to such agents based on the average daily net assets of Class D
Shares attributable to them. The distributor may retain any portion of the total
distribution fee payable under the Plans to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses. The Plans provide only for the reimbursement of
actual expenses. The Fund may participate in joint distribution activities with
any other portfolios and classes of the Company, in which event expenses
reimbursed out of the assets of the Fund may be attributable, in part, to the
distribution-related activities of another portfolio. Generally, the expenses
attributable to joint distribution activities will be allocated among the Fund
and any other portfolio of the Company in proportion to their relative net asset
sizes, although the Board of Directors may allocate such expenses in any other
manner that it deems fair and equitable.

SERVICING PLAN

17
<PAGE> 68

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to declare as a dividend to all shareholders of record
substantially all of its net investment income at the close of each business day
to shareholders of record at 4:00 p.m. (New York time) on the day of
declaration. Shares purchased in the Fund will begin earning dividends on the
business day following the date the purchase order settles and shares redeemed
will earn dividends through the date of redemption. Net investment income for a
Saturday, Sunday or holiday will be declared as a dividend to shareholders of
record at 4:00 p.m. (New York time) on the prior business day.

Dividends of the Fund declared in, and attributable to, any month will be
paid early in the following month. Shareholders of the Fund who redeem shares
prior to a dividend payment date will be entitled to all dividends declared but
unpaid prior to redemption on such shares on the next dividend payment date.

Net capital gains of the Fund, if any, will be distributed annually (or
more frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI).

The Fund's net investment income available for distribution to the holders
of Class D Shares will be reduced by the amount of shareholder servicing fees
payable to shareholder servicing agents under the Servicing Plan and by the
incremental distribution fees payable under the Distribution Plan. There may be
certain other differences in fees (e.g., transfer agent fees) between Class A
Shares and Class D Shares that would affect their relative dividends.

DIVIDEND AND DISTRIBUTION OPTIONS

When you fill out an Account Application, you can choose from three
dividend and distribution options:

A. The Automatic Reinvestment Option provides for the reinvestment of
dividends and capital gain distributions in additional shares of the same
Class of the Fund. Dividends and distributions declared in a month are
reinvested at net asset value early in the following month. You are
assigned this option automatically if you make no choice on your Account
Application.

18
<PAGE> 69

TAXES

Generally, dividends of taxable income and distributions of capital gain
are taxable to shareholders at the time they are paid. However, such dividends
and distributions declared payable in October, November and December and made
payable to shareholders of record in such a month are treated as paid and are
thereby taxable as of December 31, provided that such dividends and
distributions are actually paid no later than January 31 of the following year.
In addition, by complying with the applicable provisions of the California
Revenue and Taxation Code, dividends of the Fund also will be exempt from
California personal income tax to the extent such dividends are attributable to
instruments that pay interest which would be exempt from California personal
income tax, if such instruments were held directly by an individual. The Fund
does not make any representation regarding the taxation of its corporate
shareholders with respect to Fund distributions and recommends that they consult
their tax advisors.

The Fund will inform you by January 31 of each year of the amount and
nature of Fund dividends and capital gain distributions with respect to the
previous year. You should keep all statements you receive to assist in your
personal record keeping. The Company is required by federal law to withhold,
subject to certain exemptions, at a rate of 31% on taxable dividends, capital
gain distributions, and redemption proceeds (including proceeds from exchanges)
paid or credited to individual shareholders of the Fund, if a shareholder has
not complied with IRS regulations or if a correct taxpayer identification
number, certified when required, is not on file with the Company or the Transfer
Agent. In connection with this withholding requirement, you will be asked to
certify on your Account Application that the social security or taxpayer

19
<PAGE> 70

identification number you provide is correct and that you are not subject to 31%
backup withholding for previous underreporting to the IRS.

Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes -- Foreign Shareholders" in the SAI.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Wells Fargo Bank has been retained to act as the Fund's custodian and
transfer and dividend disbursing agent. Its principal place of business is 420
Montgomery Street, San Francisco, California 94104 and its transfer and dividend
disbursing agency activities are managed at 525 Market Street, San Francisco,
California 94105.

ORGANIZATION AND CAPITAL STOCK

The Company, an open-end investment company, was incorporated in Maryland
on April 27, 1987. The authorized capital stock of the Company consists of
20,000,000,000 shares having a par value of $.001 per share. The Company
currently offers the following series of shares, each representing an interest
in one of the following funds -- the Asset Allocation, California Tax-Free Bond,
California Tax-Free Money Market, Money Market, Municipal Income National
Tax-Free Institutional Money Market, Overland Sweep, Short-Term
Government-Corporate Income, Short-Term Municipal Income, Strategic Growth, U.S.
Government Income, U.S. Treasury Money Market and Variable Rate Government
Funds. The Board of Directors may, in the future, authorize the issuance of
other series of capital stock representing shares of additional investment
portfolios or funds. All shares of the Company have equal voting rights and will
be voted in the aggregate, and not by series or class, except where voting by
series or class is required by law or where the matter involved affects only one
series or class. The Company may dispense with the annual meeting of
shareholders in any fiscal year in which it is not required by the 1940 Act to
elect Directors; however, shareholders are entitled to call a meeting of
shareholders for purposes of voting on removal of a Director or Directors. A
more detailed statement of the voting rights of shareholders is contained in the
SAI. All shares of the Company, when issued, will be fully paid and
nonassessable.

20
<PAGE> 71
OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS SHAREHOLDER SERVICES, WELLS FARGO BANK, N.A.
POST OFFICE BOX 63084, SAN FRANCISCO, CALIFORNIA 94163
[LOGO] FOR PERSONAL SERVICE PLEASE CALL
YOUR INVESTMENT ADVISOR OR 1-800-572-7797

ACCOUNT APPLICATION PAGE 1 OF 5

CALIFORNIA TAX-FREE BOND FUND

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / ADDITIONAL INVESTMENT OR CHANGE TO ACCOUNT # _____________
- -----------------------------------------------------------------------------------------------------------
<S> <C>
/ / INDIVIDUAL 1. Individual __________________________________________ _______-_____-_______
USE LINE 1 First Name Initial Last Name Soc. Security No.

/ / JOINT OWNERS 2. Joint Owner _____________________________________ (Only one Soc. Security No. is
USE LINES 1 & 2 First Name Initial Last Name required for Joint Owners)
Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is
indicated:
/ / Tenants in Common
/ / TRANSFER TO 3. Uniform _________________________________________________________________
MINORS Transfer Custodian's Name (only one) Minor's State of Residence
USE LINE 3 to Minors __________________________________________ _______-_____-_______
Minor's Name (only one) Minor's Soc. Security No.
/ / TRUST* 4. Trust Name _________________________________________________________________
USE LINE 4 Trustee(s) _________________________________________________________________
(If you would like Trustee's name included in registration.)
Trust ID Number _____________________________________________
Please attach title page, the page(s) allowing investment in a mutual fund
("powers page") and signature page, and complete Section 6, "Authorization
for Trusts and Organizations."
/ / ORGANIZATION* 5. Organization Name ______________________________________ _________-_________
USE LINE 5 Complete "Authorization for Trusts and Tax I.D. No.
rganizations" (Section 6).
- -----------------------------------------------------------------------------------------------------------
ADDRESS:
Number and Street _________________________________________________________ Apartment No. __________
City ________________________________________________ State __________________ Zip Code ______________
Telephone Numbers: (DAY) __________-__________-__________ (EVENING) ________-_________-__________
(Area Code) (Area Code)
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(CONTINUED)

<PAGE> 72
[LOGO] ACCOUNT APPLICATION PAGE 2 OF 5
OVERLAND EXPRESS FUNDS, INC.
- --------------------------------------------------------------------------------
2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $1,000.)
- --------------------------------------------------------------------------------
INVESTMENT AMOUNT: $____________________

TYPE OF ACCOUNT (CHOOSE ONE ONLY):

/ / Class A Shares, or

/ / Class D Shares (not available for
purchases of $9,000,000 or more)

Note: If no choice is indicated, Class A Shares will be selected.

METHOD OF PAYMENT: / / Debit bank account designated in Section 3.

/ / Check attached (payable to Overland Express
California Tax Free Bond Fund (designate Class A
or D))

/ / Funds have been wired to Overland Express

- --------------------------------------------------------------------------------

SETTLEMENT ARRANGEMENTS: (Check only one if applicable)

- --------------------------------------------------------------------------------

SYSTEMATIC PURCHASE PLAN:

/ / I hereby authorize you to systematically withdraw from the bank account
designated in Section 3 the following amount to purchase shares of the
Fund. I understand and agree that the designated account will be debited
on or about the fifth business day of each month to effect the Fund
purchase and that such monthly investments shall continue until my
written notice to cancel has been received by you at least five (5)
business days prior to the next scheduled Fund purchase.
Monthly Investment Amount: $_________________________ (minimum $100)
- --------------------------------------------------------------------------------

SYSTEMATIC WITHDRAWAL PLAN:

/ / Mail check to registration set forth in Section 1.

/ / Distribute funds to bank account designated in Section 3.
- --------------------------------------------------------------------------------
3. BANK ACCOUNT INFORMATION
- --------------------------------------------------------------------------------
______________________________________________________________________________
Bank Name
______________________________________________________________________________
Address City State Zip
______________________________________________________________________________
Bank Account Number Bank Routing Number
- --------------------------------------------------------------------------------
(CONTINUED)
<PAGE> 73
[LOGO] ACCOUNT APPLICATION PAGE 3 OF 5
OVERLAND EXPRESS FUNDS, INC.
- --------------------------------------------------------------------------------
4. REDUCED SALES CHARGES (If Applicable.)
- --------------------------------------------------------------------------------
LETTER OF INTENT -- CLASS A SHARES

/ / I agree to the Letter of Intent set forth above. It is my intention to
invest over a 13-month period in the Load Funds an aggregate amount equal
to at least:

/ / $100,000 / / $200,000 / / $400,000 / / $600,000
/ / $800,000 / / $1,000,000 / / $2,500,000 / / $5,000,000
/ / $9,000,000

Existing accounts must be identified in advance. If the value of currently
owned shares is to be applied towards completion of this Letter of Intent,
please list accounts below.

Account #____________________ Account #____________________

RIGHT OF ACCUMULATION -- CLASS A SHARES

/ / I qualify for reduced sales charges under the Right of Accumulation. The
value of shares presently held in the Overland Express accounts listed
below, combined with this investment, totals $100,000 or more.
Account #____________________ Account #____________________
- --------------------------------------------------------------------------------
5. TELEPHONE INSTRUCTIONS (Do NOT check this box if you wish to authorize
telephone instructions.)
- --------------------------------------------------------------------------------

All dividends and capital gain distributions will be automatically reinvested
in shares of the same class of the Fund unless otherwise indicated:

/ / Invest dividends in Account #____________________ of _________________ Fund
of the Overland Express Funds.

/ / Invest capital gain distributions in Account #____________________ of
____________________ Fund of the Overland Express Funds.

/ / Pay dividends by check and/or / / pay capital gain distributions by check

AND MAIL CHECKS TO:

/ / The registration address set forth in Section 1. / / The bank account
designated in Section 3.
- --------------------------------------------------------------------------------
(CONTINUED)
<PAGE> 74
[LOGO] ACCOUNT APPLICATION PAGE 4 OF 5
OVERLAND EXPRESS FUNDS, INC.
- --------------------------------------------------------------------------------
7. AUTHORIZATION FOR TRUSTS AND ORGANIZATIONS (If Applicable.)
- --------------------------------------------------------------------------------

CORPORATIONS, TRUSTS, PARTNERSHIPS OR OTHER ORGANIZATIONS MUST COMPLETE
THIS SECTION.

<TABLE>
<S> <C> <C> <C> <C>
Registered Owner is a: / / Trust / / Corporation, Incorporated Association
/ / Partnership / / Other:_______________________________________________________
(such as Non-Profit Organization, Religious Organization, Sole
Proprietorship, Investment Club, Non-incorporated Association, etc.)
</TABLE>

<TABLE>
<S> <C> <C>
Name Title Specimen Signature

---------------------------------- ---------------------------------- ----------------------------------

---------------------------------- ---------------------------------- ----------------------------------
</TABLE>

FOR CORPORATIONS AND INCORPORATED ASSOCIATIONS:
I, ___________________________________________, Secretary of the
above-named Registered Owner, do hereby certify that at a meeting on
_________________ at which a quorum was present throughout, the Board of
Directors of the corporation/the officers of the association duly adopted
a resolution, which is in full force and effect and in accordance with the
Registered Owner's charter and by-laws, which resolution: (1) empowered
the above-named Authorized Person(s) to effect securities transactions for
the Registered Owner on the terms described above; (2) authorized the
Secretary to certify, from time to time, the names and titles of the
officers of the Registered Owner and to notify you when changes in the
office occur; and (3) authorized the Secretary to certify that such a
resolution has been duly adopted and will remain in full force and effect
until you receive a duly executed amendment to the Authorization Form.
Witness my hand on behalf of the corporation/association on this
_____ day of ____________________, 19__

<TABLE>
<S> <C>
________________________________________________
Secretary (Signature Guarantee or
Corporate Seal is Required)

FOR ALL OTHER ORGANIZATIONS: ________________________________________________
Certifying Trustee, General Partner, or Other
</TABLE>
- --------------------------------------------------------------------------------
(CONTINUED)
<PAGE> 75
[LOGO] ACCOUNT APPLICATION PAGE 5 OF 5
OVERLAND EXPRESS FUNDS, INC.
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------
8. SIGNATURE, TAX INFORMATION & CERTIFICATION
- ---------------------------------------------------------------------------------------------------------------
/ / U.S. CITIZEN OR RESIDENT
I understand that the Federal Government requires Overland Express Funds, Inc. to withhold and pay to
the Internal Revenue Service 31% from all interest, dividends, capital gains distributions and
proceeds from redemptions UNLESS I have provided a certified taxpayer identification (Social Security
or Employer Identification) number and certify in the Withholding Status below that I am NOT subject
to backup withholding. The taxpayer identification number I provided in Section 1 will be the number
under which any taxable earnings will be reported to the IRS.
WITHHOLDING STATUS: Unless I indicate that I am subject to backup withholding by checking the box
below, I certify that 1) I have NOT been notified by the IRS that I am subject to backup withholding
as a result of a failure to report all interest or dividends, OR 2) I have been notified by the IRS
that I am no longer subject to backup withholding: / / I am currently subject to backup withholding.
/ / NON-RESIDENT ALIEN (In order to claim this exemption, ALL owners on the account must be non-resident
aliens and sign below.)
I am not a U.S. citizen or resident (nor is this account held by a foreign corporation, partnership,
estate or trust) and my permanent address is:______________________________ Country:________________
By signing below, I (we) certify, under penalties of perjury, that I (we) have full authority and legal
capacity to purchase shares of the Fund and affirm that I (we) have received a current prospectus and agree
to be bound by its terms and further certify that 1) the correct taxpayer identification number has been
provided in Section 1 of this Application and that the Withholding Status information, above, is correct OR
2) all owners are entitled to claim non-resident alien status. Investors should be aware that the failure to
check the box under "Telephone Instructions" above means that the telephone exchange and redemption
privileges will be provided. A shareholder would bear the risk of loss in the event of the fraudulent use of
the pre-authorized redemption or exchange privileges. Please see "Exchange Privileges" and "Redemption of
Shares" in the Prospectus for more information on these privileges.

X_________________________________________________________ SIGNATURE GUARANTEE: NOT REQUIRED WHEN
Individual (or Custodian) date ESTABLISHING NEW ACCOUNTS. Required only if
establishing privileges in Block 2 on an
X_________________________________________________________ existing account. Signature Guarantee may be
Joint Owner (if any) date provided by an "eligible guarantor
institution," which includes a commercial bank,
X_________________________________________________________ trust company, member firm of a domestic stock
Corporate Officer or Trustee date exchange, savings association, or credit union
that is authorized by its charter to provide a
signature guarantee.

AFFIX SIGNATURE GUARANTEE STAMP
_________________________________________________________ _______________________________________________
Title of Corporate Officer or Trustee Signature Guaranteed By
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

DEALER INFORMATION

<TABLE>
<S> <C> <C>
____________________________________________________ _______________________
Dealer Name Branch ID #
____________________________________________________ _______________________ ____________________
Representative's Last Name Rep ID # Rep Phone #
X_______________________________________________________________________________________________________
Authorized signature of Broker/Dealer Title date
</TABLE>
<PAGE> 76

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201

INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND
CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163

LEGAL COUNSEL

Morrison & Foerster LLP

2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

INDEPENDENT AUDITOR

KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111

NOT FDIC INSURED

FOR MORE INFORMATION ABOUT THE FUND,
SIMPLY CALL (800) 552-9612,
OR WRITE:

OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163

LOGO

------------------------

PROSPECTUS
------------------------

California Tax-Free Bond Fund

------------------------

May 1, 1996

------------------------

NOT FDIC INSURED

78P 5/96

<PAGE> 77
[OVERLAND EXPRESS LOGO]

Telephone: (800) 552-9612

Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian

Overland Express Funds, Inc. (the "Company") is an open-end, series
investment company. This Prospectus contains information about three of the
Company's funds -- the CALIFORNIA TAX-FREE MONEY MARKET FUND, the MONEY MARKET
FUND and the U.S. TREASURY MONEY MARKET FUND (each, a "Fund," and collectively,
the "Funds").

The CALIFORNIA TAX-FREE MONEY MARKET FUND seeks to provide investors with a
high level of current income exempt from federal income taxes, a portion of
which is also exempt from California personal income taxes, while preserving
capital and liquidity, by investing in high-quality instruments, principally
municipal securities. Under normal market conditions, a substantial majority of
the Fund's total assets will consist of securities the interest on which is
exempt from California personal income taxes. In any event, at the close of each
calendar quarter at least 50% of the Fund's total assets will consist of such
securities.

The MONEY MARKET FUND seeks to provide investors with a high level of
current income, while preserving capital and liquidity, by investing in
high-quality, short-term securities.

The U.S. TREASURY MONEY MARKET FUND seeks to provide investors with a high
level of current income, while preserving capital and liquidity, by investing in
short-term U.S. Treasury bonds, notes and bills.

Each of the Funds seeks to maintain a net asset value of $1.00 per share.

This Prospectus sets forth concisely the information a prospective investor
should know before investing in any of the Funds. A Statement of Additional
Information ("SAI") dated May 1, 1996, containing additional and more detailed
information about each of the Funds has been filed with the Securities and
Exchange Commission (the "SEC") and is hereby incorporated by reference into
this Prospectus. The SAI is available without charge and can be obtained by
writing the Company at P.O. Box 63084, San Francisco, CA 94163 or by calling the
Company at (800) 552-9612.

AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN A
CONSTANT $1.00 NET ASSET VALUE PER SHARE.

------------------------

INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.

------------------------

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. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT
IN A FUND INVOLVES CERTAIN INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

PROSPECTUS DATED MAY 1, 1996

<PAGE> 78

This Prospectus describes the shares of the California Tax-Free Money
Market Fund and the Class A Shares of the Money Market Fund and the U.S.
Treasury Money Market Fund. Each of the Money Market Fund and the U.S. Treasury
Money Market Fund also offers a class of shares known as the Institutional Class
(shares of the Institutional Class are referred to hereinafter as the
"Institutional Shares"). Institutional Shares of these Funds require a minimum
initial investment of $150,000. Additional information about the Institutional
Shares and a free copy of the current prospectus describing the Institutional
Shares is available from the Company by calling (800) 552-9612.

WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER
SERVICES TO THE FUNDS, FOR WHICH IT IS COMPENSATED. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK,
IS THE SPONSOR AND DISTRIBUTOR FOR THE FUNDS.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary........................................................................ ii
Summary of Expenses....................................................................... iv
Financial Highlights...................................................................... v
Investment Objectives, Policies and Activities............................................ 1
Advisory, Administration and Distribution Arrangements.................................... 8
Distribution Plans........................................................................ 10
Determination of Net Asset Value.......................................................... 10
Purchase of Shares........................................................................ 11
Exchange Privileges....................................................................... 14
Redemption of Shares...................................................................... 15
Dividends and Distributions............................................................... 18
Taxes..................................................................................... 19
Custodian and Transfer and Dividend Disbursing Agent...................................... 20
Organization and Capital Stock............................................................ 21
</TABLE>

i
<PAGE> 79

PROSPECTUS SUMMARY

The Company, as an open-end management investment company, provides a
convenient way for you to invest in portfolios of securities selected and
supervised by professional management. The following provides information about
the Funds, each of which has its own investment objective.

Q. WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?

A. The CALIFORNIA TAX-FREE MONEY MARKET FUND seeks to provide investors with
a high level of current income exempt from federal income taxes, a portion
of which is also exempt from California personal income taxes, while
preserving capital and liquidity, by investing in high-quality
instruments, principally municipal securities.

The MONEY MARKET FUND seeks to provide investors with a high level of
current income, while preserving capital and liquidity, by investing in
high-quality, short-term securities.

The U.S. TREASURY MONEY MARKET FUND seeks to provide investors with a high
level of current income, while preserving capital and liquidity, by
investing in short-term U.S. Treasury bonds, notes and bills.

Each Fund seeks to maintain a net asset value of $1.00 per share; however,
there can be no assurance that this will be achieved. As with all mutual
funds, there can be no assurance that the Funds will achieve their
investment objectives.

Q. WHAT ARE PERMISSIBLE INVESTMENTS?

A. THE CALIFORNIA TAX-FREE MONEY MARKET FUND invests in high-quality
instruments, primarily municipal securities, the income from which is
exempt from federal income taxes, a portion of which is also exempt from
California personal income taxes. Under normal market conditions, a
substantial majority of the total assets of this Fund will consist of
securities the interest on which is exempt from California personal income
taxes. In all events, at the close of each calendar quarter, at least 50%
of the Fund's total assets will consist of such securities. Income exempt
from federal income tax may be of benefit to investors who pay federal
income taxes, whether or not they are residents of California. See
"Investment Objectives, Policies and Activities."

The MONEY MARKET FUND invests in high-quality money market instruments,
including obligations of the U.S. Government, its agencies and
instrumentalities (including government-sponsored enterprises), certain
debt obligations, including corporate debt, certain obligations of U.S.
banks and certain repurchase agreements. See "Investment Objectives,
Policies and Activities."

The U.S. TREASURY MONEY MARKET FUND invests primarily in short-term U.S.
Treasury bonds, notes and bills. See "Investment Objectives, Policies and
Activities."

Q. WHO MANAGES MY INVESTMENTS?

A. Wells Fargo Bank, as the investment adviser to each Fund, manages your
investments. Wells Fargo Bank also provides the Funds with transfer
agency, dividend disbursing agency and custodial services. Stephens Inc.
is the sponsor, administrator and distributor for the Company. See
"Advisory, Administration and Distribution Arrangements" and "Distribution
Plans."

ii
<PAGE> 80

Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUNDS?

A. Shares of the Funds are not guaranteed or insured against loss of
principal or interest, although certain of the Funds' portfolio securities
may be insured or guaranteed as to repayments of principal and/or the
payment of interest. Although each of the Funds seeks to maintain a stable
net asset value of $1.00 per share, there is no assurance that it will be
able to do so. As with all mutual funds, there can be no assurance that
the Funds will achieve their investment objectives. Since the California
Tax-Free Money Market Fund will invest primarily in securities issued by
California, its agencies and municipalities, events in California are more
likely to affect this Fund's investments. Also, the California Tax-Free
Money Market Fund is non-diversified, which means that its assets may be
invested in fewer issuers and therefore the value of its assets may be
subject to greater impact by events affecting one of its investments. See
"Investment Objectives, Policies and Activities -- Municipal Securities"
in this Prospectus and "Special Factors Affecting the California Tax-Free
Money Market Fund" both in this Prospectus and in the SAI.

Q. HOW MAY I PURCHASE SHARES?

A. Shares of the Funds may be purchased on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is no sales load for
purchasing shares of any of the Funds. In most cases, the minimum initial
purchase amount for shares of any of the Funds is $1,000. The minimum
initial purchase amount is $100 for shares purchased through the
Systematic Purchase Plan. The minimum subsequent purchase amount is
generally $100 or more. However, certain exceptions may apply. You may
purchase shares of the Funds through Stephens, Wells Fargo Bank, as
transfer agent (the "Transfer Agent"), or any authorized broker/dealer or
financial institution. Purchases of Shares of the Funds may be made by
wire directly to the Transfer Agent. See "Purchase of Shares." Investors
intending to invest at least $150,000 in either the Money Market Fund or
the U.S. Treasury Money Market Fund should consider purchasing
Institutional Shares rather than Class A Shares. A free copy of the
current Prospectus for the Institutional Shares is available from the
Company by calling (800) 552-9612.

Q. HOW WILL I RECEIVE DIVIDENDS?

A. Dividends on shares of the Funds are declared daily and paid monthly.
Dividends are automatically reinvested in additional shares, unless you
elect to receive dividends in cash. All reinvestments in shares of the
Funds are at net asset value. See "Dividends and Distributions."

Q. HOW MAY I REDEEM SHARES?

A. Shares may be redeemed on any day the Exchange is open upon request to
Stephens or the Transfer Agent directly, or through any authorized
broker/dealer or financial institution. Shares may be redeemed by a
request in good form in writing or through telephone direction. Proceeds
are payable by check, or for shareholders who make prior arrangements, by
wire. Accounts maintaining less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. The Company
does not charge for redeeming its shares. However, the Company reserves
the right to impose charges for wiring redemption proceeds. See
"Redemption of Shares."

iii
<PAGE> 81

SUMMARY OF EXPENSES

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
CLASS A
CALIFORNIA CLASS A SHARES OF
TAX-FREE SHARES OF U.S.
MONEY MARKET MONEY MARKET TREASURY
MONEY MARKET
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees (after waivers or reimbursements)(1)... 0.45% 0.25% 0.24%
12b-1 Fees............................................. 0.04% 0.25% 0.25%
Other Expenses
Administrative Fees.................................. 0.10% 0.10% 0.10%
Miscellaneous Expenses (after waivers or
reimbursements)(1)................................ 0.09% 0.05% 0.06%
Total Other Expenses (after waivers or
reimbursements)(1)................................... 0.19% 0.15% 0.16%
---- ---- ----
Total Fund Operating Expenses (after waivers or
reimbursements)(1)................................... 0.68% 0.65% 0.65%
</TABLE>

- ---------------

(1) The percentages shown above under "Management Fees," for the Class A Shares
of the U.S. Treasury Money Market Fund and under "Miscellaneous Expenses,"
"Total Other Expenses" and "Total Fund Operating Expenses" for the Class A
Shares of the Money Market and U.S. Treasury Money Market Funds are based on
amounts incurred during the most recent fiscal year restated to reflect
voluntary fee waivers and expense reimbursements. The fee waivers and
expense reimbursements are expected to continue to reduce expenses during
the current fiscal year. Absent waivers and reimbursements, the percentage
shown above under "Management Fees" would have been 0.25% for the Class A
Shares of the U.S. Treasury Money Market Fund. The percentages shown under
"Miscellaneous Expenses," "Total Other Expenses" and "Total Fund Operating
Expenses" would have been 0.09%, 0.19% and 0.69%, respectively, for the
Class A Shares of the Money Market Fund, and 0.13%, 0.23% and 0.73%,
respectively for the Class A Shares of the U.S. Treasury Money Market Fund.

Stephens and Wells Fargo Bank each may elect, in its sole discretion, to
otherwise waive its respective fees or reimburse expenses. Stephens and
Wells Fargo Bank each has agreed to waive all or a portion of its respective
fees, through at least the current fiscal year, to the extent Total Fund
Operating Expenses for Class A Shares of either the Money Market Fund or the
U.S. Treasury Money Market Fund exceed 0.70% of average daily net assets.
Any such waivers or reimbursements of fees with respect to a Fund would
reduce the total expenses of such Fund. There can be no assurances that
voluntary fees waivers and reimbursements will continue.

iv
<PAGE> 82

EXAMPLE OF EXPENSES

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2)
redemption at the end of each time period indicated:
California Tax-Free Money Market Fund............... $ 7 $ 22 $ 38 $ 85
Money Market Fund -- Class A Shares................. $ 7 $ 21 $ 36 $ 81
U.S. Treasury Money Market Fund -- Class A Shares... $ 7 $ 21 $ 36 $ 81
</TABLE>

The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that investors in shares of the Funds will bear
directly or indirectly. There are no sales loads, redemption fees or exchange
fees charged by the Funds. However, the Company reserves the right to impose
charges for wiring redemption proceeds.

THE EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment over the periods shown, based on
the expenses in the table on the previous page and an assumed annual rate of
return of 5%. This rate of return should not be considered an indication of the
actual or expected performance of the fund. In addition, the Example should not
be considered a representation of past or future expenses; actual expenses and
returns may be greater or lesser than those shown. See "Advisory, Administration
and Distribution Arrangements," "Purchase of Shares" and "Distribution Plans"
for more complete descriptions of the various costs and expenses applicable to
the Funds.

FINANCIAL HIGHLIGHTS

The following information has been derived from the Financial Highlights in
the Funds' 1995 annual financial statements. The financial statements are
incorporated by reference into the SAI and have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated February 14, 1996 also is
incorporated by reference in the SAI. This information should be read in
conjunction with the Funds' 1995 annual financial statements and the notes
thereto. The SAI has been incorporated by reference into this Prospectus.

v
<PAGE> 83

CALIFORNIA TAX-FREE MONEY MARKET FUND

FOR A SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1993 DEC. 31, 1992 DEC. 31, 1991
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income............ 0.03 0.02 0.02 0.03 0.04
Net realized and
unrealized gain/(loss)
on investments................. 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Total from investment
operations..................... 0.03 0.02 0.02 0.03 0.04
Less distributions:
Dividends from net
investment income.............. (0.03) (0.02) (0.02) (0.03) (0.04)
Distributions from net
realized gain.................. 0.00 0.00 0.00 0.00 0.00
Tax return of capital............ 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Total from distributions......... (0.03) (0.02) (0.02) (0.03) (0.04)
--------- --------- --------- --------- ---------
Net Asset Value, End of
Period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return (Not
Annualized)(3)................. 3.25% 2.22% 1.84% 2.54% 3.99%
Ratios/supplemental data:
Net assets, end of period
(000).......................... $ 355,868 $ 288,409 $ 397,712 $ 363,067 $ 299,234
Number of shares
outstanding, end of
period (000)................... 355,940 288,409 397,717 363,069 299,234
Ratios to average net
assets (annualized):
Ratio of expenses to
average net assets(1).......... 0.68% 0.68% 0.66% 0.66% 0.66%
Ratio of net investment
income to average net
assets(2)...................... 3.20% 2.17% 1.82% 2.50% 3.92%
- ---------------
(1) Ratio of expenses to
average net assets
prior to waived fees
and reimbursed
expenses..................... 0.68% 0.70% 0.70% 0.69% 0.70%
(2) Ratio of net
investment income to
average net assets
prior to waived fees
and reimbursed
expenses..................... 3.20% 2.15% 1.68% 2.47% 3.88%
(3) Total returns do not
include any sales
charges.

<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
DEC. 31, 1990 DEC. 31, 1989 DEC. 31, 1988*
------------- -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning
of period...................... $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income............ 0.05 0.06 0.03
Net realized and
unrealized gain/(loss)
on investments................. 0.00 0.00 0.00
--------- -------- --------
Total from investment
operations..................... 0.05 0.06 0.03
Less distributions:
Dividends from net
investment income.............. (0.05) (0.06) (0.03)
Distributions from net
realized gain.................. 0.00 0.00 0.00
Tax return of capital............ 0.00 0.00 0.00
--------- -------- --------
Total from distributions......... (0.05) (0.06) (0.03)
--------- -------- --------
Net Asset Value, End of
Period......................... $ 1.00 $ 1.00 $ 1.00
========= ======== ========
Total Return (Not
Annualized)(3)................. 5.20% 5.84% 3.29%
Ratios/supplemental data:
Net assets, end of period
(000).......................... $ 312,023 $247,777 $271,683
Number of shares
outstanding, end of
period (000)................... 312,023 247,777 271,683
Ratios to average net
assets (annualized):
Ratio of expenses to
average net assets(1).......... 0.65% 0.61% 0.55%
Ratio of net investment
income to average net
assets(2)...................... 5.07% 5.73% 4.93%
- ---------------
(1) Ratio of expenses to
average net assets
prior to waived fees
and reimbursed
expenses..................... 0.73% 0.75% 0.73%
(2) Ratio of net
investment income to
average net assets
prior to waived fees
and reimbursed
expenses..................... 4.99% N/A N/A
(3) Total returns do not
include any sales
charges.

</TABLE>

- ---------------

* The Fund commenced operations on April 7, 1988.

vi
<PAGE> 84

MONEY MARKET FUND

FOR A CLASS A SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993 1992 1991 1990 1989*
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income From Investment Operations:
Net investment income (loss)........................... 0.05 0.04 0.03 0.03 0.06 0.08 0.01
Net realized and unrealized gain (loss) on
investments.......................................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- -------- -------- -------
Total from investment operations....................... 0.05 0.04 0.03 0.03 0.06 0.08 0.01
Less Distributions:
Dividends from net investment income................... (0.05) (0.04) (0.03) (0.03) (0.06) (0.08) (0.01)
Distributions from net realized gain................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Tax return of capital.................................. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- -------- -------- -------
Total from distributions............................... (0.05) (0.04) (0.03) (0.03) (0.06) (0.08) (0.01)
Net Asset Value, End of Period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== =======
Total return (not annualized)(3)....................... 5.44% 3.70% 2.57% 3.23% 5.65% 7.88% 1.37%
Ratios/supplemental data:
Net assets, end of period (000)........................ $375,218 $307,878 $228,084 $268,424 $229,863 $198,187 $40,143
Number of shares outstanding, end of period (000)...... 375,364 307,915 228,085 268,434 229,866 198,192 40,143
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)............. 0.65% 0.68% 0.74% 0.75% 0.74% 0.68% 0.53%
Ratio of net investment income to average net
assets(2)............................................ 5.43% 3.71% 2.54% 3.17% 5.54% 7.55% 8.11%
- ------------
(1) Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses................ 0.69% 0.72% 0.74% 0.75% 0.75% 0.84% 1.82%
(2) Ratio of net investment income to average net
assets prior to waived fees and reimbursed
expenses........................................... 5.39% 3.67% 2.54% 3.17% 5.53% 7.39% N/A
(3) Total returns do not include any sales charges.
* The Fund commenced operations on November 1, 1989
</TABLE>

vii
<PAGE> 85

U.S. TREASURY MONEY MARKET FUND

FOR A CLASS A SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993 1992*
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Income from investment operations:
Net investment income (loss)............................................. 0.05 0.03 0.03 0.02
Net realized and unrealized gain (loss) on investments................... 0.00 0.00 0.00 0.00
-------- -------- -------- --------
Total from investment operations......................................... 0.05 0.03 0.03 0.02
Less distributions:
Dividends from net investment income..................................... (0.05) (0.03) (0.03) (0.02)
Distributions from net realized gain..................................... 0.00 0.00 0.00 0.00
Tax return of capital.................................................... 0.00 0.00 0.00 0.00
-------- -------- -------- --------
Total from distributions................................................. (0.05) (0.03) (0.03) (0.02)
-------- -------- -------- --------
Net Asset Value, End of Period........................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total Return (not annualized)(3)......................................... 5.09% 3.44% 2.56% 1.97%
Ratios/supplemental data:
Net assets, end of period (000).......................................... $198,753 $195,031 $118,169 $137,412
Number of shares outstanding, end of period (000)........................ 198,782 195,042 118,169 137,416
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)............................... 0.65% 0.63% 0.52% 0.27%
Ratio of net investment income to average net assets(2).................. 4.97% 3.47% 2.55% 3.12%
- ---------------
(1) Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses.................................................. 0.73% 0.80% 0.77% 0.79%
(2) Ratio of net investment income to average net assets prior to waived
fees and reimbursed expenses......................................... 4.89% 3.30% 2.30% 2.60%
(3) Total returns do not include any sales charges.
</TABLE>

* The Fund commenced operations on May 12, 1992.

viii
<PAGE> 86

INVESTMENT OBJECTIVES, POLICIES AND ACTIVITIES

Set forth below is a description of the investment objectives and related
policies of each of the Funds. As with all mutual funds, there can be no
assurance that the Funds will achieve their respective investment objectives.
The Funds invest only in U.S. dollar-denominated "Eligible Securities" with
remaining maturities not exceeding thirteen months, as defined in Rule 2a-7
under the Investment Company Act of 1940 (the "1940 Act"), and maintain a
dollar-weighted average portfolio maturity of 90 days or less. An Eligible
Security is a security that is determined to present minimal credit risks and is
rated in one of the two highest rating categories by the required number of
nationally recognized statistical rating organizations ("NRSROs") or, if
unrated, is determined to be of comparable quality to such rated securities.
These determinations are made by the investment adviser under guidelines adopted
by the Company's Board of Directors, although in certain instances the Board of
Directors must approve or ratify the Funds' investments. The Board of Directors
of the Company (or Wells Fargo Bank, under authority delegated to it as
investment adviser to the Funds) will determine on an ongoing basis that any
Eligible Securities purchased by the Funds present minimal credit risks. The
Funds will endeavor to maintain a constant net asset value of $1.00 per share;
however, there is no assurance that they will be able to do so.

CALIFORNIA TAX-FREE MONEY MARKET FUND

Investment Objective. The California Tax-Free Money Market Fund seeks to
provide investors with a high level of current income exempt from federal income
taxes, a portion of which is also exempt from California personal income taxes,
while preserving capital and liquidity, by investing in high-quality
instruments, principally municipal securities.

As a matter of fundamental policy, the Fund under normal circumstances
invests at least 80% of its net assets in municipal securities that are exempt
from federal income taxes and are not subject to the alternative minimum tax (or
in other open-end tax-free money market funds with a similar fundamental
policy). Under normal market conditions, a substantial majority of the Fund's
total assets will consist of securities, the interest on which is exempt from
both federal income taxes and California personal income taxes. Under normal
market conditions, at least 65% of the Fund's total assets will consist of such
securities. In addition, as a matter of fundamental policy, at the close of each
quarter of the Fund's taxable year at least 50% of its total assets will consist
of such securities. The Fund invests in municipal obligations issued by or on
behalf of the State of California, its cities, municipalities and other public
authorities and may also invest in obligations issued by the U.S. Virgin
Islands, Puerto Rico and Guam; the income on these securities is exempt from
both federal income taxes and California personal income taxes. See "Investments
and Activities -- Municipal Securities" and "Taxes."

Pending the investment of proceeds from the sale of Fund shares or proceeds
from sales of portfolio securities or in anticipation of redemptions, or to
maintain a "defensive" posture when, in the opinion of the investment adviser,
it is advisable to do so because of market conditions, the Fund may elect to
invest temporarily up to 20% of the current value of its net assets in cash
reserves, high-quality taxable money market instruments (discussed below) and
high-quality municipal obligations, the income from which may or may not be
exempt from federal income taxes. Some portion of the income received by Fund
shareholders may be subject to federal income taxes and California personal
income taxes. The Fund is a non-diversified portfolio, which means that its
assets may be invested in fewer issuers than a diversified portfolio and
therefore the value of its assets may be subject to greater impact by events
affecting one of its

1
<PAGE> 87

investments. Since the Fund will invest primarily in securities issued by
California, its agencies and municipalities, events in California are more
likely to affect this Fund's investments. For a further discussion of factors
affecting investments by the California Tax-Exempt Money Market Fund, see
"Investments and Activities -- Municipal Securities" and "Special Factors
Affecting the California Tax-Free Money Market Fund" both in this Prospectus and
in the SAI.

MONEY MARKET FUND

Investment Objective. The Money Market Fund seeks to provide investors with
a high level of current income, while preserving capital and liquidity, by
investing in high-quality, short-term securities.

Under normal market circumstances, this Fund invests its assets exclusively
in money market instruments (discussed below). This Fund is a diversified
portfolio.

U.S. TREASURY MONEY MARKET FUND

Investment Objective. The U.S. Treasury Money Market Fund seeks to provide
investors with a high level of current income, while preserving capital and
liquidity, by investing in short-term U.S. Treasury bonds, notes and bills
("U.S. Treasury Securities").

The Fund will invest exclusively in U.S. Treasury Securities. U.S. Treasury
Securities are debt obligations issued by the U.S. Government, of which the
payment of interest and repayment of principal are secured by the full faith and
credit of the U.S. Treasury. Treasury bonds, notes and bills differ mainly in
the length of their maturities: Treasury bonds are long-term debt instruments
with original maturities of ten years or more; Treasury notes are medium-term
debt instruments with original maturities of one to ten years; and Treasury
bills are short-term debt obligations with original maturities of one year or
less and are issued on a discounted basis. The U.S. Treasury Money Market Fund
may only purchase U.S. Treasury Securities with remaining maturities of 13
months or less. This Fund is a diversified portfolio.

INVESTMENTS AND ACTIVITIES

Municipal Securities

The municipal securities in which the California Tax-Free Money Market Fund
may invest are:

Long-term municipal bonds rated at the date of purchase "Aa" or better
by Moody's Investors Service, Inc. ("Moody's") or "AA" or better by
Standard & Poor's Corporation ("S&P");

Medium-term municipal notes rated at the date of purchase "MIG 1" or
"MIG 2" (or "VMIG 1" or "VMIG 2" in the case of an issue having a variable
rate with a demand feature) by Moody's or "SP-1" or better by S&P; and

Short-term municipal commercial paper rated at the date of purchase
"Prime-1" by Moody's or "A-1" or better by S&P.

Medium-term municipal notes are generally issued in anticipation of the
receipt of tax funds, of the proceeds of bond placements or of other revenues.
The ability of an issuer to make payments on notes is therefore especially
dependent on such tax receipts, proceeds from bond sales or other revenues, as
the case may be. Municipal commercial paper is a debt obligation with a stated
maturity of 270 days or less that is

2
<PAGE> 88

issued to finance seasonal working capital needs or as short-term financing in
anticipation of longer-term debt. From time to time, the Fund may invest 25% or
more of the current value of its total assets in municipal obligations that are
related in such a way that an economic, business or political development or
change affecting one such obligation also would affect the other obligations;
for example, municipal obligations the interest on which is paid from revenues
of similar type projects. Furthermore, from time to time, the Fund may invest
25% or more of the current value of its total assets in certain "private
activity bonds," the interest on which may be subject to federal alternative
minimum tax, such as pollution control bonds; provided, however, that such
investments will be made only to the extent they are consistent with the Fund's
fundamental policy, described above, of investing, under normal circumstances,
at least 80% of its net assets in municipal obligations that are exempt from
federal income taxes and are not subject to the alternative minimum tax. In
addition, because the Fund intends to invest at least 25% of its total assets in
obligations issued by or on behalf of the State of California, its cities,
municipalities and other public authorities, the Fund is particularly dependent
on, and may be adversely affected by, general economic conditions in California.
In this regard, certain of the municipal securities in which the California
Tax-Free Money Market Fund may invest may be bonds or other types of obligations
of California issuers that rely in whole or in part, directly or indirectly, on
ad valorem real property taxes as a source of revenue. The California
Constitution limits the powers of municipalities to impose and collect ad
valorem taxes on real property, which, in turn, restricts the ability of
municipalities to service their debt or lease obligations from such taxes.

Money Market Instruments

Money Market Instruments consist of: (a) short-term securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities (including
government-sponsored enterprises) ("U.S. Government obligations") (discussed
below); (b) negotiable certificates of deposit, bankers' acceptances and fixed
time deposits and other short-term obligations of domestic banks (including
foreign branches) that have more than $1 billion in total assets at the time of
the 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 Federal
Deposit Insurance Corporation ("FDIC"); (c) commercial paper rated at the date
of purchase "Prime-1" by Moody's or "A-1+" or "A-1" by S&P, or, if unrated, of
comparable quality as determined by the Investment Adviser; (d) certain
repurchase agreements (discussed below); and (e) short-term U.S.
dollar-denominated obligations of foreign banks (including U.S. branches) that
at the time of investment: (i) have more than $10 billion, or the equivalent in
other currencies, in total assets; (ii) are among the 75 largest foreign banks
in the world as determined on the basis of assets; and (iii) have branches or
agencies in the United States.

U.S. Government Obligations

The U.S. Treasury Money Market Fund invests exclusively in U.S. Treasury
Securities. The California Tax-Free Money Market Fund and the Money Market Fund
may invest in various types of U.S. Government obligations. U.S. Government
obligations include securities issued or guaranteed as to principal and interest
by the U.S. Government and supported by the full faith and credit of the U.S.
Treasury. U.S. Treasury obligations differ mainly in the length of their
maturity. Treasury bills, the most frequently issued marketable government
securities, have a maturity of up to one year and are issued on a discount
basis. U.S. Government obligations also include securities issued or guaranteed
by federal

3
<PAGE> 89

agencies or instrumentalities, including government-sponsored enterprises. Some
obligations of agencies or instrumentalities of the U.S. Government are
supported by the full faith and credit of the United States or U.S. Treasury
guarantees; others, by the right of the issuer or guarantor to borrow from the
U.S. Treasury; still others, by the discretionary authority of the U.S.
Government to purchase certain obligations of the agency or instrumentality; and
others, only by the credit of the agency or instrumentality issuing the
obligation. In the case of obligations not backed by the full faith and credit
of the United States, the investor must look principally to the agency or
instrumentality, which may be privately owned, issuing or guaranteeing the
obligation for ultimate repayment. 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. Certain types of U.S. Government obligations are subject to fluctuations
in yield or value due to their structure or contract terms.

Floating- and Variable-Rate Instruments

Certain of the debt instruments in which the Funds may invest bear interest
at rates that are not fixed, but float or vary with, for example, changes in
specified market rates or indices or at specified intervals. Certain of these
floating- and variable-rate instruments may carry a demand feature that would
permit the holder to tender them back to the issuer at par value prior to
maturity. The Funds may purchase certificates of participation in pools of
floating- and variable-rate instruments from banks and other financial
institutions. The investment adviser may rely upon either the opinion of counsel
to the issuer or bond counsel regarding the tax-exempt status of these
securities purchased by the California Tax-Free Money Market Fund. The Funds may
invest in floating- and variable-rate instruments even if they carry stated
maturities in excess of thirteen months, upon compliance with certain conditions
of the SEC, in which case such instruments will be treated, in accordance with
these conditions, as having maturities not exceeding thirteen months. Wells
Fargo Bank, as investment adviser to each of the Funds, monitors on an ongoing
basis the ability of an issuer of a demand instrument to pay principal and
interest on demand. Events occurring between the date a Fund elects to demand
payment on a floating- or variable-rate instrument and the date payment is due
may affect the ability of the issuer of the instrument to make payment when due,
and unless such demand instrument permits same-day settlement, such events may
affect a Fund's ability to obtain payment at par. Demand instruments whose
demand feature is not exercisable within seven days may be treated as liquid,
provided that an active secondary market exists.

Repurchase Agreements

The California Tax-Free Money Market Fund and the Money Market Fund may
enter into repurchase agreements wherein the seller of a security to the Fund
agrees to repurchase that security from the Fund at a mutually agreed-upon time
and price. The period of maturity is usually quite short, often overnight or a
few days, although it may extend over a number of months. These Funds may enter
into repurchase agreements only with respect to U.S. Government obligations and
other securities which are permissible investments for the Funds. All repurchase
agreements will be fully collateralized at 102% based on values that are marked
to market daily. The maturities of the underlying securities in a repurchase
agreement transaction may be greater than twelve months. However, the term of
any repurchase agreement on behalf of the Fund will always be less than twelve
months. If the seller defaults and the value of the underlying

4
<PAGE> 90

securities has declined, the Fund may incur a loss. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security, the Fund's
disposition of the security may be delayed or limited.

These Funds may not enter into a repurchase agreement with a maturity of
more than seven days if, as a result, more than 10% of the market value of the
Fund's total net assets would be invested in either repurchase agreements with
maturities of more than seven days and/or illiquid securities and, with respect
to the California Tax-Free Money Market Fund, restricted securities. The Funds
will enter into repurchase agreements only with primary broker/dealers and
commercial banks that meet guidelines established by the Company's Board of
Directors and are not affiliated with the investment adviser. The Funds may
participate in pooled repurchase agreement transactions with other funds advised
by Wells Fargo Bank.

Foreign Obligations

The California Tax-Free Money Market Fund and the Money Market Fund may
invest less than 25% of their assets in high-quality, short-term debt
obligations of foreign branches of U.S. banks or U.S. branches of foreign banks
that are denominated in and pay interest in U.S. dollars. Investments in foreign
obligations involve certain considerations that are not typically associated
with investing in domestic obligations. There may be less publicly available
information about a foreign issuer than about a domestic issuer. Foreign issuers
also are not subject to the same accounting, auditing and financial reporting
standards or governmental supervision as domestic issuers. In addition, with
respect to certain foreign countries, taxes may be withheld at the source under
foreign income tax laws, and there is a possibility of expropriation or
confiscatory taxation, political or social instability or diplomatic
developments that could adversely affect investments in, the liquidity of, and
the ability to enforce contractual obligations with respect to, securities of
issuers located in those countries.

Other Tax-Exempt Mutual Funds

The California Tax-Free Money Market Fund may invest in shares of other
open-end investment companies that invest exclusively in high-quality,
short-term securities, provided, however, that such company is a tax-free money
market fund with a fundamental policy of investing, under normal circumstances,
at least 80% of its net assets in obligations that are exempt from federal
income taxes and are not subject to the alternative minimum tax. Such investment
companies can be expected to charge management fees and other operating expenses
that would be in addition to those charged to the Fund. However, the investment
adviser has undertaken to waive its advisory fees with respect to assets so
invested. In no event may this Fund, together with any company or companies
controlled by it, own more than 3% of the total outstanding voting stock of any
such company, nor may the Fund, together with any such company or companies,
invest more than 5% of its assets in any one such company or invest more than
10% of its assets in securities of all such companies combined.

Special Factors Affecting the California Tax-Free Money Market Fund

California is experiencing recurring budget deficits caused by lower than
anticipated tax-revenues and increased expenditures for certain programs. These
budget deficits have depleted the state's available cash resources, and the
state has recently had to use a series of external borrowings to meet its cash
needs. In addition, since 1992 some of the credit rating agencies have assigned
their third highest rating to certain of the state's debt obligations. On July
15, 1994, three of the NRSROs rating California's long-term debt

5
<PAGE> 91

lowered their ratings of the state's general obligation bonds. Moody's lowered
its rating from "Aa" to "A1," S&P lowered its rating from "A+" to "A" and termed
its outlook as "stable," and Fitch Investors Service lowered its rating from
"AA" to "A." The California Tax-Free Money Market Fund may invest only in
securities rated in the top two rating categories. Any further rating downgrade
of the state's debt obligations may impact the availability of securities that
meet the Funds' investment policies and restrictions. The Fund's investment
adviser will continue to monitor and evaluate the investments of the Fund in
light of the events in California and the Fund's investment objective and
investment policies. The NRSROs will also continue to monitor events in the
state and the state and local governments' responses to budget shortfalls.

Risk Factors

Pursuant to the 1940 Act, each Fund must comply with certain investment
criteria (noted in the first paragraph of this section) designed to provide
liquidity, reduce risk and allow the Funds to maintain a stable net asset value
of $1.00 per share. Of course, the Funds cannot guarantee a $1.00 share price.

The Funds seek to reduce risk by investing their assets in securities of
various issuers and will comply with Internal Revenue Code of 1986 (the "Code")
diversification requirements. Although the Money Market and U.S. Treasury Money
Market Funds will be considered "diversified" for purposes of the 1940 Act, the
California Tax-Free Money Market Fund will be considered non-diversified for
purposes of the 1940 Act. See "Taxes" below.

Since their inception, the Funds have emphasized safety of principal and
high credit quality. In particular, the internal investment policies of the
Funds' investment adviser, Wells Fargo Bank, have always prohibited the purchase
for the Funds of many types of floating-rate instruments commonly referred to as
"derivatives" that are considered potentially volatile. The following types of
derivative securities ARE NOT permitted investments for the Funds:

- capped floaters (on which interest is not paid when market rates move
above a certain level);

- leveraged floaters (whose interest-rate reset provisions are based on a
formula that magnifies changes in interest rates);

- range floaters (which do not pay any interest if market interest rates
move outside of a specified range);

- dual index floaters (whose interest-rate reset provisions are tied to
more than one index so that a change in the relationship between these
indices may result in the value of the instrument falling below face
value); and

- inverse floaters (which reset in the opposite direction of their index).

Additionally, the Funds may not invest in securities whose interest rate
reset provisions are tied to an index that materially lags short-term interest
rates, such as Cost of Funds Index ("COFI") Floaters. The Funds may only invest
in floating rate instruments that bear interest at a rate that resets quarterly
or more frequently, and which resets based on changes in standard money market
rate indices such as U.S. Treasury bills, London Interbank Offered Rate, the
prime rate, published commercial paper rates, federal funds rates, Public
Securities Associates ("PSA") Floaters or JJ Kenney index floaters.

6
<PAGE> 92

* * * *

Each of the Funds' investment objectives, as set forth in the first
paragraph of the subsection describing each Fund above, is fundamental; that is,
the investment objective may not be changed without approval by the vote of the
holders of a majority of the Fund's outstanding voting securities, as described
under "Capital Stock" in the SAI. If the Board of Directors determines, however,
that a Fund's investment objective can best be achieved by a substantive change
in a non-fundamental investment policy or strategy, the Company may make such
change without shareholder approval and will disclose any such material changes
in the then current prospectus.

As matters of fundamental policy, the following apply: (i) each of the
Funds may borrow from banks up to 10% of the current value of its net assets for
temporary purposes only in order to meet redemptions, and these borrowings may
be secured by the pledge of up to 10% of the current value of its net assets
(but investments may not be purchased by the California Tax-Free Money Market
Fund or the Money Market Fund while any such outstanding borrowing exists and
investments may not be purchased by the U.S. Treasury Money Market Fund while
any such outstanding borrowing in excess of 5% of its net assets exists); (ii)
only the California Tax-Free Money Market Fund may make loans of portfolio
securities in accordance with its investment policies; and (iii) none of the
Funds may purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of the Fund's investment in that industry would exceed 25% of
the current value of such Fund's total assets, provided that there is no
limitation with respect to investments in (a) U.S. Government obligations (which
includes U.S. Treasury Securities), (b) obligations of domestic banks (for
purpose of this restriction, domestic bank obligations do not include
obligations of U.S. branches of foreign banks or obligations of foreign branches
of U.S. banks), and (c) with respect to the California Tax-Free Money Market
Fund, municipal securities (for the purpose of this restriction, private
activity bonds shall not be deemed municipal securities if the payments of
principal and interest on such bonds are the ultimate responsibility of
non-governmental users). With respect to fundamental investment restriction (ii)
above, the California Tax-Free Money Market Fund does not intend to make loans
of its portfolio securities during the coming year. In addition, as a matter of
non-fundamental investment policy, the California Tax-Free Money Market Fund may
invest up to 5% of its net assets in when-issued securities. See "Investment
Restrictions" and "Additional Permitted Investment Activities" in the SAI.

7
<PAGE> 93

ADVISORY, ADMINISTRATION AND
DISTRIBUTION ARRANGEMENTS

The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decides
upon matters of general policy.

INVESTMENT ADVISER

Pursuant to Advisory Contracts, each of the Funds is advised by Wells Fargo
Bank, 420 Montgomery Street, San Francisco, California 94104, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the largest banks
in the United States, was founded in 1852 and is the oldest bank in the western
United States. As of April 1, 1996 Wells Fargo Bank and its affiliates provided
investment advisory services for approximately $56 billion of assets of
individuals, trusts, estates and institutions. Wells Fargo Bank is the
investment adviser to other separately managed portfolios of the Company and
serves as investment adviser or sub-adviser to five other registered open-end
management investment companies, each of which consist of several separately
managed investment portfolios.

The Advisory Contracts provide that Wells Fargo Bank shall furnish to the
Funds investment guidance and policy direction in connection with the daily
portfolio management of the Funds. Pursuant to the Advisory Contracts, Wells
Fargo Bank furnishes to the Board of Directors periodic reports on the
investment strategy and performance of each Fund.

For its services under the Advisory Contracts, Wells Fargo Bank is entitled
to receive monthly advisory fees at the annual rates of 0.45% of the average
daily net assets of the California Tax-Free Money Market Fund and 0.25% of the
average daily net assets of each of the Money Market Fund and the U.S. Treasury
Money Market Fund. From time to time, Wells Fargo Bank may waive such fees in
whole or in part. In this regard, Wells Fargo Bank has agreed to waive its fees,
through at least the current fiscal year, to the extent Total Fund Operating
Expenses for Class A Shares of the Money Market Fund or the U.S. Treasury Money
Market Fund would exceed 0.70% of average daily net assets. Any such waiver will
reduce expenses of the Fund involved and, accordingly, have a favorable impact
on the performance of such Fund. For the year ended December 31, 1995, Wells
Fargo Bank received 0.45%, 0.25% and 0.24% of the average daily net assets of
the California Tax-Free Money Market Fund, Money Market Fund and U.S. Treasury
Money Market Fund, respectively, as compensation for its services as investment
adviser.

Purchase and sale orders of the securities held by each of the Funds may be
combined with those of other accounts that Wells Fargo Bank manages, and for
which it has brokerage placement authority, in the interest of seeking the most
favorable overall net results. When Wells Fargo Bank determines that a
particular security should be bought or sold for any of the Funds and other
accounts managed by Wells Fargo Bank, Wells Fargo Bank undertakes to allocate
those transaction costs among the participants equitably. From time to time,
each of the Funds, to the extent consistent with its investment objective,
policies and restrictions, may invest in securities of companies with which
Wells Fargo Bank has a lending relationship.

8
<PAGE> 94

interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal or state statutes,
including the Glass-Steagall Act, and regulations relating to the permissible
activities of banks and their subsidiaries or affiliates, as well as future
changes in such statutes, regulations and judicial or administrative decisions
or interpretations, could prevent such entities from continuing to perform, in
whole or in part, such services. If any such entity were prohibited from
performing any such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR

Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with each of the Funds under which Stephens acts as administrator
for the Funds. For providing these administrative services, Stephens is entitled
to receive a monthly fee from each Fund at the annual rate of 0.10% of its
average daily net assets. For each of the California Tax-Free Money Market Fund
and the U.S. Treasury Money Market Fund, such annual rate shall decrease to
0.05% of such average daily value of net assets of the Fund in excess of $200
million. From time to time, Stephens may waive fees from any or all of the Funds
in whole in part. Any such waiver will reduce expenses of the Fund involved and,
accordingly, have a favorable impact on the performance of such Fund.

The Administration Agreements between Stephens and the Funds state that
Stephens shall provide as administrative services, among other things, (i)
general supervision of the operation of the Funds, including coordination of the
services performed by the Funds' investment adviser, transfer agent, custodian,
independent auditors and legal counsel; (ii) general supervision of regulatory
compliance matters, including, the compilation of information for documents such
as reports to, and filings with, the SEC and state securities commissions, and
preparation of proxy statements and shareholder reports for the Funds; and (iii)
general supervision of the compilation of data required for the preparation of
periodic reports distributed to the Company's officers and Board of Directors.
Stephens also furnishes office space and certain facilities required for
conducting the business of the Funds and pays the compensation of the Company's
Directors, officers and employees who are affiliated with Stephens.

Stephens, as the principal underwriter of the Funds within the meaning of
the 1940 Act, has entered into a Distribution Agreement with the Company
pursuant to which Stephens has the responsibility for distributing shares of the
Funds. Stephens bears the cost of printing and mailing prospectuses to potential
investors and any advertising expenses incurred by it in connection with the
distribution of shares, subject to the terms of the distribution plans described
below. In addition, Stephens has established a non-cash compensation program,
pursuant to which broker/dealers or financial institutions that sell shares of
the Funds may earn additional compensation in the form of trips to sales
seminars or vacation destinations, tickets to sporting events, theater or other
entertainment, opportunities to participate in golf or other outings and gift
certificates for meals or merchandise.

Stephens is a full service broker/dealer and investment advisory firm.
Stephens and its predecessor have been providing securities and investment
services for more than sixty years. Additionally, they have been providing
discretionary portfolio management services since 1983. It currently manages
investment portfolios for pension and profit sharing plans, individual
investors, foundations, insurance companies and university endowments.

9
<PAGE> 95

DISTRIBUTION PLANS

The Company's Board of Directors has adopted a Distribution Plan on behalf
of each Fund. Under the Plan for the California Tax-Free Money Market Fund, the
Fund may defray all or part of the cost of preparing and printing prospectuses
and other promotional materials and of delivering prospectuses and those
materials to prospective shareholders of the Fund, by paying on an annual basis
up to the greater of $100,000 or 0.05% of the Fund's average daily net assets.
The Plan for the California Tax-Free Money Market Fund provides only for the
reimbursement of actual expenses. Under the Plans for the Class A Shares of the
Money Market Fund and the Class A Shares of the U.S. Treasury Money Market Fund,
Stephens is entitled to receive, as compensation for distribution-related
services, a monthly fee at an annual rate of up to 0.25% of each Fund's average
daily net assets attributable to Class A Shares. The actual fee payable to
Stephens is determined, within such limit, from time to time by mutual agreement
between the Company and Stephens, and may not exceed the maximum amount payable
under the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. Stephens may enter into selling agreements with one or more
selling agents under which such agents may receive compensation for
distribution-related services from Stephens, including, but not limited to,
commissions or other payments to such agents based on the average daily net
assets of the Class A Shares of the Money Market Fund and/or the Class A Shares
of the U.S. Treasury Money Market Fund attributable to them. Stephens may retain
any portion of the total distribution fee payable under the Plans for these
Funds to compensate it for distribution-related services provided by it or to
reimburse it for other distribution-related expenses.

Each of the Funds may participate in joint distribution activities with any
of the other funds or portfolios of the Company, in which event, expenses
reimbursed out of the assets of one of the Funds may be attributable, in part,
to the distribution-related activities of the other funds or another portfolio.
Generally, the expenses attributable to joint distribution activities will be
allocated among the Funds and the other portfolios of the Company in proportion
to their relative net asset sizes, although the Board of Directors may allocate
such expenses in any other manner that it deems fair and equitable.

DETERMINATION OF NET ASSET VALUE

Net asset value per share of each Fund is determined by Wells Fargo Bank on
each day that the Exchange is open for trading. The net asset value of a share
of a class of the Money Market Fund and the U.S. Treasury Money Market Fund is
the value of total net assets attributable to such class divided by the number
of outstanding shares of that class. The value of net assets per class is
determined daily by adjusting the net assets per class at the beginning of the
day by the value of each class's shareholder activity, net investment income and
net realized and unrealized gains or losses for that day. Net investment income
is calculated each day for each class by attributing to each class a pro rata
share of daily income and common expenses, and by assigning class-specific
expenses to each class as appropriate. The net asset value per share of the
California Tax Free Money Market Fund is determined by dividing the value of the
total assets of the Fund less all of its liabilities by the total number of
outstanding shares of the Fund.

The net asset value per share of each Fund is determined as of 12:00 noon
and 4:00 p.m. (New York time). Each of the Funds uses the amortized cost method
to value its portfolio securities and attempts to maintain a constant net asset
value of $1.00 per share. The amortized cost method involves valuing a

10
<PAGE> 96

security at its cost and amortizing any discount or premium over the period
until maturity, regardless of the impact of fluctuating interest rates on the
market value of the security.

PERFORMANCE DATA

From time to time, the Company may advertise yield information with respect
to a class of shares of the Funds. Yield information will be based on the
historical earnings and performance of a class of shares of a Fund and should
not be considered representative of future performance. From time to time, each
of the Funds may advertise its current yield and its effective yield for a class
of shares. The California Tax-Free Money Market Fund also may advertise its
current tax-equivalent yield and its effective tax-equivalent yield. Current
yield for each class of shares of a Fund will be computed by dividing its net
investment income per share of a class of shares earned during a specified
period by its net asset value per share on the last day of such period and
annualizing the result. The current yield of each class of shares of a Fund will
show the annualized income per share generated by an investment in such a class
of shares of the Fund over a stated period. The current tax-equivalent yield of
the California Tax-Free Money Market Fund will be calculated in a similar
manner, but will assume that a stated income tax rate has been applied to non-
exempt income to derive the tax-exempt portion of this Fund's yield. The
effective yield and effective tax-equivalent yield are calculated similarly but,
when annualized, the income earned, or the tax-equivalent income assumed to have
been earned, per share of a class of shares will be assumed to have been
reinvested. The effective yield and effective tax-equivalent yield will be
slightly higher than the current yield and current tax-equivalent yield,
respectively, because of the compounding effect of this assumed reinvestment.
Additional information about the performance of each Fund is contained in the
Annual Report for each Fund. The Annual Report may be obtained free of charge by
calling the Company at 800-552-9612.

PURCHASE OF SHARES

Shares of any of the Funds may be purchased on any day the Exchange is open
for trading through Stephens, the Transfer Agent, or any authorized
broker/dealer or financial institution with which Stephens has entered into
agreements. Such broker/dealers or financial institutions are responsible for
the prompt transmission of purchase, exchange or redemption orders, and may
independently establish and charge additional fees to their clients for such
services, other than services related to purchase orders, which would reduce the
clients' overall yield or return. The Exchange is closed on New Year's 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 Saturday, the Exchange usually is closed the preceding Friday, and when any
Holiday falls on a Sunday, the Exchange usually is closed the following Monday.

In most cases, the minimum initial purchase amount for shares of any of the
Funds is $1,000. The minimum initial purchase amount is $100 for shares
purchased through the Systematic Purchase Plan. The minimum subsequent purchase
amount is generally $100. The minimum initial or subsequent purchase amount
requirements may be waived or lowered for investments effected on a group basis
by certain entities and their employees, such as pursuant to a payroll deduction
or other accumulation plan. In addition, the minimum initial purchase amount
does not apply to investors who purchase shares of the California Tax-Free Money
Market Fund or Class A Shares of the Money Market Fund and U.S. Treasury Money
Market Fund as customers of a financial institution which has established a cash
sweep arrangement with respect to such Funds. The Company reserves the right to
reject any purchase order. All funds will be invested in full and fractional
shares. Checks will be accepted for the purchase of any Fund's shares subject to
collection at

11
<PAGE> 97

full face value in U.S. dollars. Inquiries concerning purchases may be directed
to the Company at (800) 572-7797 or at the address on the front cover of the
Prospectus.

Shares of the Funds are offered continuously at the net asset value next
determined after a purchase order is effective. No sales load is imposed.

Account Applications for shares of any of the Funds will become effective
when an investor's bank wire order or check is converted into federal funds. If
payment is transmitted by the Federal Reserve Wire System, the Account
Application will become effective upon receipt. In addition, if investors, with
the prior approval of the Company, notify the Company at or before 12:00 noon
(New York time) on any business day that they intend to wire federal funds to
purchase shares of any of the Funds, the Account Application will be executed at
the net asset value per share determined at 12:00 noon (New York time) the same
day. Wire transmissions may, however, be subject to delays of several hours, in
which event the effectiveness of the order will be delayed. Payments transmitted
by a bank wire other than the Federal Reserve Wire System may take longer to be
converted into federal funds.

A salesperson or any other person or entity entitled to receive
compensation for selling or servicing shares of any of the Funds may receive
different compensation with respect to one class of shares over another.

------------------------

When payment for shares of any of the Funds is by a check that is drawn on
any member bank of the Federal Reserve System, federal funds normally become
available to the Fund on the business day after the day the check is deposited.
Checks drawn on a non-member bank or a foreign bank may take substantially
longer to be converted into federal funds and, accordingly, may delay the
execution of an order.

By investing in shares of any of the Funds, you appoint the Transfer Agent,
as agent, to establish an open account to which all shares purchased will be
credited, together with any dividends and capital gain distributions that are
paid in additional shares. See "Dividends and Distributions." Stock certificates
for the Funds will not be issued.

Shares of any of the Funds may be purchased by any of the methods described
below.

INITIAL PURCHASES OF FUND SHARES BY WIRE

1. Telephone toll free (800) 572-7797. Give the name of the Fund and Class
of shares in which the investment is to be made, the name(s) in which the shares
are to be registered, the address and social security number (or tax
identification number, where applicable) of the person or entity in whose
name(s) the shares will be registered, dividend payment election, amount to be
wired, name of the wiring bank and name and telephone number of the person to be
contacted in connection with the order. An account number will be assigned.

12
<PAGE> 98

2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($1,000 or more) to:

Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express (designate Fund and Class, if any)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)

Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082

4. Share purchases are effected at the public offering price next
determined after the Account Application is received and accepted.

INITIAL PURCHASES OF FUND SHARES BY MAIL

1. Complete an Account Application. Indicate the services to be used.

2. Mail the Account Application and, subject to limited exceptions, a check
for $1,000 or more, payable to "Overland Express (designate Fund and Class, if
any)" at its mailing address set forth above.

ADDITIONAL PURCHASES

Additional purchases of $100 or more may be made by instructing the Funds'
Transfer Agent to debit an approved account designated in your Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Overland Express (designate Fund and Class, if any)" sent to the above
address. Write the Fund account number on the check and include the detachable
stub from a Statement of Account or a letter providing the account number.

SYSTEMATIC PURCHASE PLAN

The Company's Systematic Purchase Plan provides you with a convenient way
to establish and add to your existing accounts on a monthly basis. If you elect
to participate in this plan, specify an amount ($100 or more) to be withdrawn
automatically by the Transfer Agent on a monthly basis from an approved bank
account designated in your Account Application (an "Approved Bank Account"). The
Transfer Agent withdraws and uses this amount to purchase shares of the
designated Fund on or about the fifth business day of each month. The Transfer
Agent requires a minimum of ten (10) business days to implement your Systematic
Purchase Plan purchases. There are no additional fees charged for participating
in this plan.

13
<PAGE> 99

You may change the investment amount, the date on which your Systematic
Purchase is effected, suspend purchases or terminate your participation in the
Systematic Purchase Plan at any time by providing written notice to the Transfer
Agent at least five (5) business days prior to any scheduled transaction. An
election will be terminated automatically if your Approved Bank Account balance
is insufficient to make a scheduled withdrawal, or if either your Approved Bank
Account or your Fund account is closed.

PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Purchase orders for Shares of any of the Funds placed through
broker/dealers and financial institutions by 12:00 noon (New York time) on any
business day that the Exchange is open for trading, including orders for which
payment is to be made from free cash credit balances in securities accounts,
generally will be executed on the same day the order is placed if notice is
provided to the Transfer Agent by 12:00 noon (New York time) and federal funds
are received by the Transfer Agent before the close of business. Purchase orders
that are received by a broker/dealer or financial institution after 12:00 noon
(New York time) on any business day that the Exchange is open for trading or
that are not received by the Transfer Agent before the close of business,
generally will be executed on the next business day following the day the order
is placed. The broker/dealer or financial institution is responsible for the
prompt transmission of purchase orders to the Transfer Agent. A broker/dealer or
financial institution that is involved in a purchase transaction may charge
separate account, service or transaction fees. Financial institutions may be
required to register as dealers pursuant to applicable state securities laws,
which may differ from federal law and any interpretations expressed herein.

EXCHANGE PRIVILEGES

Shares of any of the Funds may be exchanged for shares of another Fund or
for Class A Shares of any other investment portfolio of the Company in an
identically registered account (provided that shares of the investment portfolio
to be acquired are registered for sale in your state of residence) at respective
net asset values if the shares being acquired carry no sales load or the shares
being exchanged were acquired in exchange for shares on which an equivalent
sales load was paid. Otherwise, applicable sales loads or sales load
differentials will be charged on an exchange.

You may exchange shares by writing the Transfer Agent as indicated below
under Redemption by Mail, or by calling the Transfer Agent or your authorized
broker/dealer or financial institution, unless you have elected not to authorize
telephone exchanges in your Account Application (in which case you may
subsequently authorize such telephone exchanges by completing a Telephone
Exchange Authorization Form and submitting it to the Transfer Agent in advance
of the first such exchange). The Transfer Agent's telephone number for exchanges
is (800) 572-7797.

14
<PAGE> 100

transactions by those seeking to time market fluctuations. Any such rejection
will be made by management on a prospective basis only, upon notice to the
shareholder given not later than 10 days following such shareholder's most
recent exchange. The Company reserves the right to modify or discontinue
exchange privileges at any time. Under SEC rules, 60 days prior notice of any
amendments or termination of exchange privileges will be given to shareholders,
except under certain extraordinary circumstances. The exchange privilege is not
an option or a right to purchase shares, but is permitted under the current
policies of the respective Funds and portfolios of the Company. A capital gain
or loss for federal income tax purposes may be realized upon an exchange,
depending upon the cost or other basis of shares exchanged.

Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you specifically decline such
privileges. These privileges authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Transfer Agent to be genuine. The Company will
require the Transfer Agent to employ reasonable procedures, such as requiring a
form of personal identification, to confirm that instructions are genuine. If
the Transfer Agent does not follow such procedures, the Company and the Transfer
Agent may be liable for any losses attributable to unauthorized or fraudulent
instructions. Neither the Company nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.

REDEMPTION OF SHARES

The Company does not charge for redemption transactions. However, a
broker/dealer or financial institution that is involved in a redemption
transaction may charge separate account, service or transaction fees. Redemption
orders for shares of any of the Funds received by an authorized broker/dealer or
financial institution on any day that the Fund is open and received by the
Transfer Agent before 12:00 noon (New York time) on the same day will be
executed at the net asset value determined at 12:00 noon on that day. Redemption
orders for any of the Funds received by authorized broker/dealers or financial
institutions on any day that the Fund is open and received by the Transfer Agent
after 12:00 noon (New York time) will be executed at the net asset value
determined at 12:00 noon on the next day that the Fund is open.

Redemption proceeds ordinarily will be remitted within seven days after the
order is received in proper form, except proceeds may be remitted over a longer
period to the extent permitted by the SEC under extraordinary circumstances. If
an expedited redemption is requested, redemption proceeds will be distributed
only if the check used for investment is deemed to be cleared for payment by
your bank, currently considered by the Company to be a period of ten (10) days
after investment. The redemption proceeds, of course, may be more or less than
cost. Payment of redemption proceeds may be made in securities, subject to
regulation by some state securities commissions.

REDEMPTION BY MAIL

1. Write a letter of instruction. Indicate the dollar amount or number of
shares to be redeemed. Refer to your Fund account number and provide either a
social security number or a tax identification number (where applicable).

15
<PAGE> 101

2. Sign the letter in exactly the same way the account is registered. If
there is more than one owner of the shares, all must sign.

3. If shares to be redeemed have a value of $5,000 or more or redemption
proceeds are to be made to someone other than yourself at your address of
record, the signature(s) must be guaranteed by an "eligible guarantor
institution," which includes a commercial bank that is a member of the FDIC, a
trust company, a member firm of a domestic stock exchange, a savings
association, or a credit union that is authorized by its charter to provide a
signature guarantee. Signature guarantees by notaries public are not acceptable.
Further documentation may be requested from corporations, administrators,
executors, personal representatives, trustees or custodians.

4. Mail the letter to the Transfer Agent at the mailing address set forth
under "Purchase of Shares -- Initial Purchases of Fund Shares by Wire."

Unless other instructions are given in proper form, a check for the
proceeds of redemption will be sent to your address of record.

SYSTEMATIC WITHDRAWAL PLAN

The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your accounts and the proceeds distributed to you on a
monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of your date of the election to
participate and are not also a participant in the Company's Systematic Purchase
Plan at any time while participating in this plan. To participate in the plan
you must specify an amount ($100 or more) to be distributed by check to your
address of record or deposited in your Approved Bank Account. The Transfer Agent
redeems sufficient shares and mails or deposits the proceeds of the redemption
as instructed on or about the fifth business day prior to the end of each month.
There are no additional fees charged for participating in this plan.

It may take up to ten (10) days to establish your participation in the
Systematic Withdrawal Plan. You may change the withdrawal amount, suspend
withdrawals or terminate your participation in the Systematic Withdrawal Plan at
any time by providing written notice to the Transfer Agent at least five (5)
business days prior to any scheduled transaction. An election will be terminated
automatically if your Fund account balance is insufficient to make a scheduled
withdrawal or if your Fund account or Approved Bank Account is closed.

EXPEDITED REDEMPTIONS BY LETTER AND TELEPHONE

If shares are not held in certificated form, you may request an expedited
redemption of shares by letter or telephone (unless you have elected not to
authorize telephone redemptions on your Account Application or other form that
is on file with the Transfer Agent) on any day the Funds are open for business.
See "Exchange Privileges" for additional information regarding telephone
redemption privileges.

To request expedited redemption by telephone call the Transfer Agent at
(800) 572-7797.

To request expedited redemption by mail, mail the expedited redemption
request to the Transfer Agent at the mailing address set forth under "Purchase
of Shares -- Initial Purchases of Fund Shares by Wire."

16
<PAGE> 102

Upon request, proceeds of expedited redemptions of $5,000 or more will be
wired or credited to your Approved Bank Account or wired to an authorized
broker/dealer or financial institution designated in your Account Application.
The Company reserves the right to impose charges for wiring redemption proceeds.
When proceeds of an expedited redemption are to be paid to someone other than
yourself, to an address other than that of record, or to a bank, broker/dealer
or other financial institution that has not been predesignated, the expedited
redemption request must be made by letter and the signature(s) on the letter
must be guaranteed, regardless of the amount of the redemption. If an expedited
redemption request is received by the Transfer Agent by 12:00 noon (New York
time) on a day the Funds are open for business, the redemption proceeds will be
transmitted to your bank or predesignated broker/dealer or financial institution
on the same day (assuming the investment check has cleared as described above),
absent extraordinary circumstances. A check for proceeds of less than $5,000
will be mailed to your address of record, except that, in the case of
investments in the Company that have been effected through broker/dealers, banks
and other institutions that have entered into special arrangements with the
Company, the full amount of the redemption proceeds may be transmitted by wire
or credited to a designated account.

REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Unless you have made other arrangements, and have informed the Transfer
Agent of such arrangements, proceeds of redemptions made through authorized
broker/dealers and financial institutions will be credited to your account with
such broker/dealer or institution. You may request a check from the
broker/dealer or financial institution or may elect to retain the redemption
proceeds in your account. The broker/dealer or financial institution may benefit
from the use of the redemption proceeds prior to the clearance of a check issued
to you for such proceeds or prior to disbursement or reinvestment of such
proceeds on your behalf.

------------------------

The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.

17
<PAGE> 103

DIVIDENDS AND DISTRIBUTIONS

Each of the Funds intends to declare as a dividend substantially all of its
net investment income for each class at the close of each business day to
shareholders of record at 12:00 noon (New York time) on the day of declaration.
Shares purchased will begin earning dividends on the day the purchase order
settles and shares redeemed will earn dividends through the day prior to the
date of redemption. Net investment income for a Saturday, Sunday or holiday will
be declared as a dividend to shareholders of record at 12:00 noon (New York
time) on the previous business day.

Dividends of each Fund declared in, and attributable to, any month will be
paid early in the following month. Shareholders of any of the Funds who redeem
shares prior to a dividend payment date will be entitled to all dividends
declared but unpaid prior to redemption on such shares on the next dividend
payment date.

Net capital gains of each class of each Fund, if any, will be distributed
annually (or more frequently to the extent permitted to avoid imposition of the
4% excise tax described in the SAI or in order to maintain the net asset value
of the Fund's shares at $1.00 per share).

Dividends and/or capital gain distributions paid by each of the Funds will
be invested in additional shares of the same Fund at net asset value and
credited to your account on the payment date or, at your election, paid by
check. Dividend checks and Statements of Account will be mailed approximately
three business days after the payment date.

The net investment income of the Money Market Fund and the U.S. Treasury
Money Market Fund available for distribution to the holders of the Class A
Shares will be reduced by the amount of the distribution-related expenses
payable under the Plans. There may be certain other differences in fees (e.g.
transfer agent fees) between Class A Shares and Institutional Shares of the
Money Market Fund and the U.S. Treasury Money Market Fund that would affect
their relative dividends.

DIVIDEND AND DISTRIBUTION OPTIONS

When you fill out an Account Application, you can choose from three
dividend and distribution options:

A. The AUTOMATIC REINVESTMENT OPTION provides for the reinvestment of
dividends and capital gain distributions in additional shares of the same
class of each Fund. Dividends and distributions declared in a month are
reinvested at net asset value early in the following month. You are
assigned this option automatically if you make no choice on your Account
Application.

B. The AUTOMATIC CLEARING HOUSE OPTION permits you to have dividends
and capital gain distributions deposited in your Approved Bank Account. In
the event your Approved Bank Account is closed, and such distribution is
returned to the Funds' dividend disbursing agent, the distribution will be
reinvested in your Fund account at the net asset value next determined
after the distribution has been returned. Your Automatic Clearing House
Option will be converted to the Automatic Reinvestment Option.

C. The CHECK PAYMENT OPTION allows you to receive a check for a
dividend or capital gain distribution, which is mailed either to the
designated address, or your Approved Bank Account, early

18
<PAGE> 104

in the month following declaration. If the U.S. Postal Service cannot
deliver such checks, or if such checks remain uncashed for six months,
those checks will be reinvested in your Fund account at the net asset value
next determined after the earlier of the date the checks have been returned
to the dividend disbursing agent or the date six months after the payment
of such dividend or distribution. Your Check Payment Option will be
converted to the Automatic Reinvestment Option.

TAXES

Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Code, as long as such qualification is in the best interest
of each Fund's shareholders. Each Fund will be treated as a separate entity for
tax purposes and thus the provisions of the Code applicable to regulated
investment companies generally will be applied to each Fund, rather than to the
Company as a whole. In addition, net capital gains, net investment income, and
operating expenses will be determined separately for each Fund. By complying
with the applicable provisions of the Code, the Funds will not be subject to
federal income taxes with respect to net investment income and net realized
capital gains distributed to their respective shareholders. Each Fund intends to
pay out substantially all of its net investment income and net realized capital
gains (if any) for each year. Dividends from taxable investment income (which
includes net short-term capital gains, if any) declared and paid by each Fund
will be taxable as ordinary income to its shareholders. Whether you take such
dividend payments and capital gain distributions in cash or have them
automatically reinvested in additional shares, they will be taxable. Generally,
such dividends and distributions are taxable to shareholders at the time they
are paid. However, such dividends and distributions declared payable in October,
November and December and made payable to shareholders of record in such a month
are treated as paid and are thereby taxable as of December 31, provided that
such dividends and distributions are actually paid no later than January 31 of
the following year. You may be eligible to defer the tax on such dividends and
distributions on shares of a Fund held under a qualified tax-deferred retirement
plan. The Funds' dividends will not qualify for the dividends-received deduction
allowed to corporate shareholders.

The California Tax-Free Money Market Fund's shareholders will not be
subject to federal income taxes on any Fund dividends attributable to interest
from tax-exempt securities. However, dividends attributable to interest from
taxable securities, and capital gain distributions (if any) will be taxable to
shareholders, regardless of whether such dividends and distributions are paid in
cash or reinvested in Fund shares. In addition, as long as the California
Tax-Free Money Market Fund complies with applicable provisions of the California
Revenue and Taxation Code, it will be entitled to pay its shareholders dividends
that are exempt from California personal income tax.

19
<PAGE> 105

paid or credited to individual shareholders of the Funds, if a shareholder has
not complied with IRS regulations or if a correct taxpayer identification
number, certified when required, is not on file with the Company or the Transfer
Agent. In connection with this withholding requirement, you will be asked to
certify on your Account Application that the social security or taxpayer
identification number you provide is correct and that you are not subject to 31%
backup withholding for previous underreporting to the IRS.

Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes -- Foreign Shareholders" in the SAI.

The foregoing discussion regarding dividends, distributions and taxes is
based on tax laws and regulations which were in effect as of the date of this
Prospectus and summarizes only some of the important federal tax considerations
generally affecting the Funds and their shareholders. It is not intended as a
substitute for careful tax planning; you should consult your tax advisor with
respect to your specific tax situation as well as with respect to state and
local taxes. In addition, the Funds do not make any representation of their
corporate shareholders and recommend that such shareholders consult their tax
advisors.

Further federal income tax considerations are discussed in the SAI for each
Fund.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Wells Fargo Bank has been retained to act as the Funds' custodian and
transfer and dividend disbursing Agent. Wells Fargo Bank performs the custodial
services at its address above and transfer and dividend disbursing agency
activities at 525 Market Street, San Francisco, California 94105.

20
<PAGE> 106

ORGANIZATION AND CAPITAL STOCK

The Company, an open-end, management investment company, was incorporated
in Maryland on April 27, 1987. The authorized capital stock of the Company
consists of 20,000,000,000 shares having a par value of $.001 per share. The
Company currently offers the following series of shares, each representing an
interest in one of the following funds -- the Asset Allocation, California
Tax-Free Bond, California Tax-Free Money Market, Money Market, Municipal Income,
National Tax-Free Institutional Money Market, Overland Sweep, Short-Term
Government-Corporate Income, Short-Term Municipal Income, Strategic Growth, U.S.
Government Income, U.S. Treasury Money Market and Variable Rate Government
Funds. The Board of Directors may, in the future, authorize the issuance of
shares of capital stock representing additional series or investment portfolios.
All shares of the Company have equal voting rights and will be voted in the
aggregate, and not by series or class, except where voting by series or class is
required by law or where the matter involved affects only one series or class.
The Company may dispense with the annual meeting of shareholders in any fiscal
year in which it is not required to elect Directors under the 1940 Act; however,
shareholders are entitled to call a meeting of shareholders for purposes of
voting on removal of a Director or Directors. A more detailed statement of the
voting rights of shareholders is contained in the SAI. All shares of the
Company, when issued, will be fully paid and nonassessable.

In addition to the Class A Shares, the Money Market Fund and the U.S.
Treasury Money Market Fund each offers an Institutional Class of Shares. The
Institutional Shares, which require a minimum initial investment of at least
$150,000, are not subject to fees imposed under the Distribution Plans (Rule
12b-1 fees) applicable to Class A Shares. For more information about this class
of shares, or to obtain a current prospectus for the Institutional Shares,
please call the Company at (800) 552-9612.

21
<PAGE> 107
OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS SHAREHOLDER SERVICES, WELLS FARGO BANK, N.A.
POST OFFICE BOX 63084, SAN FRANCISCO, CALIFORNIA 94163
FOR PERSONAL SERVICE PLEASE CALL
YOUR INVESTMENT ADVISOR OR 1-800-572-7797

[LOGO] ACCOUNT APPLICATION PAGE 1 OF 5
OVERLAND EXPRESS FUNDS, INC.

<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / ADDITIONAL INVESTMENT OR CHANGE TO ACCOUNT #
--------------------
- ---------------------------------------------------------------------------------------------------------------------------------

/ / INDIVIDUAL 1. Individual - -
USE LINE 1 -------------------------------- -------- -------- --------
First Name Initial Last Name Soc. Security No.

/ / JOINT OWNERS 2. Joint Owner
USE LINES 1 & 2 --------------------------------- (Only one Soc. Security No. is
First Name Initial Last Name required for Joint Owners)

Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is indicated:
/ / Tenants in Common

/ / TRANSFER TO 3. Uniform
MINORS Transfer ------------------------------------------------------------------
USE LINE 3 to Minors Custodian's Name (only one) Minor's State of Residence

- -
--------------------------------- -------- -------- --------
Minor's Name (only one) Minor's Soc. Security No.

/ / TRUST* 4. Trust Name
USE LINE 4 ------------------------------------------------------------------
Trustee(s)
------------------------------------------------------------------
(If you would like Trustee's name included in registration.)

Trust ID Number
---------------------------------------------------
Please attach title page, the page(s) allowing investment in a mutual fund
("powers page") and signature page, and complete Section 6, "Authorization
for Trusts and Organizations."

/ / ORGANIZATION* 5. Organization Name -
USE LINE 5 ----------------------------------------------- ---------- ----------
*Complete "Authorization for Trusts and Tax I.D. No.
Organizations" (Section 6).

- ---------------------------------------------------------------------------------------------------------------------------------
ADDRESS:

Number and Street Apartment No.
----------------------------------------------------------------------------- -------------
City State Zip Code
-------------------------------------------------------------- -------------------------- --------------

Telephone Numbers: (DAY) - - (EVENING) - -
----------- ---------- ---------- ---------- ---------- ----------
(Area Code) (Area Code)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(CONTINUED)
<PAGE> 108
[LOGO] ACCOUNT APPLICATION PAGE 2 OF 5
OVERLAND EXPRESS FUNDS, INC.

- --------------------------------------------------------------------------------
2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $1,000.)
- --------------------------------------------------------------------------------
INVESTMENT AMOUNT:
/ / OVERLAND EXPRESS CALIFORNIA TAX-FREE MONEY MARKET $ ________
/ / OVERLAND EXPRESS MONEY MARKET FUND -- CLASS A $ ________
/ / OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND -- CLASS A $ ________

METHOD OF PAYMENT: / / Debit bank account designated in Section 3.

/ / Check attached (payable to Overland Express Funds, Inc.)

/ / Funds have been wired to Overland Express

- --------------------------------------------------------------------------------

SETTLEMENT ARRANGEMENTS: (Check only one if applicable)

- --------------------------------------------------------------------------------

SYSTEMATIC PURCHASE PLAN:

Monthly Investment Amount: $
------------------- -------------------------
(minimum $100) Name of Fund

- --------------------------------------------------------------------------------

SYSTEMATIC WITHDRAWAL PLAN:

Monthly Withdrawal Amount: $
------------------- -------------------------
(minimum $100) Name of Fund

/ / Mail check to registration set forth in Section 1.

/ / Distribute funds to bank account designated in Section 3.

- --------------------------------------------------------------------------------
(CONTINUED)

<PAGE> 109
[LOGO] ACCOUNT APPLICATION PAGE 3 OF 5
OVERLAND EXPRESS FUNDS, INC.

- --------------------------------------------------------------------------------
3. BANK ACCOUNT INFORMATION
- --------------------------------------------------------------------------------

------------------------------------------------------------------------------
Bank Name

------------------------------------------------------------------------------
Address City State Zip

------------------------------------------------------------------------------
Bank Account Number Bank Routing Number

- --------------------------------------------------------------------------------
4. TELEPHONE INSTRUCTIONS (Do NOT check this box if you wish to authorize
telephone instructions.)
- --------------------------------------------------------------------------------

/ / If this box is checked, you are NOT authorized to honor my telephone
instructions for purchase of additional Fund shares, redemptions of Fund
shares and exchanges of shares between Funds. If this box is not checked,
I understand that telephone instructions will be effected by
debiting/crediting the account designated in Section 3 (if approved) and
that if a designated account has not been authorized and approved, a
check or wire transfer will be required for a purchase and a check will
be sent for a redemption.
- --------------------------------------------------------------------------------
5. DISTRIBUTIONS (Do NOT check boxes if you want reinvestment.)
- --------------------------------------------------------------------------------
All dividends and capital gain distributions will be automatically reinvested
in shares of the Fund unless otherwise indicated:

<TABLE>
<C> <S>
OVERLAND EXPRESS CALIFORNIA TAX-FREE MONEY MARKET FUND:
Pay dividends and capital gain distributions by / / mailing check to the registration address set forth in Section 1
or by / / crediting amounts to the bank account designated in Section 3

OVERLAND EXPRESS MONEY MARKET FUND -- CLASS A:
Pay dividends and capital gain distributions by / / mailing check to the registration address set forth in Section 1
or by / / crediting amounts to the bank account designated in Section 3

OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND -- CLASS A:
Pay dividends and capital gain distributions by / / mailing check to the registration address set forth in Section 1
or by / / crediting amounts to the bank account designated in Section 3
</TABLE>

- --------------------------------------------------------------------------------

(CONTINUED)

<PAGE> 110
[LOGO] ACCOUNT APPLICATION PAGE 4 OF 5
OVERLAND EXPRESS FUNDS, INC.

- --------------------------------------------------------------------------------
6. AUTHORIZATION FOR TRUSTS AND ORGANIZATIONS (If Applicable.)
- --------------------------------------------------------------------------------

CORPORATIONS, TRUSTS, PARTNERSHIPS OR OTHER ORGANIZATIONS MUST COMPLETE
THIS SECTION.

<TABLE>
<S> <C> <C> <C> <C>
Registered Owner is a: / / Trust / / Corporation, Incorporated Association

/ / Partnership / / Other:
--------------------------------------------------------------------
(such as Non-Profit Organization, Religious Organization, Sole
Proprietorship, Investment Club, Non-incorporated Association, etc.)
</TABLE>

<TABLE>
<S> <C> <C>
Name Title Specimen Signature

---------------------------------- ---------------------------------- ----------------------------------

---------------------------------- ---------------------------------- ----------------------------------
</TABLE>

FOR CORPORATIONS AND INCORPORATED ASSOCIATIONS:

I, ______________________________________________, Secretary of the
above-named Registered Owner, do hereby certify that at a meeting on
__________________ at which a quorum was present throughout, the Board of
Directors of the corporation/the officers of the association duly adopted
a resolution, which is in full force and effect and in accordance with the
Registered Owner's charter and by-laws, which resolution: (1) empowered
the above-named Authorized Person(s) to effect securities transactions for
the Registered Owner on the terms described above; (2) authorized the
Secretary to certify, from time to time, the names and titles of the
officers of the Registered Owner and to notify you when changes in the
office occur; and (3) authorized the Secretary to certify that such a
resolution has been duly adopted and will remain in full force and effect
until you receive a duly executed amendment to the Authorization Form.

Witness my hand on behalf of the corporation/association on this
_________ day of _______,19

---------------------------------------------
Secretary (Signature Guarantee or
Corporate Seal is Required)

FOR ALL OTHER ORGANIZATIONS: ---------------------------------------------
Certifying Trustee, General Partner, or Other

- --------------------------------------------------------------------------------

(CONTINUED)

<PAGE> 111
[LOGO] ACCOUNT APPLICATION PAGE 5 OF 5
OVERLAND EXPRESS FUNDS, INC.

<TABLE>
<S> <C>
---------------------------------------------------------------------------------------------------------------
7. SIGNATURE, TAX INFORMATION & CERTIFICATION
---------------------------------------------------------------------------------------------------------------
/ / U.S. CITIZEN OR RESIDENT
I understand that the Federal Government requires Overland Express Funds, Inc. to withhold and pay to
the Internal Revenue Service 31% from all interest, dividends, capital gains distributions and
proceeds from redemptions UNLESS I have provided a certified taxpayer identification (Social Security
or Employer Identification) number and certify in the Withholding Status below that I am NOT subject
to backup withholding. The taxpayer identification number I provided in Section 1 will be the number
under which any taxable earnings will be reported to the IRS.
WITHHOLDING STATUS: Unless I indicate that I am subject to backup withholding by checking the box
below, I certify that 1) I have NOT been notified by the IRS that I am subject to backup withholding
as a result of a failure to report all interest or dividends, OR 2) I have been notified by the IRS
that I am no longer subject to backup withholding: / / I am currently subject to backup withholding.
/ / NON-RESIDENT ALIEN (In order to claim this exemption, ALL owners on the account must be non-resident
aliens and sign below.)
I am not a U.S. citizen or resident (nor is this account held by a foreign corporation, partnership,
estate or trust) and my permanent address is:

Country:
------------------------------------------------------------------------- ----------------
By signing below, I (we) certify, under penalties of perjury, that I (we) have full authority and legal
capacity to purchase shares of the Fund and affirm that I (we) have received a current prospectus and agree
to be bound by its terms and further certify that 1) the correct taxpayer identification number has been
provided in Section 1 of this Application and that the Withholding Status information, above, is correct OR
2) all owners are entitled to claim non-resident alien status. Investors should be aware that the failure to
check the box under "Telephone Instructions" above means that the telephone exchange and redemption
privileges will be provided. A shareholder would bear the risk of loss in the event of the fraudulent use of
the pre-authorized redemption or exchange privileges. Please see "Exchange Privileges" and "Redemption of
Shares" in the Prospectus for more information on these privileges.

X SIGNATURE GUARANTEE: NOT REQUIRED WHEN
-------------------------------------------------------- ESTABLISHING NEW ACCOUNTS. Required only if
Individual (or Custodian) date establishing privileges in Block 2 on an
existing account. Signature Guarantee may be
X provided by an "eligible guarantor
-------------------------------------------------------- institution," which includes a commercial bank,
Joint Owner (if any) date trust company, member firm of a domestic stock
exchange, savings association, or credit union
that is authorized by its charter to provide a
X signature guarantee.
--------------------------------------------------------
Corporate Officer or Trustee date
AFFIX SIGNATURE GUARANTEE STAMP

-------------------------------------------------------- -----------------------------------------------
Title of Corporate Officer or Trustee Signature Guaranteed By
---------------------------------------------------------------------------------------------------------------
</TABLE>

DEALER INFORMATION

- --------------------------------------------- -----------------
Dealer Name Branch ID #

- --------------------------------------------- ----------------- ----------------
Representative's Last Name Rep ID # Rep Phone #

X
-------------------------------------------------------------------------------
Authorized signature of Broker/Dealer Title date

<PAGE> 112

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR

Stephens Inc.

111 Center Street
Little Rock, Arkansas 72201

INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND
CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163

LEGAL COUNSEL

Morrison & Foerster LLP

2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111

NOT FDIC INSURED

FOR MORE INFORMATION ABOUT THE FUNDS,
SIMPLY CALL (800) 552-9612,
OR WRITE:

OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163

MMP 5/96

[OVERLAND EXPRESS LOGO]

------------------------

PROSPECTUS

------------------------

California Tax-Free
Money Market Fund

Money Market Fund
Class A Shares

U.S. Treasury Money
Market Fund
Class A Shares

------------------------

May 1, 1996

------------------------

NOT FDIC INSURED
<PAGE> 113

Telephone: (800) 552-9612 LOGO

Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian

Overland Express Funds, Inc. (the "Company") is an open-end, series
investment company. This Prospectus describes the Institutional Class of two of
the Company's funds -- the MONEY MARKET FUND and the U.S. TREASURY MONEY MARKET
FUND (each, a "Fund," and collectively, the "Funds").

The MONEY MARKET FUND seeks to provide investors with a high level of
current income, while preserving capital and liquidity, by investing in
high-quality, short-term securities.

Each of the Funds seeks to maintain a net asset value of $1.00 per share.

This Prospectus sets forth concisely the information a prospective investor
should know before investing in any of the Funds. A Statement of Additional
Information ("SAI") dated May 1, 1996, containing additional and more detailed
information about each of the Funds, has been filed with the Securities and
Exchange Commission (the "SEC") and is hereby incorporated by reference into
this Prospectus. The SAI is available without charge and can be obtained by
writing the Company at P.O. Box 63084, San Francisco, CA 94163 or by calling the
Company at (800) 552-9612.

AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN A
CONSTANT $1.00 NET ASSET VALUE PER SHARE.

------------------------

INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.

------------------------

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. SUCH SHARES ARE NOT INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL
AGENCY. AN INVESTMENT IN A FUND INVOLVES
CERTAIN INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

PROSPECTUS DATED MAY 1, 1996

<PAGE> 114

This Prospectus describes one class of shares of the Funds -- the
Institutional Class (shares of the Institutional Class are also referred to
hereinafter as the "Institutional Shares"). The Funds also offer a class of
shares known as the Class A Shares. Investors who are not eligible to invest in
the Institutional Shares may be eligible to invest in the Class A Shares.
Additional information about Class A Shares, and a free copy of the current
prospectus describing the Class A Shares, is available from the Company by
calling (800) 552-9612.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary................................................. ii
Summary of Expenses................................................ iv
Financial Highlights............................................... vi
Investment Objectives, Policies and Activities..................... 1
Advisory, Administration and Distribution Arrangements............. 5
Determination of Net Asset Value................................... 7
Purchase of Shares................................................. 8
Exchange Privileges................................................ 10
Redemption of Shares............................................... 11
Dividends and Distributions........................................ 14
Taxes.............................................................. 15
Custodian and Transfer and Dividend Disbursing Agent............... 16
Organization and Capital Stock..................................... 16
</TABLE>

i
<PAGE> 115

PROSPECTUS SUMMARY

Q. WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?

A. The MONEY MARKET FUND seeks to provide investors with a high level of
current income, while preserving capital and liquidity, by investing in
high-quality, short-term securities.

The U.S. TREASURY MONEY MARKET FUND seeks to provide investors with a high
level of current income, while preserving capital and liquidity, by
investing in short-term U.S. Treasury bonds, notes and bills.

Each Fund seeks to maintain a net asset value of $1.00 per share; however,
there can be no assurance that this will be achieved. As with all mutual
funds there can be no assurance each Fund will achieve its investment
objective.

Q. WHAT ARE PERMISSIBLE INVESTMENTS?

A. The MONEY MARKET FUND invests in high-quality money market instruments,
including obligations of the U.S. Government, its agencies and
instrumentalities (including government-sponsored enterprises), certain
debt obligations, including corporate debt, certain obligations of U.S.
banks and certain repurchase agreements. See "Investment Objectives,
Policies and Activities."

The U.S. TREASURY MONEY MARKET FUND invests in short-term U.S. Treasury
bonds, notes and bills. See "Investment Objectives, Policies and
Activities."

Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?

Q. WHO MANAGES MY INVESTMENTS?

A. Wells Fargo Bank, as the investment adviser to each Fund, manages your
investments. Wells Fargo Bank also provides the Funds with transfer
agency, dividend disbursing agency and custodial services. Stephens is the
sponsor, administrator and distributor for the Company. See "Advisory,
Administration and Distribution Arrangements."

Q. HOW MAY I PURCHASE SHARES?

A. Institutional Shares of the Funds may be purchased on any day the New
York Stock Exchange (the "Exchange") is open for trading. There is no
sales load for purchasing shares of either of the Funds. The minimum
initial purchase amount for Institutional Shares of either of the Funds is
$150,000 with minimum subsequent purchase amounts of $25,000 or more in
each account, although certain exceptions to these minimums may be
available. You may purchase Institutional Shares of the Funds

ii
<PAGE> 116

through Stephens, Wells Fargo Bank, as transfer agent (the "Transfer
Agent"), or any authorized broker/dealer or financial institution.
Purchases of shares of the Funds may be made by wire directly to the
Transfer Agent. See "Purchase of Shares."

Q. HOW WILL I RECEIVE DIVIDENDS?

Q. HOW MAY I REDEEM SHARES?

A. Shares may be redeemed on any day the Exchange is open upon request to
Stephens or the Transfer Agent directly, or through any authorized
broker/dealer or financial institution. Shares may be redeemed by a
request in good form in writing or through telephone direction. Proceeds
are payable by check or, for shareholders who make prior arrangements, by
wire. Accounts maintaining less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. The Company
does not charge for redeeming its shares. However, the Company reserves
the right to impose charges for wiring redemption proceeds. See
"Redemption of Shares."

iii
<PAGE> 117

SUMMARY OF EXPENSES

ANNUAL FUND OPERATING EXPENSES
AS A PERCENTAGE OF AVERAGE NET ASSETS

<TABLE>
<CAPTION>
INSTITUTIONAL
SHARES OF
INSTITUTIONAL U.S.
SHARES OF TREASURY
MONEY MARKET MONEY MARKET
FUND FUND
------------ ------------
<S> <C> <C>
Management Fees (after waivers or reimbursements)(1)................ 0.25% 0.24%
Other Expenses (after waivers or reimbursements)(1)................. 0.14% 0.15%
----- -----
Total Fund Operating Expenses (after waivers or
reimbursements)(1)................................................ 0.39% 0.39%
</TABLE>

- ---------------

(1) The percentages shown above are based on amounts incurred during the most
recent fiscal year and are restated to reflect fee waivers and
reimbursements that are expected to continue to reduce expenses during the
current fiscal year. Absent waivers and reimbursements, the percentages
shown above under "Other Expenses" and "Total Fund Operating Expenses" with
respect to the Institutional Shares of the Money Market Fund would have been
0.20% and 0.45%, respectively. Absent waivers and reimbursements, the
percentages shown above under "Management Fees," "Other Expenses" and "Total
Fund Operating Expenses" with respect to the Institutional Shares of the
U.S. Treasury Money Market Fund would have been 0.25%, 0.24% and 0.49%,
respectively.

Stephens and Wells Fargo Bank each may elect, in its sole discretion, to
otherwise waive all or a portion of its respective fees or reimburse expenses.
Wells Fargo Bank and Stephens each has agreed to waive all or a portion of its
respective fees, through at least the current fiscal year, to the extent Total
Fund Operating Expenses for Institutional Shares of either Fund would exceed
0.45% of average daily net assets. Any such waivers, limits or reimbursements
of fees with respect to a Fund would reduce the total expenses of such Fund.
Of course, there can be no assurances that voluntary fee waivers, limits and
reimbursements will continue.

iv
<PAGE> 118

EXAMPLE OF EXPENSES

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment in Institutional Shares of each Fund,
assuming (1) a 5% annual return and (2) redemption at
the end of each time period indicated:
Money Market Fund................................... $ 4 $ 13 $ 22 $ 49
U.S. Treasury Money Market Fund..................... $ 4 $ 13 $ 22 $ 49
</TABLE>

The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that investors in Institutional
Shares of the Funds will bear directly or indirectly. There are no sales loads,
redemption fees or exchange fees charged by the Funds. However, the Company
reserves the right to impose charges for wiring redemption proceeds.

THE EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment over the periods shown, based on
the expenses in the table on the previous page and an assumed annual rate of
return of 5%. This rate of return should not be considered an indication of the
actual or expected performance of the fund. In addition, the Example should not
be considered a representation of past or future expenses; actual expenses and
returns may be greater or lesser than those shown. See "Advisory, Administration
and Distribution Arrangements," "Distribution Plans" and "Purchase of Shares"
for more complete descriptions of the various costs and expenses applicable to
the Fund.

v
<PAGE> 119

FINANCIAL HIGHLIGHTS

MONEY MARKET FUND

FOR AN INSTITUTIONAL CLASS SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
DEC. 31, 1995 DEC. 31, 1994*
------------- --------------
<S> <C> <C>
Net asset value, beginning of period.............................. $ 1.00 $ 1.00
Income from investment operations:
Net investment income (loss)...................................... 0.06 0.02
Net realized and unrealized gain (loss) on investments............ 0.00 0.00
Total from investment operations.................................. 0.06 0.02
Less distributions:
Dividends from net investment income.............................. (0.06) (0.02)
Distributions from net realized gain.............................. 0.00 0.00
Tax return of capital............................................. 0.00 0.00
Total from distributions.......................................... (0.06) (0.02)
--------- --------
Net Asset Value, End of Period.................................... $ 1.00 $ 1.00
========= ========
Total Return (not annualized)(3).................................. 5.71% 1.83%
Ratios/supplemental data:
Net assets, end of period (000)................................... $ 324,175 $ 11,237
Number of shares outstanding, end of period (000)................. 324,222 11,238
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)........................ 0.39% 0.38%
Ratio of net investment income to average net assets(2)........... 5.70% 5.05%
- ------------
(1) Ratio of expenses to average net assets prior to waived fees
and reimbursed expenses....................................... 0.45% 0.55%
(2) Ratio of net investment income to average net assets prior to
waived fees and reimbursed expenses........................... 5.64% 4.88%
(3) Total returns do not include any sales charges.
* This class commenced operations on August 18, 1994.
</TABLE>

vi
<PAGE> 120

U.S. TREASURY MONEY MARKET FUND

FOR AN INSTITUTIONAL CLASS SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
DEC. 31, 1995 DEC. 31, 1994*
------------- --------------
<S> <C> <C>
Net asset value, beginning of period................................ $ 1.00 $ 1.00
------- ------
Income from investment operations:
Net investment income (loss)........................................ 0.05 0.02
Net realized and unrealized gain (loss) on investments.............. 0.00 0.00
------- ------
Total from investment operations.................................... 0.05 0.02
Less distributions:
Dividends from net investment income................................ (0.05) (0.02)
Distributions from net realized gain................................ 0.00 0.00
------- ------
Tax return of capital............................................... 0.00 0.00
------- ------
Total from distributions............................................ (0.05) (0.02)
Net asset value, end of period...................................... $ 1.00 $ 1.00
======= ======
Total Return (not annualized)(3).................................... 5.35% 2.00%
Ratios/supplemental data:
Net assets, end of period (000)..................................... $63,134 $3,898
Number of shares outstanding, end of period (000)................... 63,130 3,900
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1).......................... 0.39% 0.23%
Ratio of net investment income to average net assets(2)............. 5.16% 4.42%
- ------------
(1) Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses............................................ 0.49% 0.57%
(2) Ratio of net investment income to average net assets prior to
waived fees and reimbursed expenses............................. 5.06% 4.08%
(3) Total returns do not include any sales charges.
* This class commenced operations on June 20, 1994.
</TABLE>

vii
<PAGE> 121

(This page intentionally left blank)
<PAGE> 122

INVESTMENT OBJECTIVES, POLICIES AND ACTIVITIES

Set forth below is a description of the investment objectives and related
policies of each of the Funds. As with all mutual funds, there can be no
assurance that the Funds, each of which is a diversified portfolio, will achieve
their respective investment objectives. The Funds invest only in U.S.
dollar-denominated "Eligible Securities" with remaining maturities not exceeding
thirteen months, as defined in Rule 2a-7 under the Investment Company Act of
1940 (the "1940 Act"), and maintain a dollar-weighted average portfolio maturity
of 90 days or less. An Eligible Security is a security that is determined to
present minimal credit risks and is rated in one of the two highest rating
categories by the required number of nationally recognized statistical rating
organizations or, if unrated, is determined to be of comparable quality to such
rated securities. These determinations are made by the investment adviser under
guidelines adopted by the Company's Board of Directors, although in certain
instances the Board of Directors must approve or ratify the Funds' investments.
The Board of Directors of the Company (or Wells Fargo Bank, under authority
delegated to it as investment adviser to the Funds) will determine on an ongoing
basis that any Eligible Securities purchased by the Funds present minimal credit
risks. The Funds will endeavor to maintain a constant net asset value of $1.00
per Share; however, there is no assurance that this objective will be achieved.

MONEY MARKET FUND

Under normal market circumstances, this Fund invests its assets exclusively
in money market instruments (discussed below). The Fund is a diversified
portfolio.

U.S. TREASURY MONEY MARKET FUND

The Fund will invest exclusively in U.S. Treasury Securities. U.S. Treasury
Securities are debt obligations issued by the U.S. Government, of which the
payment of interest and repayment of principal are secured by the full faith and
credit of the U.S. Treasury. Treasury bonds, notes and bills differ mainly in
the length of their maturities. Treasury bonds are long-term debt instruments
with original maturities of ten years or more. Treasury notes are medium-term
debt instruments with original maturities of one to ten years. Treasury bills
are short-term debt obligations with original maturities of one year or less and
are issued on a discounted basis. The U.S. Treasury Money Market Fund may only
purchase U.S. Treasury Securities with remaining maturities of 13 months or
less. The Fund is a diversified portfolio.

INVESTMENTS AND ACTIVITIES

Money Market Instruments

Money Market Instruments consist of: (a) short-term securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities (including
government-sponsored enterprises) ("U.S. Gov-

1
<PAGE> 123

ernment obligations") (discussed below); (b) negotiable certificates of deposit,
bankers' acceptances and fixed time deposits and other short-term obligations of
domestic banks (including foreign branches) that have more than $1 billion in
total assets at the time of the 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 Federal Deposit Insurance Corporation ("FDIC"); (c)
commercial paper rated at the date of purchase "Prime-1" by Moody's Investors
Service, Inc. ("Moody's") or "A-1" or better by Standard & Poor's Corporation
("S&P"), or, if unrated, of comparable quality as determined by the investment
adviser; (d) certain repurchase agreements (discussed below); and (e) short-term
U.S. dollar-denominated obligations of foreign banks (including U.S. branches)
that at the time of investment: (i) have more than $10 billion, or the
equivalent in other currencies, in total assets; (ii) are among the 75 largest
foreign banks in the world as determined on the basis of assets; and (iii) have
branches or agencies in the United States.

U.S. Government Obligations

The U.S. Treasury Money Market Fund invests exclusively in U.S. Treasury
Securities. The Money Market Fund may invest in various types of U.S. Government
obligations. U.S. Government obligations include securities issued or guaranteed
as to principal and interest by the U.S. Government and supported by the full
faith and credit of the U.S. Treasury. U.S. Treasury obligations differ mainly
in the length of their maturity. Treasury bills, the most frequently issued
marketable government securities, have a maturity of up to one year and are
issued on a discount basis. U.S. Government obligations also include securities
issued or guaranteed by federal agencies or instrumentalities, including
government-sponsored enterprises. Some obligations of agencies or
instrumentalities of the U.S. Government are supported by the full faith and
credit of the United States or U.S. Treasury guarantees; others, by the right of
the issuer or guarantor to borrow from the U.S. Treasury; still others, by the
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and others, only by the credit of the agency
or instrumentality issuing the obligation. In the case of obligations not backed
by the full faith and credit of the United States, the investor must look
principally to the agency or instrumentality, which may be privately owned,
issuing or guaranteeing the obligation for ultimate repayment. 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. Certain types of U.S. Government
obligations are subject to fluctuations in yield or value due to their structure
or contract terms.

Floating- and Variable-Rate Instruments

2
<PAGE> 124

affecting the ability of the issuer of the demand instrument to make payment
when due may occur between the date a Fund elects to demand payment and the date
payment is due. Such events may affect the ability of the issuer of the
instrument to make payment when due, and unless such demand instrument permits
same-day settlement, such events may affect a Fund's ability to obtain payment
at par. Demand instruments whose demand feature is not exercisable within seven
days may be treated as liquid, provided that an active secondary market exists.

Repurchase Agreements

The Money Market Fund may enter into repurchase agreements wherein the
seller of a security to the Fund agrees to repurchase that security from the
Fund at a mutually agreed-upon time and price. The period of maturity is usually
quite short, often overnight or a few days, although it may extend over a number
of months. The Money Market Fund may enter into repurchase agreements only with
respect to U.S. Government obligations and other securities that are permissible
investments for the Fund. All repurchase agreements will be fully collateralized
at 102% based on values that are marked to market daily. The maturities of the
underlying securities in a repurchase agreement transaction may be greater than
twelve months. However, the term of any repurchase agreement on behalf of the
Fund will always be less than twelve months. If the seller defaults and the
value of the underlying securities has declined, the Fund may incur a loss. In
addition, if bankruptcy proceedings are commenced with respect to the seller of
the security, the Fund's disposition of the security may be delayed or limited.

The Money Market Fund may not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 10% of the market
value of the Fund's total net assets would be invested in repurchase agreements
with maturities of more than seven days and illiquid securities. The Fund will
enter into repurchase agreements only with primary broker/dealers and commercial
banks that meet guidelines established by the Company's Board of Directors and
are not affiliated with the investment adviser. The Fund may participate in
pooled repurchase agreement transactions with other funds advised by Wells Fargo
Bank.

Foreign Obligations

The Money Market Fund may invest up to 25% of its assets in high-quality,
short-term debt obligations of foreign branches of U.S. banks or U.S. branches
of foreign banks that are denominated in and pay interest in U.S. dollars.
Investments in foreign obligations involve certain considerations that are not
typically associated with investing in domestic obligations. There may be less
publicly available information about a foreign issuer than about a domestic
issuer. Foreign issuers also are not subject to the same accounting, auditing
and financial reporting standards or governmental supervision as domestic
issuers. In addition, with respect to certain foreign countries, taxes may be
withheld at the source under foreign income tax laws, and there is a possibility
of expropriation or confiscatory taxation, political or social instability or
diplomatic development that could adversely affect investments in, the liquidity
of, and the ability to enforce contractual obligations with respect to,
securities of issuers located in those countries.

3
<PAGE> 125

Risk Factors

The Funds seek to reduce risk by investing their assets in securities of
various issuers and will comply with 1940 Act and Internal Revenue Code of 1986
(the "Code") diversification requirements.

- capped floaters (on which interest is not paid when market rates move
above a certain level);

- leveraged floaters (whose interest-rate reset provisions are based on
a formula that magnifies changes in interest rates);

- range floaters (which do not pay any interest if market interest rates
move outside of a specified range);

- inverse floaters (which reset in the opposite direction of their
index).

Additionally, the Funds may not invest in securities whose interest rate
reset provisions are tied to an index that materially lags short-term interest
rates, such as Cost of Funds Index ("COFI") Floaters. The Funds may only invest
in floating-rate instruments that bear interest at a rate that resets quarterly
or more frequently, and which resets based on changes in standard money market
rate indices such as U.S. Treasury bills, London Interbank Offered Rate, the
prime rate, published commercial paper rates, federal funds rates, Public
Securities Associates ("PSA") Floaters or JJ Kenney index floaters.

* * * *

Each of the Funds' investment objectives, as set forth in the first
paragraph of the relevant section describing each Fund's objective and policies,
is fundamental; that is, the investment objective may not be changed without
approval by the vote of the holders of a majority of the Fund's outstanding
voting securities, as described under "Capital Stock" in the SAI. If the Board
of Directors determines, however, that a Fund's investment objective can best be
achieved by a substantive change in a non-fundamental investment policy or
strategy, the Company may make such change without shareholder approval and will
disclose any such material changes in the then current prospectus.

4
<PAGE> 126

investments may not be purchased by the Money Market Fund while any such
outstanding borrowing exists and investments may not be purchased by the U.S.
Treasury Money Market Fund while any such outstanding borrowing in excess of 5%
of its net assets exists); (ii) the Money Market Fund may invest up to 10% of
the current value of its net assets in repurchase agreements having maturities
of more than seven days and illiquid securities; (iii) none of the Funds may
purchase the securities of issuers conducting their principal business activity
in the same industry if, immediately after the purchase and as a result thereof,
the value of the Fund's investment in that industry would exceed 25% of the
current value of such Fund's total assets, provided that there is no limitation
with respect to investments in (a) U.S. Government obligations (which includes
U.S. Treasury Securities), and (b) obligations of domestic banks (for purpose of
this restriction, domestic bank obligations do not include obligations of U.S.
branches of foreign banks or obligations of foreign branches of U.S. banks). See
"Investment Restrictions" and "Additional Permitted Investment Activities" in
the SAI.

ADVISORY, ADMINISTRATION AND
DISTRIBUTION ARRANGEMENTS

The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decides
upon matters of general policy.

INVESTMENT ADVISER

Pursuant to Advisory Contracts, each of the Funds is advised by Wells Fargo
Bank, 420 Montgomery Street, San Francisco, California 94104, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the largest banks
in the United States, was founded in 1852 and is the oldest bank in the western
United States. As of April 1, 1996, Wells Fargo Bank and its affiliates provided
investment advisory services for approximately $56 billion of assets of
individuals, trusts, estates and institutions. Wells Fargo Bank is the
investment adviser to other separately managed portfolios of the Company and
serves as investment adviser or sub-adviser to five other registered investment
companies, each of which consists of several separately managed investment
portfolios.

For its services under the Advisory Contracts, Wells Fargo Bank is entitled
to receive a monthly advisory fee at the annual rate of 0.25% of the average
daily net assets of each of the Money Market Fund and the U.S. Treasury Money
Market Fund. From time to time, Wells Fargo Bank may waive such fees in whole or
in part. In this regard, Wells Fargo Bank has agreed to waive its fees, through
at least the current fiscal year, to the extent Total Fund Operating Expenses
for the Institutional Shares of either Fund would exceed 0.45% of average daily
net assets. Any such waiver will reduce expenses of the Fund involved and,
accordingly, have a favorable impact on the performance of such Fund. For the
year ended December 31, 1995, Wells Fargo Bank received 0.25% of the Money
Market Fund's average daily net assets and 0.24% of the U.S. Treasury Money
Market Fund's average daily net assets as compensation for its services as
investment adviser.

5
<PAGE> 127

Morrison & Foerster LLP, counsel to the Company and special counsel to
Wells Fargo Bank, has advised the Company and Wells Fargo Bank that Wells Fargo
Bank and its affiliates may perform the services contemplated by the Advisory
Contracts and this Prospectus without violation of the Glass-Steagall Act. Such
counsel has pointed out, however, that there are no controlling judicial or
administrative interpretations or decisions and that future judicial or
administrative interpretations of, or decisions relating to, present federal or
state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in such statutes, regulations and judicial or
administrative decisions or interpretations, could prevent such entities from
continuing to perform, in whole or in part, such services. If any such entity
were prohibited from performing any such services, it is expected that new
agreements would be proposed or entered into with another entity or entities
qualified to perform such services.

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR

Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with each of the Funds under which Stephens acts as administrator
for the Funds. For providing these administrative services, Stephens is entitled
to receive a monthly fee from each Fund at the annual rate of 0.10% of its
average daily net assets. From time to time, Stephens may waive fees from any or
all of the Funds in whole or in part. Any such waiver will reduce expenses of
the Fund involved and, accordingly, have a favorable impact on the performance
of such Fund.

The Administration Agreements between Stephens and the Funds state that
Stephens shall provide as administrative services, among other things, (i)
general supervision of the operation of the Funds, including coordination of the
services performed by the Funds' investment adviser, transfer agent, custodian,
independent auditors and legal counsel; (ii) general supervision of regulatory
compliance matters including, compilation of information for documents such as
reports to, and filings with, the SEC and state securities commissions, and
preparation of proxy statements and shareholder reports for the Funds; and (iii)
general supervision of the compilation of data required for the preparation of
periodic reports distributed to the Company's officers and Board of Directors.
Stephens also furnishes office space and certain facilities required for
conducting the business of the Funds and pays the compensation of the Company's
Directors, officers and employees who are affiliated with Stephens.

Stephens, as the principal underwriter of the Funds within the meaning of
the 1940 Act, has entered into a Distribution Agreement with the Company
pursuant to which Stephens has the responsibility for distributing shares of the
Funds. Stephens bears the cost of printing and mailing prospectuses to potential
investors and any advertising expenses incurred by it in connection with the
distribution of shares. In addition, Stephens has established a non-cash
compensation program, pursuant to which broker/dealers or financial institutions
that sell shares of the Funds may earn additional compensation in the form of
trips to

6
<PAGE> 128

sales seminars or vacation destinations, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or merchandise.

Stephens is a full service broker/dealer and investment advisory firm.
Stephens and its predecessor have been providing securities and investment
services for more than sixty years. Additionally, they have been providing
discretionary portfolio management services since 1983. It currently manages
investment portfolios for pension and profit sharing plans, individual
investors, foundations, insurance companies and university endowments.

DETERMINATION OF NET ASSET VALUE

Net asset value per class of shares of each Fund is determined by Wells
Fargo Bank on each day that the Exchange is open for trading. The net asset
value of a share of a class of a Fund is the value of total net assets
attributable to such class divided by the number of outstanding shares of that
class. The value of net assets per class is determined daily by adjusting the
net assets per class at the beginning of the day by the value of each class's
shareholder activity, net investment income and net realized and unrealized
gains or losses for that day. Net investment income is calculated each day for
each class by attributing to each class a pro rata share of daily income and
common expenses, and by assigning class-specific expenses to each class as
appropriate.

The net asset value per class of shares of each Fund is determined as of
12:00 noon and 4:00 p.m. (New York time). The only transactions that are
processed as of 4:00 p.m. are those that are received between 12:00 noon and
4:00 p.m. on that day from employee benefit plans for which Wells Fargo Bank
serves as fiduciary ("Benefit Plans"). All transaction orders are processed at
the net asset value next determined after an order is received. The amortized
cost method involves valuing a security at its cost and amortizing any discount
or premium over the period until maturity, regardless of the impact of
fluctuating interest rates on the market value of the security.

PERFORMANCE DATA

From time to time, the Company may advertise yield information with respect
to a class of shares of the Funds. Yield information is based on the historical
earnings and performance of a class of shares of a Fund and should not be
considered representative of future performance. From time to time, each of the
Funds may advertise its current yield and its effective yield for a class of
shares. Current yield for each class of shares of a Fund is computed by dividing
its net investment income per share of a class of shares earned during a
specified period by its net asset value per share on the last day of such period
and annualizing the result. The current yield of each class of shares of a Fund
shows the annualized income per share generated by an investment in such a class
of shares of the Fund over a stated period. In calculating the annualized
effective yield, the income earned per share of a class of shares is assumed to
have been reinvested. The effective yield is slightly higher than the current
yield because of the compounding effect of this assumed reinvestment. Additional
information about the performance of each Fund is contained in the Annual Report
for each Fund. The Annual Report may be obtained free of charge by calling the
Company at 800-552-9612.

7
<PAGE> 129

PURCHASE OF SHARES

Investors may purchase Institutional Shares of either of the Funds on any
day the Exchange is open for trading through Stephens, the Transfer Agent, or
any authorized broker/dealer or financial institution with which Stephens has
entered into agreements. Such broker/dealers or financial institutions are
responsible for the prompt transmission of purchase, exchange or redemption
orders, and may independently establish and charge additional fees to their
clients for such services, other than services related to purchase orders, which
would reduce the clients' overall yield or return. The Exchange is closed on New
Year's 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 Saturday, the Exchange usually is closed the preceding Friday, and
when any Holiday falls on a Sunday, the Exchange usually is closed the following
Monday.

Institutional Shares of each Fund are only offered to investors that meet
certain minimum purchase requirements. The initial minimum investment by a
single investor in Institutional Shares of a Fund is $150,000. Once an account
balance of $150,000 in Institutional Shares of a single Fund is established, an
investor may only make subsequent additional purchases of Institutional Shares
of such Fund in increments of $25,000. There are, however, no minimum initial or
subsequent additional investment amounts for shares purchased in connection with
a Benefit Plan. There is no minimum purchase requirement for reinvestment of
dividends or capital gains. Investments in Institutional Shares of more than one
Fund, or Institutional Shares held in more than one account, may not be
aggregated for purposes of determining whether a particular investor meets the
minimum purchase requirements.

There is no limitation on the amount that can be redeemed at one time,
although a Fund may limit new purchases of Institutional Shares if an investor
attempts to avoid the minimum initial purchase requirements by making partial
redemptions shortly following an initial purchase of $150,000.

The Company reserves the right to reject any purchase order. All funds will
be invested in full and fractional shares. Checks will be accepted for the
purchase of either Fund's shares subject to collection at full face value in
U.S. dollars. Inquiries concerning purchases may be directed to the Company at
(800) 572-7797 or at the address on the front cover of the Prospectus.

Shares of the Funds are offered continuously at the net asset value next
determined after a purchase order is effective. No sales load is imposed.

Account Applications for shares of either of the Funds will become
effective when an investor's bank wire order or check is converted into federal
funds. If payment is transmitted by the Federal Reserve Wire System, the Account
Application will become effective upon receipt. In addition, if investors, with
the prior approval of the Company, notify the Company at or before 12:00 noon
(New York time) on any business day that they intend to wire federal funds to
purchase shares of either of the Funds, the Account Application will be executed
at the net asset value per share determined at 12:00 noon the same day. Account
Applications received from Benefit Plans before 4:00 p.m. (New York time) on any
business day are executed at the net asset value per share determined as of 4:00
p.m. on the same day. Wire transmissions may, however, be subject to delays of
several hours, in which event the effectiveness of the order will be delayed.
Payments transmitted by a bank wire other than the Federal Reserve Wire System
may take longer to be converted into federal funds.

8
<PAGE> 130

------------------------

When payment for shares of either of the Funds is by a check that is drawn
on any member bank of the Federal Reserve System, federal funds normally become
available to the Fund on the business day after the day the check is deposited.
Checks drawn on a non-member bank or a foreign bank may take substantially
longer to be converted into federal funds and, accordingly, may delay the
execution of an order.

By investing in Institutional Shares of either of the Funds, a shareholder
appoints the Transfer Agent, as agent, to establish an open account to which all
shares purchased will be credited, together with any dividends and capital gain
distributions that are paid in additional Shares. See "Dividends and
Distributions." Stock certificates for the Funds will not be issued.

Shares of either of the Funds may be purchased in accordance with the
following procedures:

INITIAL PURCHASES OF FUND SHARES BY WIRE

1. Telephone toll free (800) 572-7797. Give the name of the Fund and class
of shares in which the investment is to be made and the name(s) in which the
Shares are to be registered, the address and social security number (or tax
identification number, where applicable) of the person or entity in whose
name(s) the shares are to be registered, dividend payment election, amount to be
wired, name of the wiring bank and name and telephone number of the person to be
contacted in connection with the order. An account number will be assigned.

2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($150,000 or more) to:

Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express (Name of Fund -- Institutional Shares)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)

Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082

4. Share purchases are effected at the public offering price next
determined after the Account Application is received and accepted.

9
<PAGE> 131

INITIAL PURCHASES OF FUND SHARES BY MAIL

1. Complete an Account Application. Indicate the services to be used.

2. Mail the Account Application and a check for $150,000 or more, payable
to "Overland Express (Name of Fund -- Institutional Shares)" at its mailing
address set forth above.

ADDITIONAL PURCHASES

Additional purchases of $25,000 or more may be made by instructing the
Funds' Transfer Agent to debit an approved account designated in the Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail by mailing a check
payable to "Overland Express (Name of Fund -- Institutional Shares)" to the
above address. Write the Fund account number on the check and include the
detachable stub from a Statement of Account or a letter providing the account
number.

PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Purchase orders for Institutional Shares of either of the Funds placed
through broker/dealers and financial institutions by 12:00 noon (New York time)
on any business day that the Exchange is open for trading, including orders for
which payment is to be made from free cash credit balances in securities
accounts held by a dealer, will be effective on the same day the order is placed
if notice is provided to the Transfer Agent by 12:00 noon (New York time) and
federal funds are received by the Transfer Agent before the close of business.
Purchase orders that are received by a broker/dealer or financial institution
after 12:00 noon (New York time) on any business day that the Exchange is open
for trading or that are not received by the Transfer Agent before the close of
business, generally will be effective on the next business day following the day
the order is placed. The broker/dealer or financial institution is responsible
for the prompt transmission of purchase orders to the Transfer Agent. A
broker/dealer or financial institution that is involved in a purchase
transaction may charge separate account, service or transaction fees. Financial
institutions may be required to register as dealers pursuant to applicable state
securities laws, which may differ from federal law and any interpretations
expressed herein.

EXCHANGE PRIVILEGES

Institutional Shares of either of the Funds may be exchanged for
Institutional Shares of the other Fund (as well as Class A Shares of any other
investment portfolio of the Company) in an identically registered account
(provided that shares of the investment portfolio to be acquired are registered
for sale in your state of residence) at respective net asset values if the
shares being acquired carry no sales load or the shares being exchanged were
acquired in exchange for shares on which an equivalent sales load was paid.
Otherwise, applicable sales loads or sales load differentials will be charged on
an exchange.

A shareholder may exchange shares by writing the Transfer Agent as
indicated below under Redemption by Mail, or by calling the Transfer Agent or
the shareholder's authorized broker/dealer or financial institution, unless the
shareholder has elected not to authorize telephone exchanges in the Account
Application (in which case the shareholder may subsequently authorize such
telephone exchanges by completing a Telephone Exchange Authorization Form and
submitting it to the Transfer Agent in advance of the first such exchange). The
Transfer Agent's telephone number for exchanges is (800) 572-7797.

10
<PAGE> 132

Procedures applicable to redemption of the Funds' shares also are
applicable to exchanging shares, except that, with respect to an exchange
transaction between accounts registered in identical names, no signature
guarantee is required unless the amount being exchanged exceeds $25,000. The
only transaction orders that are processed at 4:00 p.m. (New York time) are
those that are received prior to that time through Benefit Plans, exchange
orders received through other means after 12:00 p.m. (New York time) are
processed on the next day that is a business day for both funds involved in the
exchange. The Company reserves the right to limit the number of times shares may
be exchanged between portfolios, or to reject in whole or in part any exchange
request into a fund when management believes that such action would be in the
best interest of the fund's other shareholders, such as when management believes
that such action would be appropriate to protect such fund against disruptions
in portfolio management resulting from frequent transactions by those seeking to
time market fluctuations. Any such rejection will be made by management on a
prospective basis only, upon notice to the shareholder given not later than 10
days following such shareholder's most recent exchange. The Company reserves the
right to modify or discontinue exchange privileges at any time. Under SEC rules,
60 days prior notice of any amendments or termination of exchange privileges
will be given to shareholders, except under certain extraordinary circumstances.
The exchange privilege is not an option or a right to purchase shares, but is
permitted under the current policies of the respective Funds and portfolios of
the Company. A capital gain or loss for federal income tax purposes may be
realized upon an exchange, depending upon the cost or other basis of shares
exchanged.

Telephone redemption or exchange privileges are made available to
shareholders automatically upon opening an account, unless specifically
declined. These privileges authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Transfer Agent to be genuine. The Company will
require the Transfer Agent to employ reasonable procedures, such as requiring a
form of personal identification, to confirm that instructions are genuine. If
the Transfer Agent does not follow such procedures, the Company and the Transfer
Agent may be liable for any losses attributable to unauthorized or fraudulent
instructions. Neither the Company nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.

REDEMPTION OF SHARES

Institutional Shares of a Fund may be redeemed at their next determined net
asset value after receipt of a request in proper form by the Transfer Agent
directly or through any authorized broker/dealer or financial institution.

The Company does not charge for redemption transactions. However, a
broker/dealer or financial institution that is involved in a redemption
transaction may charge separate account, service or transaction fees. Redemption
orders for Institutional Shares of any of the Funds received by an authorized
broker/dealer or financial institution on any day that the Fund is open and
received by the Transfer Agent before 12:00 noon (New York time) on the same day
will be executed at the net asset value determined at 12:00 noon on that day.
Redemption orders for any of the Funds received by authorized broker/dealers or
financial institutions on any day that the Fund is open and received by the
Transfer Agent after 12:00 noon (New York time) will be executed at the net
asset value determined at 12:00 noon on the next day that the Fund is open.
Redemption orders for either of the Funds received in connection with Benefit
Plans by the

11
<PAGE> 133

Transfer Agent before 4:00 p.m. (New York time) on any day the Funds are open
for business are executed at the net asset value determined as of 4:00 p.m. on
that day.

Redemption proceeds ordinarily will be remitted within seven days after the
order is received in proper form, except proceeds may be remitted over a longer
period to the extent permitted by the SEC under extraordinary circumstances. If
an expedited redemption is requested, redemption proceeds will be distributed
only if the check used for investment is deemed to be cleared for payment by the
shareholder's bank, currently considered by the Company to be a period of ten
(10) days after investment. The redemption proceeds, of course, may be more or
less than cost. Payment of redemption proceeds may be made in securities,
subject to regulation by some state securities commissions.

REDEMPTION BY MAIL

1. Write a letter of instruction. Indicate the dollar amount or number of
shares to be redeemed. Refer to the shareholder's Fund account number and
provide either a social security or a tax identification number (where
applicable) of the person or entity in whose name(s) the shares are registered.

2. Sign the letter in exactly the same way the account is registered. If
there is more than one owner of the shares, all must sign.

3. If shares to be redeemed have a value of $5,000 or more, or redemption
proceeds are to be made to someone other than the shareholder at its address of
record, the signature(s) must be guaranteed by an "eligible guarantor
institution," which includes a commercial bank that is a member of the FDIC, a
trust company, a member firm of a domestic stock exchange, a savings
association, or a credit union that is authorized by its charter to provide a
signature guarantee. Signature guarantees by notaries public are not acceptable.
Further documentation may be requested from corporations, administrators,
executors, personal representatives, trustees or custodians.

4. Mail the letter to the Transfer Agent at the mailing address set forth
under "Purchase of Shares."

Unless other instructions are given in proper form, a check for the
proceeds of redemption will be sent to the shareholder's address of record.

SYSTEMATIC WITHDRAWAL PLAN

The Company's Systematic Withdrawal Plan provides an investor with a
convenient way to have Fund shares redeemed from an account and the proceeds
distributed to the investor on a monthly basis. An investor may participate in
this plan only if the investor has a Fund account valued at $10,000 or more as
of the date of the election to participate. The investor specifies an amount
($100 or more) to be distributed by check to the investor's address of record or
deposited in an approved bank account designated in the account application (an
"Approved Bank Account"). The Transfer Agent redeems sufficient shares and mails
or deposits redemption proceeds as instructed on or about the fifth business day
prior to the end of each month. There are no separate fees charged to investors
by the Fund for participating in the Systematic Withdrawal Plan.

It may take up to ten (10) business days after receipt of your request to
establish your participation in the Systematic Withdrawal Plan. Investors may
change the withdrawal amount, suspend withdrawals or terminate participation in
the Systematic Withdrawal Plan at any time by providing written notice to the

12
<PAGE> 134

Transfer Agent at least five (5) business days prior to any scheduled
transaction. Participation in the Systematic Withdrawal Plan will be terminated
automatically if the investor's Fund account balance is insufficient to make a
withdrawal or if the investor's Fund account or Approved Bank Account is closed.

EXPEDITED REDEMPTIONS BY LETTER AND TELEPHONE

A shareholder may request an expedited redemption of Shares by letter or
telephone (unless the shareholder has elected not to authorize telephone
redemptions on the Account Application or other form that is on file with the
Transfer Agent) on any day the Funds are open for business. See "Exchange
Privileges" for additional information regarding telephone redemption
privileges.

To request expedited redemption by telephone, please call the Transfer
Agent at (800) 572-7797.

To request expedited redemption by mail, mail your request for expedited
redemption to the Transfer Agent at the mailing address set forth under
"Purchase of Shares -- Initial Purchases of Fund Shares by Wire."

Upon request, proceeds of expedited redemptions of $5,000 or more will be
wired or credited to the shareholder's Approved Bank Account or wired to an
authorized broker/dealer or financial institution designated in the Account
Application. The Company reserves the right to impose charges for wiring
redemption proceeds. When proceeds of an expedited redemption are to be paid to
someone other than the shareholder, to an address other than that of record, or
to a bank, broker/dealer or other financial institution that has not been
predesignated, the expedited redemption request must be made by letter and the
signature(s) on the letter must be guaranteed, regardless of the amount of the
redemption. If an expedited redemption request is received by the Transfer Agent
by 12:00 noon (New York time) on a day the Funds are open for business, the
redemption proceeds will be transmitted to the shareholder's bank or
predesignated broker/dealer or financial institution on the same day (assuming
the investment check has cleared as described above), absent extraordinary
circumstances. A check for proceeds of less than $5,000 will be mailed to the
shareholder's address of record, except that, in the case of investments in the
Company that have been effected through broker/dealers, banks and other
institutions that have entered into special arrangements with the Company, the
full amount of the redemption proceeds may be transmitted by wire or credited to
a designated account.

REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Unless an investor has made other arrangements, and informed the Transfer
Agent of such arrangements, proceeds of redemptions made through authorized
broker/dealers and financial institutions will be credited to the shareholder's
account with such broker/dealer or institution. A redeeming shareholder may
request a check from the broker/dealer or financial institution or may elect to
retain the redemption proceeds in such shareholder's account. The broker/dealer
or financial institution may benefit from the use of the redemption proceeds
prior to the clearance of a check issued to a redeeming shareholder for such
proceeds or prior to disbursement or reinvestment of such proceeds on behalf of
the shareholder.

------------------------

The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.

13
<PAGE> 135

Due to the high cost of maintaining small accounts, the Company reserves
the right to redeem accounts that fall below $1,000. Prior to such a redemption,
a shareholder will be notified in writing and permitted 30 days to make
additional investments to raise the account balance to the specified minimum.

DIVIDENDS AND DISTRIBUTIONS

Each of the Funds intends to declare as a dividend substantially all of its
net investment income for each class at the close of each business day to
shareholders of record at 12:00 noon (New York time) on the day of declaration.
Purchase orders for shares received before 12:00 noon (New York time) on any
business day begin earning dividends on the day such purchase orders are
effective and continue to earn dividends through the day prior to the date such
shares are redeemed. Purchase orders for shares processed at 4:00 p.m. (New York
time) on any business day begin earning dividends on the following business day
and continue to earn dividends through the day on which such shares are
redeemed. Net investment income for a Saturday, Sunday or holiday will be
declared as a dividend to shareholders of record at 12:00 noon (New York time)
on the previous business day.

Net capital gains of each Fund, if any, will be distributed annually (or
more frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI or in order to maintain the net asset value of the Fund's
Shares at $1.00 per Share).

Dividends and capital gain distributions paid by each of the Funds will be
invested in additional shares of the same Fund at net asset value and credited
to the shareholder's account on the payment date or, at the shareholder's
election, paid by check. Dividend checks and Statements of Account will be
mailed approximately three business days after the payment date.

DIVIDEND AND DISTRIBUTION OPTIONS

When an investor fills out an Account Application, the investor can choose
from three dividend and distribution options:

A. The AUTOMATIC REINVESTMENT OPTION provides for the reinvestment of
dividends and capital gain distributions in additional shares of the same
Class of the Fund. Dividends and distributions declared in a month are
reinvested at net asset value early in the following month. Investors are
assigned this option automatically if they make no choice on their Account
Applications.

B. The AUTOMATIC CLEARING HOUSE OPTION permits investors to have
dividends and capital gain distributions deposited in an Approved Bank
Account. In the event the Approved Bank Account is closed, and such
distribution is returned to the Funds' dividend disbursing agent, the
distribution will be reinvested in an investor's Fund account at the net
asset value next determined after the distribution has been returned. The
investor's Automatic Clearing House Option will be converted to the
Automatic Reinvestment Option.

14
<PAGE> 136

C. The CHECK PAYMENT OPTION allows an investor to receive a check for
a dividend or capital gain distribution, which is mailed either to the
designated address, or the investors Approved Bank Account, early in the
month following declaration. If the U.S. Postal Service cannot deliver such
checks, or if such checks remain uncashed for six months, those checks will
be reinvested in the investor's Fund account at the net asset value next
determined after the earlier of the date the checks have been returned to
the dividend disbursing agent or the date six months after the payment of
such dividend or distribution. The investor's Check Payment Option will be
converted to the Automatic Reinvestment Option.

TAXES

Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Code, as long as such qualification is in the best interest
of each Fund's shareholders. Each Fund will be treated as a separate entity for
tax purposes and thus the provisions of the Code applicable to regulated
investment companies generally will be applied to each Fund, rather than to the
Company as a whole. In addition, net capital gains, net investment income, and
operating expenses will be determined separately for each Fund. By complying
with the applicable provisions of the Code, the Funds will not be subject to
federal income taxes with respect to net investment income and net realized
capital gains distributed to their respective shareholders. Each Fund intends to
pay out substantially all of its net investment income and net realized capital
gains (if any) for each year. Dividends from net investment income (which
includes net short-term capital gains, if any) declared and paid by the Funds
will be taxable as ordinary income to their respective shareholders. Whether you
take such dividend payments and capital gain distributions in cash or have them
automatically reinvested in additional shares, they will be taxable. Generally,
such dividends and distributions are taxable to shareholders at the time they
are paid. However, such dividends and distributions declared payable in October,
November and December and made payable to shareholders of record in such a month
are treated as paid and are thereby taxable as of December 31, provided that
such dividends and distributions are actually paid no later than January 31 of
the following year. You may be eligible to defer the tax on such dividends and
distributions on shares of a Fund held under a qualified tax-deferred retirement
plan. The Funds' dividends will not qualify for the dividends-received deduction
allowed to corporate shareholders.

The Funds will inform you by January 31 of each year of the amount and
nature of dividends and capital gain distributions. You should keep all
statements you receive to assist in your personal recordkeeping. The Company is
required by federal law to withhold, subject to certain exemptions, at a rate of
31% on taxable dividends, capital gain distributions and redemption proceeds
(including proceeds from exchanges) paid or credited to individual shareholders
of the Funds, if a shareholder has not complied with IRS regulations or if a
correct taxpayer identification number, certified when required, is not on file
with the Company or the Transfer Agent. In connection with this withholding
requirement, you will be asked to

15
<PAGE> 137

certify on your Account Application that the social security or taxpayer
identification number you provide is correct and that you are not subject to 31%
backup withholding for previous underreporting to the IRS.

Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes and Foreign Shareholders" in the SAI.

The foregoing discussion regarding dividends, distributions and taxes is
based on tax laws and regulations which were in effect as of the date of this
Prospectus and summarizes only some of the important federal tax considerations
generally affecting the Funds and their shareholders. It is not intended as a
substitute for careful tax planning; you should consult your tax advisor with
respect to your specific tax situation as well as with respect to state and
local taxes. In addition, the Funds do not make any representation of its
corporate shareholders and recommends that such shareholders consult their tax
advisors.

Further federal income tax considerations are discussed in the SAI.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Wells Fargo Bank has been retained to act as the Funds' custodian and
transfer and dividend disbursing agent. Wells Fargo Bank performs the custodial
services and transfer and dividend disbursing agency activities at 525 Market
Street, San Francisco, California 94105.

ORGANIZATION AND CAPITAL STOCK

The Company, an open-end, management investment company, was incorporated
in Maryland on April 27, 1987. The authorized capital stock of the Company
consists of 20,000,000,000 shares having a par value of $.001 per share. The
Company's Board of Directors currently offers the following series of shares,
each representing an interest in one of the following funds -- the Asset
Allocation, California Tax-Free Bond, California Tax-Free Money Market, Money
Market, Municipal Income, National Tax-Free Institutional Money Market, Overland
Sweep, Short-Term Government-Corporate Income, Short-Term Municipal Income,
Strategic Growth, U.S. Treasury Money Market, and Variable Rate Government
Funds. The Board of Directors may, in the future, authorize the issuance of
shares of capital stock representing additional series or investment portfolios.
All shares of the Company have equal voting rights and will be voted in the
aggregate, and not by series or class, except where voting by series or class is
required by law or where the matter involved affects only one series or class.
The Company may dispense with the annual meeting of shareholders in any fiscal
year in which it is not required to elect Directors under the 1940 Act; however,
shareholders are entitled to call a meeting of shareholders for purposes of
voting on removal of a Director or Directors. A more detailed statement of the
voting rights of shareholders is contained in the SAI. All shares of the
Company, when issued, will be fully paid and nonassessable.

In addition to the Institutional Class of Shares, each Fund also offers a
second class of shares -- the Class A Shares -- to retail investors. Unlike the
Institutional Shares, the Class A Shares are subject to a Distribution Plan
(Rule 12b-1 fees). For more information about this class of shares, or to obtain
a current prospectus for the Class A Shares, please call the Company at (800)
552-9612.

16
<PAGE> 138

OVERLAND EXPRESS FUNDS, INC.

C/O OVERLAND EXPRESS SHAREHOLDER SERVICES, WELLS FARGO BANK, N.A.
POST OFFICE BOX 63084, SAN FRANCISCO, CALIFORNIA 94163
FOR PERSONAL SERVICE PLEASE CALL
YOUR INVESTMENT ADVISOR OR 1-800-572-7797

ACCOUNT APPLICATION PAGE 1 OF 5

OVERLAND EXPRESS FUNDS, INC.

LOGO
<TABLE>
- -----------------------------------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / ADDITIONAL INVESTMENT OR CHANGE TO ACCOUNT # _____________
- -----------------------------------------------------------------------------------------------------------
<S> <C>
/ / INDIVIDUAL 1. Individual __________________________________________ _______-_____-_______
USE LINE 1 First Name Initial Last Name Soc. Security No.

(CONTINUED)
<PAGE> 139
[LOGO] ACCOUNT APPLICATION PAGE 2 OF 5

OVERLAND EXPRESS FUNDS, INC.

- --------------------------------------------------------------------------------
2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $150,000.)
- --------------------------------------------------------------------------------

INVESTMENT AMOUNT:
/ / OVERLAND EXPRESS MONEY MARKET FUND -- INSTITUTIONAL CLASS $________
/ / OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND --
INSTITUTIONAL CLASS $________

METHOD OF PAYMENT: / / Debit bank account designated in Section 3.

/ / Check attached (payable to Overland Express (Name of
Fund -- Institutional Shares))

/ / Funds have been wired to Overland Express

- --------------------------------------------------------------------------------

SETTLEMENT ARRANGEMENTS: (Check only one if applicable)

- --------------------------------------------------------------------------------
3. BANK ACCOUNT INFORMATION
- --------------------------------------------------------------------------------
______________________________________________________________________________
Bank Name
______________________________________________________________________________
Address City State Zip
______________________________________________________________________________
Bank Account Number Bank Routing Number

<PAGE> 140
[LOGO] ACCOUNT APPLICATION PAGE 3 OF 5

OVERLAND EXPRESS FUNDS, INC.

- --------------------------------------------------------------------------------
5. DISTRIBUTIONS (Do NOT check boxes if you want reinvestment.)
- --------------------------------------------------------------------------------
All dividends and capital gain distributions will be automatically reinvested
in shares of the Fund unless otherwise indicated:

<TABLE>
<C> <S>
OVERLAND EXPRESS MONEY MARKET FUND -- INSTITUTIONAL CLASS:
Pay dividends and capital gain distributions by / / mailing check to the registration address set forth in
Section 1
or by / / crediting amounts to the bank account designated in
Section 3
OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND -- INSTITUTIONAL CLASS:
Pay dividends and capital gain distributions by / / mailing check to the registration address set forth in
Section 1
or by / / crediting amounts to the bank account designated in
Section 3
</TABLE>

- --------------------------------------------------------------------------------

(CONTINUED)

<PAGE> 141
[LOGO] ACCOUNT APPLICATION PAGE 4 OF 5

OVERLAND EXPRESS FUNDS, INC.

<TABLE>
<S> <C> <C> <C> <C>
Registered Owner is a: / / Trust / / Corporation, Incorporated Association
/ / Partnership / / Other:
(such as Non-Profit Organization, Religious Organization, Sole
Proprietorship, Investment Club, Non-incorporated Association, etc.)
</TABLE>

<TABLE>
<S> <C> <C>
Name Title Specimen Signature

---------------------------------- ---------------------------------- ----------------------------------

---------------------------------- ---------------------------------- ----------------------------------
</TABLE>

FOR CORPORATIONS AND INCORPORATED ASSOCIATIONS:

I, ___________________________________________, Secretary of the
above-named Registered Owner, do hereby certify that at a meeting on
_________________ at which a quorum was present throughout, the Board of
Directors of the corporation/the officers of the association duly adopted
a resolution, which is in full force and effect and in accordance with the
Registered Owner's charter and by-laws, which resolution: (1) empowered
the above-named Authorized Person(s) to effect securities transactions for
the Registered Owner on the terms described above; (2) authorized the
Secretary to certify, from time to time, the names and titles of the
officers of the Registered Owner and to notify you when changes in the
office occur; and (3) authorized the Secretary to certify that such a
resolution has been duly adopted and will remain in full force and effect
until you receive a duly executed amendment to the Authorization Form.
Witness my hand on behalf of the corporation/association on this
_____ day of ____________________,19__

<TABLE>
<S> <C>
________________________________________________
Secretary (Signature Guarantee or
Corporate Seal is Required)

<PAGE> 142
[LOGO] ACCOUNT APPLICATION PAGE 5 OF 5

OVERLAND EXPRESS FUNDS, INC.

<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------
7. SIGNATURE, TAX INFORMATION & CERTIFICATION
- ---------------------------------------------------------------------------------------------------------------
/ / U.S. CITIZEN OR RESIDENT
I understand that the Federal Government requires Overland Express Funds, Inc. to withhold and pay to
the Internal Revenue Service 31% from all interest, dividends, capital gains distributions and
proceeds from redemptions UNLESS I have provided a certified taxpayer identification (Social Security
or Employer Identification) number and certify in the Withholding Status below that I am NOT subject
to backup withholding. The taxpayer identification number I provided in Section 1 will be the number
under which any taxable earnings will be reported to the IRS.
WITHHOLDING STATUS: Unless I indicate that I am subject to backup withholding by checking the box
below, I certify that 1) I have NOT been notified by the IRS that I am subject to backup withholding
as a result of a failure to report all interest or dividends, OR 2) I have been notified by the IRS
that I am no longer subject to backup withholding: / / I am currently subject to backup withholding.
/ / NON-RESIDENT ALIEN (In order to claim this exemption, ALL owners on the account must be non-resident
aliens and sign below.)
I am not a U.S. citizen or resident (nor is this account held by a foreign corporation, partnership,
estate or trust) and my permanent address is:
______________________________________________________________________ Country: ____________________
By signing below, I (we) certify, under penalties of perjury, that I (we) have full authority and legal
capacity to purchase shares of the Fund and affirm that I (we) have received a current prospectus and agree
to be bound by its terms and further certify that 1) the correct taxpayer identification number has been
provided in Section 1 of this Application and that the Withholding Status information, above, is correct OR
2) all owners are entitled to claim non-resident alien status. Investors should be aware that the failure to
check the box under "Telephone Instructions" above means that the telephone exchange and redemption
privileges will be provided. A shareholder would bear the risk of loss in the event of the fraudulent use of
the pre-authorized redemption or exchange privileges. Please see "Exchange Privileges" and "Redemption of
Shares" in the Prospectus for more information on these privileges.
X _________________________________________________________ SIGNATURE GUARANTEE: NOT REQUIRED WHEN
Individual (or Custodian) date ESTABLISHING NEW ACCOUNTS. Required only if
establishing privileges in Block 2 on an
X _________________________________________________________ existing account. Signature Guarantee may be
Joint Owner (if any) date provided by an "eligible guarantor
institution," which includes a commercial bank,
X _________________________________________________________ trust company, member firm of a domestic stock
Corporate Officer or Trustee date exchange, savings association, or credit union
that is authorized by its charter to provide a
signature guarantee.

AFFIX SIGNATURE GUARANTEE STAMP
_________________________________________________________ ______________________________________________
Title of Corporate Officer or Trustee Signature Guaranteed By
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

DEALER INFORMATION

<TABLE>
<S> <C> <C>
_____________________________________________________ __________________________
Dealer Name Branch ID #
_____________________________________________________ __________________________ ______________________
Representative's Last Name Rep ID # Rep Phone #
X_________________________________________________________________________________________________________
Authorized signature of Broker/Dealer Title date
</TABLE>

<PAGE> 143

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201

INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND
CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163

LEGAL COUNSEL

Morrison & Foerster LLP

2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111

NOT FDIC INSURED

FOR MORE INFORMATION ABOUT THE FUND,
SIMPLY CALL (800) 552-9612,
OR WRITE:

OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163

LOGO

------------------------
PROSPECTUS
------------------------

Money Market Fund

U.S. Treasury Money
Market Fund

Institutional Shares

------------------------

May 1, 1996

------------------------

NOT FDIC INSURED

90P 5/96

<PAGE> 144

Telephone: (800) 552-9612 LOGO

Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian

Overland Express Funds, Inc. (the "Company") is an open-end, series
investment company. This Prospectus contains information about one of the
Company's funds -- the MUNICIPAL INCOME FUND (the "Fund").

The Fund seeks to provide investors with a high level of income, consistent
with the preservation of capital, by investing primarily in a diversified
portfolio of high quality, medium- to long-term municipal securities issued by
or on behalf of states, territories and possessions or commonwealths of the
United States and District of Columbia or their political subdivisions,
authorities, agencies and instrumentalities, the income of which is exempt from
federal income tax, but subject to the federal alternative minimum tax.

This Prospectus describes two classes of shares of the Fund -- Class A
Shares and Class D Shares.

------------------------

INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.

------------------------

PROSPECTUS DATED MAY 1, 1996

<PAGE> 145

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................................... ii
Summary of Expenses........................................................................ iv
Financial Highlights....................................................................... vi
Investment Objective and Policies.......................................................... 1
Additional Permitted Investment Activities................................................. 2
Advisory, Administration and Distribution Arrangements..................................... 5
Determination of Net Asset Value........................................................... 7
Purchase of Shares......................................................................... 9
Exchange Privileges........................................................................ 14
Redemption of Shares....................................................................... 16
Distribution Plans......................................................................... 18
Servicing Plan............................................................................. 19
Dividends and Distributions................................................................ 19
Taxes...................................................................................... 20
Custodian and Transfer and Dividend Disbursing Agent....................................... 21
Organization and Capital Stock............................................................. 21
</TABLE>

i
<PAGE> 146

PROSPECTUS SUMMARY

Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

A. The MUNICIPAL INCOME FUND seeks to provide investors with a high-level of
income, consistent with the preservation of capital, by investing
primarily in a diversified portfolio of high-quality, medium- to long-term
municipal securities issued by or on behalf of states, territories, and
possessions or commonwealths of the United States and the District of
Columbia or their political subdivisions, authorities, agencies and
instrumentalities, the income of which is exempt from federal income tax,
but subject to the federal alternative minimum tax ("tax-advantaged
municipal securities"). As with all mutual funds, there can be no
assurance that the Fund will achieve its investment objective.

Q. WHAT ARE PERMISSIBLE INVESTMENTS?

A. Under normal market conditions, the Fund invests at least 80% of its net
assets in tax-advantaged municipal securities that at the time of purchase
are assigned the highest rating by a nationally recognized statistical
rating organization ("NRSRO") or, if unrated, are of comparable quality as
determined by Wells Fargo Bank, the Fund's investment adviser. The Fund
may invest in mortgage revenue bonds. The Fund also may invest in
shorter-term municipal notes and municipal commercial paper. In addition,
pending investment of funds, in anticipation of redemption or to maintain
a "defensive" posture when determined appropriate, the Fund may invest
temporarily in cash or taxable securities. See "Investment Objectives and
Policies" and "Additional Permitted Investment Activities."

Q. WHO IS THE INVESTMENT ADVISER?

Q. WHO IS THE SPONSOR, ADMINISTRATOR AND DISTRIBUTOR?

A. Stephens serves as the sponsor, administrator and distributor for the
Company. Stephens is entitled to receive a monthly administration fee at
the annual rate of 0.10% of the average daily net assets of the Fund. See
"Advisory, Administration and Distribution Arrangements."

Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?

A. An investment in the Fund is not insured against loss of principal. When
the value of the securities that the Fund owns declines, so does the value
of your Fund shares. The portfolio securities of the Fund are subject to
interest rate risk. Interest rate risk is the risk that increases in
market interest rates may adversely affect the value of the municipal
securities in which the Fund invests and hence the value of your
investment in the Fund. The values of such securities generally change
inversely to changes in market interest rates. The Fund, although it
invests primarily in high-quality municipal securities, is subject to
credit risk. Credit risk is the risk that the issuers of the debt
securities in which the Fund invests may default on the payment of
principal and/or interest. The mortgage-revenue bonds in which the Fund
invests may be redeemed prior to maturity. Such redemptions tend to
increase when interest rates decline, and may present the Fund with more
principal to invest at

ii
<PAGE> 147

lower rates. You should be prepared to accept some risk with the money you
invest in the Fund. As with all mutual funds, there can be no assurance
that the Fund will achieve its investment objective. See "Investment
Objective and Policies."

Q. HOW MAY I PURCHASE SHARES?

A. Shares of the Fund may be purchased on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is a maximum sales
load of 3.00% (3.09% of the net amount invested) for purchasing Class A
Shares of the Fund. Class D Shares are subject to a maximum contingent
deferred sales charge of 1.00% of the lesser of net asset value at
purchase or net asset value at redemption. In most cases, the minimum
initial purchase amount for the Fund is $1,000. The minimum initial
purchase amount is $100 for shares purchased through the Systematic
Purchase Plan and $250 for shares purchased through qualified retirement
plans. The minimum subsequent purchase amounts is $100 or more. You may
purchase shares of the Fund through Stephens, Wells Fargo Bank, as
transfer agent (the "Transfer Agent"), or any authorized broker/dealer or
financial institution. Purchases of shares of the Fund may be made by wire
directly to the Transfer Agent. See "Purchase of Shares."

Q. HOW WILL I RECEIVE DIVIDENDS?

A. Dividends on shares of the Fund are declared daily and paid monthly.
Dividends are automatically reinvested in additional shares of the same
class of the Fund unless you elect to receive dividends by check. Any
capital gains will be distributed annually and may be reinvested in Fund
shares of the same class or paid by check at your election. All
reinvestments of dividends and/or capital gain distributions in shares of
the Fund are effected at the then current net asset value free of any
sales load. In addition, you may elect to reinvest Fund dividends and/or
capital gain distributions in shares of the same class of another of the
Company's funds with which you have an established account that has met
the applicable minimum initial investment requirement. See "Dividends and
Distributions."

Q. HOW MAY I REDEEM SHARES?

A. Shares may be redeemed on any day the Exchange is open, upon request to
Stephens or the Transfer Agent directly or through any authorized
broker/dealer or financial institution. Shares may be redeemed by a
request in good form in writing or through telephone direction. Proceeds
are payable by check or for shareholders who make prior arrangements, by
wire. Accounts maintaining less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. Except for
any contingent deferred sales charge which may be applicable upon
redemption of Class D Shares, the Company does not charge for redeeming
its shares. However, the Company reserves the right to impose charges for
wiring redemption proceeds. See "Redemption of Shares."

Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?

iii
<PAGE> 148

Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES-RELATED RISKS?

SUMMARY OF EXPENSES

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)... 3.00% 0.00%
Maximum Deferred Sales Load (as a percentage of the lesser of net asset value
at purchase or net asset value at redemption)
Redemption during year 1.................................................... 0.00% 1.00%
Redemption after year 1..................................................... 0.00% 0.00%
</TABLE>

ANNUAL FUND OPERATING EXPENSES

(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
------------ ------------
<S> <C> <C> <C> <C>
Management Fees (after waivers and reimbursements)1................. 0.36% 0.36%
12b-1 Fees.......................................................... 0.15% 0.50%
Other Expenses
Servicing Fees.................................................... 0.00% 0.25%
Administrative Fees............................................... 0.10% 0.10%
Miscellaneous Expenses (after waivers and reimbursements)1........ 0.19% 0.19%
Total Other Expenses (after waivers and reimbursements)1............ 0.29% 0.54%
----- -----
Total Fund Operating Expenses (after waivers and reimbursements)1... 0.80% 1.40%
</TABLE>

- ---------------

(1) The percentages shown above under "Management Fees," "Miscellaneous
Expenses," "Total Other Expenses" and "Total Fund Operating Expenses" are
restated to reflect current fees and anticipated voluntary fee waivers and
expense reimbursements expected to continue through the current fiscal year.
For the year ended December 31, 1995, the amounts shown above under
"Management Fees," "Miscellaneous Expenses," "Total Other Expenses" and
"Total Fund Operating Expenses" would have been, prior to any waivers or
reimbursements then in effect, 0.50%, 0.34%, 0.44% and 1.09%, respectively,
for the Class A Shares and 0.50%, 0.43%, 0.78% and 1.78%, respectively, for
the Class D Shares.

iv
<PAGE> 149

Stephens and Wells Fargo Bank each may elect, in its sole discretion, to
otherwise waive its respective fees or reimburse expenses. The Company and its
Distributor have agreed to limit the Fund's payment of 12b-1 fees relating to
Class A Shares, at least through the end of the current fiscal year, to a
maximum of 0.15% of the average daily net assets attributable to Class A Shares.
The maximum permissible 12b-1 fee relating to Class A Shares is 0.25% of such
assets. Any such waivers or reimbursements with respect to the Fund will reduce
the total expenses of the Fund. Long-term shareholders of the Fund could pay
more in distribution related charges than the economic equivalent of the maximum
front-end sales charges applicable to mutual funds sold by members of the
National Association of Securities Dealers, Inc. ("NASD"). Of course, there can
be no assurances that the foregoing voluntary fee waivers and expense
reimbursements will continue.

EXAMPLE OF EXPENSES

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
in Class A Shares of the Fund, assuming (1) a 5% annual
return and (2) redemption at the end of each time period
indicated.................................................. $ 38 $ 55 $73 $126
You would pay the following expenses on a $1,000 investment
in Class D Shares of the Fund, assuming (1) a 5% annual
return and (2) redemption at the end of each time period
indicated.................................................. $ 24 $ 44 $77 $168
You would pay the following expenses on the same investment
in Class D Shares of the Fund, assuming no redemption...... $ 14 $ 44 $77 $168
</TABLE>

------------------------

THE EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment over the periods shown, based on
the expenses in the table on the previous page and assumed annual rate of return
of 5%. This rate of return should not be considered an indication of the actual
or expected performance of the Fund. In addition, the Example should not be
considered a representation of past or future expenses; actual expenses and
returns may be greater or lesser than those shown. See "Advisory, Administration
and Distribution Arrangements," "Distribution Plan" and "Purchase of Shares" for
more complete descriptions of the various costs and expenses applicable to the
Fund.

v
<PAGE> 150

FINANCIAL HIGHLIGHTS

MUNICIPAL INCOME FUND

FOR A CLASS A SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993 1992 1991*
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............. $ 9.91 $ 11.27 $ 10.56 $ 10.25 $ 10.00
---------- -------- ---------- -------- --------
Income from investment operations:
Net investment income (loss)..................... 0.57 0.60 0.64 0.66 0.28
Net realized and unrealized gain (loss) on
investments.................................... 1.02 (1.36) 0.71 0.32 0.25
---------- -------- ---------- -------- --------
Total from investment operations................. 1.59 (0.76) 1.35 0.98 0.53
Less distributions:
Dividends from net investment income............. (0.57) (0.60) (0.64) (0.66) (0.28)
Distributions from net realized gain............. 0.00 0.00 0.00 (0.01) 0.00
Tax return of capital............................ 0.00 0.00 0.00 0.00 0.00
---------- -------- ---------- -------- --------
Total from distributions......................... (0.57) (0.60) (0.64) (0.67) (0.28)
Net Asset Value, End of Period................... $ 10.93 $ 9.91 $ 11.27 $ 10.56 $ 10.25
========== ======== ========== ======== ========
Total Return (not annualized)(3)................. 16.45% (6.82)% 13.11% 9.94% 5.81%
Ratios/supplemental data:
Net assets, end of period (000).................. $ 58,440 $ 73,791 $ 104,701 $ 52,553 $ 16,585
Number of shares outstanding, end of period
(000).......................................... 5,347 7,446 9,294 4,976 1,618
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)....... 0.71% 0.43% 0.39% 0.23% 0.00%
Ratio of net investment income to average net
assets(2)...................................... 5.49% 5.77% 5.56% 6.05% 6.38%
Portfolio turnover............................... 14% 32% 15% 67% 5%
- ------------
(1) Ratio of expenses to average net assets prior
to waived fees and reimbursed expenses....... 1.09% 0.98% 1.09% 1.20% 3.02%
(2) Ratio of net investment income to average net
assets prior to waived fees and reimbursed
expenses..................................... 5.11% 5.22% 4.86% 5.08% 3.36%
(3)Total returns do not include any sales
charges.
* The Fund commenced operations on July 15,
1991.
</TABLE>

vi
<PAGE> 151

MUNICIPAL INCOME FUND

FOR A CLASS D SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993*
-------- ------------ ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period......................................... $ 13.42 $ 15.26 $ 15.00
-------- -------- --------
Income from investment operations:
Net investment income (loss)................................................. 0.69 0.73 0.36
Net realized and unrealized capital gain (loss) on investments............... 1.38 (1.84) 0.26
-------- -------- --------
Total from investment operations............................................. 2.07 (1.11) 0.62
Less distributions:
Dividends from net investment income......................................... (0.69) (0.73) (0.36)
Distributions from net realized gain......................................... 0.00 0.00 0.00
Tax return of capital........................................................ 0.00 0.00 0.00
-------- -------- --------
Total from distributions..................................................... (0.69) (0.73) (0.36)
-------- -------- --------
Net Asset Value, End of Period............................................... $ 14.80 $ 13.42 $ 15.26
======== ======== ========
Total Return (not annualized)(3)............................................. 15.75% (7.37)% 4.19%
Ratios/supplemental data:
Net assets, end of period (000).............................................. $ 12,271 15,545 $ 14,771
Number of shares outstanding, end of period (000)............................ 829 1,158 968
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)................................... 1.32% 1.02% 1.13%
Ratio of net investment income to average net assets(2)...................... 4.88% 5.17% 4.14%
Portfolio turnover........................................................... 14% 32% 15%
- ------------
(1) Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses...................................................... 1.78% 1.74% 1.84%
(2) Ratio of net investment income to average net assets prior to waived fees
and reimbursed expenses.................................................. 4.42% 4.45% 3.43%
(3) Total returns do not include any sales charges.
* This class commenced operations on July 1, 1993.
</TABLE>

vii
<PAGE> 152

(This page intentionally left blank)
<PAGE> 153

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE -- The Fund seeks to provide investors with a high
level of income, consistent with the preservation of capital, by investing
primarily in a diversified portfolio of high quality, medium- to long-term
municipal securities issued by or on behalf of states, territories and
possessions or commonwealths of the United States and the District of Columbia
or their political subdivisions, authorities, agencies and instrumentalities,
the income of which is exempt from federal income tax, but subject to the
federal alternative minimum tax ("tax-advantaged municipal securities"). The
investment adviser may rely either on the opinion of counsel to the issuer of
the municipal securities or on bond counsel regarding the tax treatment of the
securities. Since a significant portion of the Fund's income is expected to be
subject to the alternative minimum tax, investors who may be subject to such tax
should consult their tax advisors prior to investing in the Fund. As with all
mutual funds, there can no assurance that the Fund, which is a diversified
portfolio, will achieve its investment objective.

As a matter of fundamental policy, the Fund will, under normal market
conditions, invest at least 80% of its net assets in tax-advantaged municipal
securities that, at the time of purchase, are assigned the highest rating by an
NRSRO or, if unrated, are considered by Wells Fargo Bank, as the Fund's
investment adviser and under the supervision of the Board of Directors, to be of
comparable quality. In addition, under normal market conditions, the Fund will
seek to invest substantially all of its net assets in the highest rated, medium-
to long-term, tax-advantaged municipal securities, except that it will maintain
that portion of its net assets in short-term, high quality investments
reasonably considered necessary to meet redemption requests and liquidity needs
and may maintain a higher portion in such investments for temporary defensive
purposes.

The highest rating assigned by Standard & Poor's Ratings Group ("S&P") is
"AAA" for state and municipal bonds, "SP-1" for state and municipal notes, and
"A-1" for state and municipal commercial paper. The highest rating assigned by
Moody's Investors Service, Inc. ("Moody's") is "Aaa," "MIG 1," and "Prime-1" for
state and municipal bonds, notes and commercial paper, respectively. Instruments
assigned these ratings by S&P or Moody's are judged by such organizations to be
high quality instruments which present minimal risks and offer a strong capacity
for repayment of principal and interest. If a municipal security ceases to be
rated or is downgraded below the highest quality rating after purchase by the
Fund, the Fund may retain or dispose of such security. In any event, the Fund
does not intend to purchase or retain any municipal security that is rated below
the top two ratings assigned by an NRSRO, or, if unrated, is considered by the
investment adviser to be of comparable quality. A description of ratings is
contained in the Appendix to the SAI.

Under normal market conditions, the Fund may not invest more than 25% of
its assets in securities of any one industry or in municipal securities of any
single state, territory, possession, commonwealth, or the District of Columbia.

MUNICIPAL BONDS -- Municipal bonds generally have a maturity at the time of
issuance of up to thirty years. They are principally classified either as
"general obligation" bonds or "revenue" bonds. General obligation bonds are
secured by the pledge of the municipality's full faith, credit and taxing power
for the payment of principal and interest. Revenue bonds are payable only from
the revenues derived from a particular project or facility, or in some cases,
from the proceeds of special excise tax, and generally are dependent solely on a
specific revenue source.

1
<PAGE> 154

The Fund may invest in Mortgage Revenue Bonds ("MRBs"), a specific type of
municipal bond. MRBs may be considered "private activity bonds," the interest on
which may be subject to the federal alternative minimum tax. MRBs are usually
limited obligations issued by a municipality, its instrumentalities or its
special purpose authority. MRBs do not represent indebtedness of these issuers,
but are payable from and secured by certain revenues and assets pledged as
collateral. MRBs may be collateralized by a pool of mortgage-backed securities
("MBSs") that are either: (i) guaranteed as to timely payment of principal and
interest by the Government National Mortgage Association ("GNMA"), a wholly
owned corporate instrumentality of the United States; (ii) guaranteed as to
timely payment of principal and interest by the Federal National Mortgage
Association ("FNMA"), a publicly owned, government sponsored corporation; or
(iii) guaranteed as to full and timely payment of interest and ultimate payment
of principal by the Federal Home Loan Mortgage Corporation ("FHLMC"), a publicly
chartered corporation. GNMA guarantees are backed by the full faith and credit
of the United States. FNMA and FHLMC guarantees are not backed by the full faith
and credit of the United States. However, because FNMA and FHLMC are
instrumentalities of the U.S. Government, the MBSs backed by their guarantees
are high quality instruments that present minimal credit risks. The MBSs, in
turn, are collateralized by pools of first-lien mortgage loans ("Mortgage
Loans") made to persons of low-to-moderate income to purchase new and existing
one- to four-family residences located in the applicable municipality or state
or to developers for the acquisition and construction of multi-family housing
for low-to-moderate income residents or senior citizens. The Mortgage Loans
underlying the MBSs may themselves be insured or guaranteed by the Federal
Housing Administration or the Veterans Administration. MRBs purchased by the
Fund generally have an initial scheduled maturity of between 30 and 40 years.

MRBs are subject to the risk of redemption prior to maturity. Such
redemption is more likely to occur during periods of declining interest rates.
If an MRB is redeemed prior to maturity, the Fund may have to reinvest the
proceeds at a rate of interest which is lower than the rate on the MRB that was
redeemed.

The Fund may also invest in municipal bonds which are covered by insurance
guaranteeing the scheduled payment of principal and interest until their
maturity ("Insured Municipal Bonds"). This insurance feature minimizes the risks
to the Fund and its shareholders associated with payment delays or defaults in
these portfolio securities, but does not guarantee the market value of these
portfolio securities or the value of the shares of the Fund. The price paid or
received for an Insured Municipal Bond may be higher than the price that would
otherwise be paid or received for the municipal bond absent the insurance. In
addition, an Insured Municipal Bond is likely to receive a higher rating by an
NRSRO than it would receive without the insurance.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

OTHER MUNICIPAL SECURITIES

Pending the investment of proceeds from the sale of Fund shares or
portfolio securities, in anticipation of redemptions, to maintain liquidity or
for temporary defensive purposes, the Fund will invest in other municipal
securities, which include:

MUNICIPAL NOTES -- Municipal notes purchased by the Fund generally have
maturities at the time of issuance of three years or less. Subject to its
investment objective and policies, the Fund may invest in

2
<PAGE> 155

municipal notes that are rated at the date of purchase "MIG 2" (or "VMIG 2" in
the case of an issue having a variable rate demand feature) or better by
Moody's, or "SP-2" or better by S&P, or notes that are not rated but that are
considered by the investment adviser to be of comparable quality. Municipal
notes generally are issued in anticipation of the receipt of tax funds, of the
proceeds of bond placements or of other revenues. The ability of an issuer to
make payments is, therefore, dependent on such tax receipts, proceeds from bond
sales or other revenues, as the case may be.

The Fund also may invest in other private activity bonds or notes, such as
pollution control bonds, the interest on which also may be subject to the
federal alternative minimum tax. See discussion in "Taxes" below.

MUNICIPAL COMMERCIAL PAPER -- Municipal commercial paper is a debt
obligation with a stated maturity of 270 days or less that is issued to finance
seasonal working capital needs or as short-term financing in anticipation of
longer-term debt. Subject to its investment objective and policies, the Fund may
invest in municipal commercial paper that is rated at the date of purchase
"Prime-1" or "Prime-2" by Moody's or "A-2" or better by S&P, or municipal
commercial paper that is not rated but is considered by the Investment Adviser
to be of comparable quality.

The value of the Fund's portfolio of municipal securities will vary as a
result of interest changes and the issuer's ability, or the market's perception
of the issuer's ability, to meet its principal and interest obligations.

TAXABLE AND OTHER INVESTMENTS

Pending the investment of proceeds from the sale of Fund shares or proceeds
from the sale of portfolio securities, in anticipation of redemptions or to
maintain a "defensive" posture when, in the opinion of Wells Fargo Bank, as
investment adviser, it is advisable to do so because of market conditions, the
Fund may elect to invest temporarily up to 20% of the current value of its net
assets in cash reserves or in taxable securities, including (i) direct
obligations of the U.S. Treasury; (ii) commercial paper rated at the date of
purchase "Prime-1" by Moody's or "A-1" or better by S&P; and (iii) shares of
unaffiliated open-end, management investment companies that invest primarily in
high-quality, short-term securities, and that have a fundamental policy of
investing, under normal market circumstances, at least 80% of their net assets
in obligations that are exempt from federal income tax and are not subject to
the federal alternative minimum tax. Such investment companies can be expected
to charge management fees and other operating expenses that would be in addition
to those charged by the Fund. However, the investment adviser has undertaken to
waive its advisory fees with respect to Fund assets so invested (except when
such purchase is part of a plan of merger, consolidation, reorganization or
acquisition). In no event may the Fund, together with any company or companies
controlled by it, own more than 3% of the total outstanding voting stock of any
such investment company, nor may the Fund, together with any controlled company
or companies, invest more than 5% of its assets in any one such investment
company or invest more than 10% of its assets in securities of all such
investment companies combined.

WHEN-ISSUED SECURITIES

The Fund may purchase portfolio securities on a when-issued basis, in which
case delivery and payment normally take place within 45 days after the date of
the commitment to purchase. The Fund will

3
<PAGE> 156

only make commitments to purchase securities on a when-issued basis with the
intention of actually acquiring the securities, but may sell them before the
settlement date if it is deemed advisable. When-issued securities are subject to
market fluctuation, and no income accrues to the purchaser during the period
prior to issuance. When-issued securities are subject to market fluctuation, and
no income accrues to the purchaser during the period prior to issuance. The
purchase price and interest rate that will be received on debt securities are
fixed at the time the purchaser enters into the commitment. Purchases on a
when-issued basis are subject to the risk that the market price at the time of
delivery may be lower than the agreed upon purchase price, in which case there
may be an unrealized loss at the time of delivery.

FLOATING- AND VARIABLE-RATE INSTRUMENTS

Certain of the debt instruments that the Fund may purchase bear interest at
rates that are not fixed, but vary with changes in specified market rates or
indices or at specified intervals. Certain of these instruments may carry a
demand feature that would permit the holder to tender them back to the issuer at
par value prior to maturity. The Fund may purchase certificates of participation
in pools of floating-and variable-rate obligations from banks and other
financial institutions. With respect to the tax-exempt status of these
certificates, the investment adviser may rely upon either the opinion of counsel
or Internal Revenue Service rulings thereon. Wells Fargo Bank, as investment
adviser, monitors on an ongoing basis the ability of an issuer of a demand
instrument to pay principal and interest on demand. Events occurring between the
date the Fund elects to demand payment on a floating- or variable-rate
instrument and the date payment is due may affect the ability of the issuer of
the instrument to make payment when due, and unless such demand instrument
permits same-day settlement, such events may affect the Fund's right to obtain
payment at par. Demand instruments whose demand feature is not exercisable
within seven days may be treated as liquid, provided an active secondary market
exists.

LETTERS OF CREDIT

The Fund may purchase debt obligations, including municipal securities,
certificates of participation, commercial paper and other short-term
obligations, backed by an 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. Letter of
credit-backed investments must, in the opinion of Wells Fargo Bank, as
investment adviser, be of investment quality comparable to other permitted
investments of the Fund.

------------------------

The Fund's investment objective, as set forth in the first paragraph of the
section describing the Fund's investment objective and policies, is fundamental;
that is, the investment objective may not be changed
without approval by the vote of the holders of a majority of the Fund's
outstanding voting securities, as described under "Capital Stock" in the SAI. If
the Board of Directors determines, however, that the Fund's investment objective
can best be achieved by a substantive change in a non-fundamental investment
policy or strategy, the Company may make such change without shareholder
approval and will disclose any such material changes in the then current
prospectus.

In addition, as a matter of fundamental policy, the Fund may borrow from
banks up to 10% of the current value of its net assets for temporary purposes
only in order to meet redemptions, and these borrowings may be secured by the
pledge of up to 10% of the current value of its net assets (but investments

4
<PAGE> 157

may not be purchased while any such outstanding borrowing exceeds 5% of the
Fund's net assets). As a matter of non-fundamental policy, the Fund may invest
up to 10% of the current value of its net assets in restricted securities and
other illiquid securities.

ADVISORY, ADMINISTRATION AND DISTRIBUTION ARRANGEMENTS

The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decides
upon matters of general policy.

INVESTMENT ADVISER

Pursuant to an Advisory Contract, the Fund is advised by Wells Fargo Bank,
420 Montgomery Street, San Francisco, California 94104, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the largest banks
in the United States, was founded in 1852 and is the oldest bank in the western
United States. As of April 1, 1996, Wells Fargo Bank and its affiliates provided
investment advisory services for approximately $56 billion of assets for
individuals, trusts, estates and institutions. Wells Fargo Bank is the
investment adviser to other separately managed series of the Company and serves
as investment adviser or sub-adviser to five other registered open-end
management investment companies, each of which consists of several separately
managed investment portfolios.

For its services under the Advisory Contract, Wells Fargo Bank is entitled
to receive a monthly advisory fee at the annual rate of 0.50% of the average
daily net assets of the Fund. From time to time, Wells Fargo Bank may waive such
fee in whole or in part. Any waiver would reduce expenses of the Fund and,
accordingly, have a favorable impact on the performance of the Fund. For the
year ended December 31, 1995, Wells Fargo Bank was paid 0.27% of the average
daily net assets of the Fund as compensation for its services as investment
adviser.

Mr. David Klug is responsible for the day-to-day management of the Fund,
and has managed municipal bond portfolios for Wells Fargo Bank for over 10
years. Prior to joining Wells Fargo Bank, he managed the municipal bond
portfolio for a major property and casualty insurance company. His investment
experience exceeds 20 years and includes all aspects of tax-exempt fixed-income
investments. He holds an M.B.A. from the University of Chicago and is a member
of the National Federation of Municipal Analysts and its California Chapter. Mr.
Klug has co-managed the Fund since May 1, 1996.

Ms. Laura L. Milner also is responsible for the day to day management of
the Fund. Ms. Milner joined Wells Fargo Bank in 1988. Her background includes
over seven years experience specializing in short- and long-term municipal
securities with Salomon Brothers. She is a member of the National Federation of
Municipal Analysts and its California Chapter. Ms. Milner has co-managed the
Fund since May 1, 1996.

5
<PAGE> 158

particular security should be bought or sold for the Fund and other accounts
managed by Wells Fargo Bank, Wells Fargo Bank undertakes to allocate those
transaction costs among the participants equitably. From time to time, the Fund,
to the extent consistent with its investment objective, policies and
restrictions, may invest in securities of companies with which Wells Fargo Bank
has a lending relationship.

Morrison & Foerster LLP, counsel to the Company and special counsel to
Wells Fargo Bank, has advised the Company and Wells Fargo Bank that Wells Fargo
Bank and its affiliates may perform the services contemplated by the Advisory
and Sub-Advisory Contracts and this Prospectus without violation of the
Glass-Steagall Act. Such counsel has pointed out, however, that there are no
controlling judicial or administrative interpretations of, or decisions relating
to, present federal or state statutes, including the Glass-Steagall Act;
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in such statutes,
regulations and judicial or administrative decisions or interpretations, could
prevent such entities from continuing to perform, in whole or in part, such
services. If any such entity were prohibited from performing any such services,
it is expected that new agreements would be proposed or entered into with
another entity or entities qualified to perform such services.

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR

Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with the Fund under which Stephens acts as Administrator for the
Fund. For these administrative services, Stephens is entitled to receive from
the Fund a monthly fee at the annual rate of 0.10% of its average daily net
assets. From time to time, Stephens may waive fees from the Fund in whole or in
part. Any such waivers would reduce expenses of the Fund and, accordingly, have
a favorable impact on the performance of the Fund.

The Administration Agreement between Stephens and the Fund states that
Stephens shall provide as administrative services, among other things, (i)
general supervision of the operation of the Fund, including coordination of the
services performed by the Fund's investment adviser, transfer agent, custodian,
independent auditors and legal counsel; (ii) general supervision of regulatory
compliance matters, including the compilation of information for documents such
as reports to, and filings with, the SEC and state securities commissions, and
preparation of proxy statements and shareholder reports for the Fund; and (iii)
general supervision of the compilation of data required for the preparation of
periodic reports distributed to the Company's officers and Board of Directors.
Stephens also furnishes office space and certain facilities required for
conducting the business of the Fund and pays the compensation of the Company's
directors, officers and employees who are affiliated with Stephens.

Stephens, as the principal underwriter of the Fund within the meaning of
the Investment Company Act of 1940 (the "1940 Act"), has also entered into a
Distribution Agreement with the Company pursuant to which Stephens has the
responsibility for distributing Class A Shares and Class D Shares of the Fund.
The Distribution Agreement provides that Stephens shall act as agent for the
Fund for the sale of its Class A Shares and Class D Shares and may enter into
selling agreements with broker/dealers or financial institutions to market and
make available such shares to their respective customers.

Under the Distribution Agreement, Stephens is entitled to receive from the
Fund a monthly fee at an annual rate of up to 0.25% of the average daily net
assets of the Fund's Class A Shares and a monthly fee at an annual rate of up to
0.50% of the average daily net assets of its Class D Shares. The actual fee
payable to

6
<PAGE> 159

Stephens is determined, within such limits, from time to time by mutual
agreement between the Company and Stephens, and may not exceed the maximum
amount payable under the Rules of Fair Practice of the NASD. With respect to
Class A Shares, the Company and Stephens have mutually agreed to limit the fee
to 0.15% of the Fund's average daily net assets attributable to such Shares.
Stephens may enter into selling agreements with one or more selling agents under
which such agents may receive from Stephens compensation for sales support
services. Such compensation may include, but is not limited to, commissions or
other payments to such agents based on the average daily net assets of Fund
shares attributable to them. Services provided by selling agents in exchange for
commissions and other payments to selling agents are the principal sales support
services provided to the Fund. Stephens may retain any portion of the total
distribution fee payable under the Distribution Agreement to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses. Since the Distribution Agreement provides for
fees that are used by Stephens to pay for distribution services, a plan of
distribution for each class of shares (individually a "Plan", collectively the
"Plans") and the Distribution Agreement are approved and reviewed in accordance
with Rule 12b-1 under the 1940 Act, which regulates the manner in which an
investment company may, directly or indirectly, bear the expense of distributing
its shares. See Prospectus section captioned "Distribution Plans" for a more
complete description of the Plans.

SERVICING AGENTS

The Fund may enter into servicing agreements with one or more servicing
agents on behalf of Class D Shares of the Fund. Under such agreements, servicing
agents provide shareholder liaison services, which may include responding to
customer inquiries and providing information on shareholder investments, and
provide such other related services as the Fund or a Class D Shareholder may
reasonably request. For these services, a servicing agent receives a fee which
will not exceed, on an annualized basis for the Fund's then current fiscal year,
the lesser of 0.25% of the average daily net assets of the Class D Shares of the
Fund (represented by Class D Shares owned by investors with whom the servicing
agent maintains a servicing relationship) or an amount which equals the maximum
amount payable to the servicing agent under applicable laws, regulations or
rules.

------------------------

DETERMINATION OF NET ASSET VALUE

7
<PAGE> 160

The value of assets of the Fund (other than debt obligations maturing in 60
days or less) is determined as of the close of regular trading on the Exchange
(referred to hereafter as "the close of the Exchange"), which is currently 4:00
p.m. New York time. Except for debt obligations with remaining maturities of 60
days or less, which are valued at amortized cost, assets are valued at current
market prices, or if such prices are not readily available, at fair value as
determined in good faith by the Board of Directors. Prices used for such
valuations may be provided by independent pricing services.

PERFORMANCE DATA

From time to time, the Company may advertise various yield and total return
information with respect to a class of shares of the Fund. Total return and
yield information of a class of shares are based on the historical earnings and
performance of such class of shares and should not be considered representative
of future performance.

The total return of a class of shares of the Fund is calculated by
comparing the value of a hypothetical investment made at the public offering
price of the class of shares (which includes the maximum sales charge for the
class of shares) at the beginning of a specified period with the net asset value
of such investment in a class of shares at the end of the specified period
(assuming reinvestment of all dividends and capital gain distributions). The
resulting percentage will be used to determine the positive or negative rate of
return that an investor would have earned from reinvested dividends, capital
gain distributions and changes in share price during the period for the class of
shares. The Fund may also, at times, calculate total return of a class of shares
based on the net asset value per share of a class of shares (rather than the
public offering price), in which case the figures would not reflect the
applicability of any sales charges that would have been paid by an investor in
the class of shares, or by assuming that a sales charge other than the maximum
sales charge (reflecting the Volume Discounts set forth below) is assessed,
provided that total return data derived pursuant to the calculation described
above are also presented.

The yield of a class of shares will be computed by dividing its net
investment income per share of the class earned during a specified period by its
public offering price per share (which includes the maximum sales charge) on the
last day of such period and annualizing the result. The Fund also may advertise
tax-equivalent yield, which assumes that a stated income tax rate has been
applied to non-exempt income to derive the same yield as that of the Fund (which
may not reflect the applicability of the federal alternative minimum tax). For
purposes of sales literature, these yields may also, at times, be calculated on
the basis of the net asset value per share of the class (rather than the public
offering price), in which case the figures would not reflect the effect of any
sales charges that would have been paid by an investor in the class of shares,
or by assuming that a sales charge other than the maximum sales charge
(reflecting the Volume Discounts set forth below) is assessed, provided that
yield data derived pursuant to the calculation described above also are
presented.

Additional information about the performance of the Fund is contained in
its Annual Report. The Annual Report may be obtained free of charge by calling
the Company at 800-552-9612.

8
<PAGE> 161

PURCHASE OF SHARES

In most cases, the minimum initial purchase amount for the Fund is $1,000.
The minimum initial purchase amount is $100 for shares purchased through the
Systematic Purchase Plan and $250 for shares purchased through a retirement plan
qualified under the Internal Revenue Code of 1986, as amended (the "Code"). The
minimum subsequent purchase amount is generally $100. The minimum initial or
subsequent purchase amount requirements may be waived or lowered for investments
effected on a group basis by certain entities and their employees, such as
pursuant to a payroll deduction or other accumulation plan. The Company reserves
the right to reject any purchase order. All funds, net of sales loads, will be
invested in full and fractional Shares. Checks will be accepted for the purchase
of the Fund's shares subject to collection at full face value in U.S. dollars.
Inquiries may be directed to the Company at (800)572-7797 or at the address on
the front cover of the Prospectus.

Shares of the Fund are offered continuously at the applicable offering
price (including any sales load) next determined after a purchase order is
received. Payment for shares purchased through a broker/dealer will not be due
from the broker/dealer until the settlement date, currently three (3) business
days after the order is placed. It is the broker/dealer's responsibility to
forward payment for shares being purchased to the Fund promptly. Payment for
orders placed directly through the Transfer Agent must accompany the order.

------------------------

When shares of the Fund are purchased through a broker/dealer or financial
institution, Stephens reallows that portion of the sales load designated below
as the Dealer-Allowance. Stephens has established a non-cash compensation
program, pursuant to which broker/dealers or financial institutions that sell
shares of the Fund may earn additional compensation in the form of trips to
sales seminars or vacation destinations, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or merchandise. If all sales charges are paid or
reallowed to a broker/dealer or financial institution, it may be deemed an
"underwriter" under the Securities Act of 1933. When shares are purchased
directly through the Transfer Agent and no broker/dealer or financial
institution is involved with the purchase, the entire sales load is paid to
Stephens.

9
<PAGE> 162

Sales loads relating to the purchase of Class A Shares of the Fund are as
follows:

<TABLE>
<CAPTION>
DEALER
SALES LOAD SALES LOAD ALLOWANCE
AS % OF AS % OF AS % OF
CLASS A SHARES OFFERING NET AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
----------------------------------------------- ---------- ---------- ---------
<S> <C> <C> <C>
Less than $100,000............................. 3.00% 3.09% 2.75%
$100,000 up to $199,999........................ 2.00 2.04 1.75
$200,000 up to $599,999........................ 1.00 1.01 0.90
$600,000 up to $999,999........................ 0.60 0.60 0.50
$1,000,000 and over............................ 0.00 0.00 0.00
</TABLE>

Class D Shares are not subject to a front-end sales load. However, Class D
Shares which are redeemed within one year from the receipt of a purchase order
will be subject to a contingent deferred sales charge equal to 1% of the dollar
amount equal to the lesser of the net asset value at the time of purchase of the
shares being redeemed or the net asset value of such shares at the time of
redemption.

REDUCED SALES CHARGE -- CLASS A SHARES

The above Volume Discounts are available to you based on the combined
dollar amount being invested in Class A Shares of the Fund or of Class A Shares
of one or more of the portfolios of the Company which assess a sales load (the
"Load Funds"). Because Class D Shares are not subject to a front-end sales
charge, the amount of Class D Shares you hold is not considered in determining
any volume discount.

The Right of Accumulation allows you to combine the amount being invested
in Class A Shares of the Fund with the total net asset value of Class A Shares
in any of the Load Funds already owned in accordance with the above sales load
schedule to reduce the sales load. For example, if you own Class A Shares of the
Load Funds with an aggregate net asset value of $90,000 and invest an additional
$20,000 in Class A Shares of the Fund, the sales load on the entire additional
amount would be 2.00% of the offering price. To obtain such discount, you must
provide sufficient information at the time of purchase to permit verification
that the purchase qualifies for the reduced sales load, and confirmation of the
order is subject to such verification. The Right of Accumulation may be modified
or discontinued at any time with respect to all Class A Shares purchased
thereafter.

10
<PAGE> 163

net asset value, without a sales load, within 120 days after such redemption.
However, if the other investment portfolio charges a sales load that is higher
than the sales load that you have paid in connection with the Class A Shares you
have redeemed, you pay the difference. In addition, the Class A Shares of the
other investment portfolio to be acquired must be registered for sale in your
state of residence. The amount that may be so reinvested may not exceed the
amount of the redemption proceeds, and a written order for the purchase of the
Class A Shares must be received by the Fund or the Transfer Agent within 120
days after the effective date of the redemption.

If you realized a gain on your redemption, the reinvestment will not alter
the amount of any federal capital gains tax payable on the gain. If you realized
a loss on your redemption, the reinvestment may cause some or all of such loss
to be disallowed as a tax deduction, depending on the number of Class A Shares
purchased by reinvestment, the period of time that has elapsed after the
redemption, and which funds' shares are purchased. Although for federal income
tax purposes, the amount disallowed is added to the cost of the Class A Shares
acquired upon the reinvestment.

Reductions in front-end sales loads also apply to purchases by individual
members of a "qualified group." The reductions are based on the aggregate dollar
amount of Class A Shares purchased by all members of the qualified group. For
purposes of this paragraph, a qualified group consists of a "company," as
defined in the 1940 Act, which has been in existence for more than six months
and which has a primary purpose other than acquiring shares of the Fund at a
reduced sales load, and the "related parties" of such company. For purposes of
this paragraph, a "related party" of a company is: (i) any individual or other
company who directly or indirectly owns, controls or has the power to vote five
percent or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls or has
the power to vote five percent or more of its outstanding voting securities;
(iii) any other company under common control with such company; (iv) any
executive officer, director or partner of such company or of a related party;
and (v) any partnership of which such company is a partner.

Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by Directors, officers
and employees (and their spouses, parents, children and
siblings) of the Company, Stephens, its affiliates and other broker/dealers that
have entered into agreements with Stephens to sell such shares. Class A Shares
of the Fund also may be purchased at a purchase price equal to the net asset
value of such shares, without a sales load, by present and retired Directors,
officers and employees (and their spouses, parents, children and siblings) of
Wells Fargo Bank and its affiliates if Wells Fargo Bank and/or the respective
affiliates agree. Such shares also may be purchased at such price by employee
benefit and thrift plans for such persons and to any investment advisory, trust
or other fiduciary account (other than an individual retirement account)
maintained, managed or advised by Wells Fargo Bank or Stephens or their
affiliates.

11
<PAGE> 164

these plans; investment advisers and financial planners who charge a management,
consulting or other fee for their services and who place trades on their own
behalf or on behalf of their clients; and clients of such investment advisers or
financial planners who place trades on their own behalf if the clients' accounts
are linked to the master account of such investment adviser or financial planner
on the books and records of the broker/dealer.

CONTINGENT DEFERRED SALES CHARGE -- CLASS D SHARES

Class D Shares which are redeemed within one year of the receipt of a
purchase order for such shares will be subject to a contingent deferred sales
charge equal to 1.00% of an amount equal to the lesser of the net asset value at
the time of purchase for the Class D Shares being redeemed or the net asset
value of such shares at the time of redemption. Accordingly, a contingent
deferred sales charge will not be imposed on amounts representing increases in
net asset value above the net asset value at the time of purchase. In addition a
charge will not be assessed on Class D Shares purchased through reinvestment of
dividends or capital gain distributions. In determining whether a contingent
deferred sales charge is applicable to a redemption, Class D Shares are
considered redeemed on a first-in, first-out basis so that Class D Shares held
for a longer period of time are considered redeemed prior to more recently
acquired shares.

Investors who are entitled to purchase Class A Shares of the Fund at net
asset value without a sales load should not purchase Class D Shares. Other
investors, including those who are entitled to purchase Class A Shares of the
Fund at a reduced sales load, should compare the fees assessed on Class A Shares
against those assessed on Class D Shares (including potential contingent
deferred sales charges and higher Rule 12b-1 fees) in light of the amount to be
invested and the anticipated time that the shares will be owned.

12
<PAGE> 165

Shares of the Fund may be purchased by any of the methods described below.

INITIAL PURCHASES OF FUND SHARES BY WIRE

2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($1,000 or more) to:

Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express Municipal Income Fund (designate Class A or D)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)

Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082

4. Share purchases are effected at the public offering price, or, in the
case of Class D Shares, at the net asset value next determined after the Account
Application is received and accepted.

INITIAL PURCHASES OF FUND SHARES BY MAIL

1. Complete an Account Application. Indicate the services to be used.

2. Mail the Account Application and a check for $1,000 or more, payable to
"Overland Express Municipal Income Fund (designate Class A or D)" to its mailing
address set forth above.

ADDITIONAL PURCHASES

Additional purchases of $100 or more may be made by instructing the Fund's
Transfer Agent to debit an approved account designated in the Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Overland Express Municipal Income Fund (designate Class A or D)" to the
above address. Write the Fund

13
<PAGE> 166

account number on the check and include the detachable stub from a Statement of
Account or a letter providing the account number.

SYSTEMATIC PURCHASE PLAN

The Company's Systematic Purchase Plan provides you with a convenient way
to establish and automatically add to your existing accounts on a monthly basis.
If you elect to participate in this plan, you must specify an amount ($100 or
more) to be withdrawn automatically by the Transfer Agent on a monthly basis
from an approved bank account designated in your Account Application (an
"Approved Bank Account"). The Transfer Agent withdraws and uses this amount to
purchase shares of the Fund on or about the fifth business day of each month.
The Transfer Agent requires a minimum of ten (10) business days to implement
your Systematic Purchase Plan purchases. There are no additional fees charged
for participating in this plan.

You may change the investment amount, the date on which your Systematic
Purchase is effected and suspend purchases or terminate your participation in
the Systematic Purchase Plan at any time by providing written notice to the
Transfer Agent at least five (5) business days prior to any scheduled
transaction. An election will be terminated automatically if your Approved Bank
Account balance is insufficient to make a scheduled withdrawal, or if either the
Approved Bank Account or your Fund account is closed.

PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Purchase orders for shares of the Fund placed through authorized
broker/dealers and financial institutions by the close of the Exchange on any
day that the Fund's shares are offered for sale, including orders for which
payment is to be made from free cash credit balances in securities accounts held
by a dealer, will be effective on the same day the order is placed if received
by the Transfer Agent before the close of business. Purchase orders that are
received by a dealer or financial institution after the close of the Exchange or
by the Transfer Agent after the close of business generally will be effective on
the next day that shares are offered. The broker/dealer or financial institution
is responsible for the prompt transmission of purchase orders to the Transfer
Agent. Payment for Fund shares is not due until settlement date. Broker/dealers
and financial institutions may benefit from the temporary use of payments to the
Fund during the settlement period. A broker/dealer or financial institution that
is involved in a purchase transaction may charge separate account, service or
transaction fees. Financial institutions may be required to register as dealers
pursuant to applicable state securities laws, which may differ from federal law
and any interpretations expressed herein.

EXCHANGE PRIVILEGES

14
<PAGE> 167

Shares of the Fund may be exchanged for Class D Shares of one of the Company's
other investment portfolios that offers Class D Shares or for Class A Shares of
the Money Market Fund in an identically registered account at respective net
asset values. You are not charged a contingent deferred sales charge on
exchanges of Class D Shares for shares of the same class of another of the
Company's investment portfolios or for Class A Shares of the Money Market Fund.
If you exchange Class D Shares for shares of the same class of another
investment portfolio, or for Class A Shares of the Money Market Fund, the
remaining period of time (if any) that the contingent deferred sales charge is
in effect will be computed from the time of the initial purchase of the
previously held shares. Accordingly, if you exchange Class D Shares for Class A
Shares of the Money Market Fund, and redeem the shares of the Money Market Fund
within one year of the receipt of the purchase order for the exchanged Class D
Shares, you will have to pay a deferred sales charge equal to the contingent
deferred sales charge applicable to the previously exchanged Class D Shares. If
you exchange Class D Shares of an investment portfolio for Class A Shares of the
Money Market Fund, you may subsequently re-exchange the acquired Class A Shares
only for Class D Shares. If you re-exchange the Class A Shares of the Money
Market Fund for Class D Shares, the remaining period of time (if any) that the
contingent deferred sales charge is in effect will be computed from the time of
your initial purchase of Class D Shares. In addition, shares of the investment
portfolio to be acquired must be registered for sale in your state of residence.
You should obtain, read and retain the Prospectus for the investment portfolio
into which you desire to exchange before submitting an exchange order.

15
<PAGE> 168

believed by the Transfer Agent to be genuine. The Company will require the
Transfer Agent to employ reasonable procedures, such as requiring a form of
personal identification, to confirm that instructions are genuine. If the
Transfer Agent does not follow such procedures, the Company and the Transfer
Agent may be liable for any losses attributable to unauthorized or fraudulent
instructions. Neither the Company nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.

REDEMPTION OF SHARES

Except for any contingent deferred sales charge which may be applicable
upon redemption of Class D Shares, as described under "Purchase of Shares," the
Company does not charge for redemption transactions. However, a broker/dealer or
financial institution that is involved in a redemption transaction may charge
separate account, service or transaction fees. On a day the Fund is open for
business, redemption orders received by an authorized broker/dealer or financial
institution before the close of the Exchange and received by the Transfer Agent
before the close of business on the same day will be executed at the net asset
value per share determined at the close of the Exchange on that day. Redemption
orders received by authorized broker/dealers or financial institutions after the
close of the Exchange, or not received by the Transfer Agent prior to the close
of business, will be executed at the net asset value determined at the close of
the Exchange on the next business day.

Redemption proceeds, net of any contingent deferred sales charge applicable
with respect to Class D Shares, ordinarily will be remitted within seven days
after the order is received in proper form, except proceeds may be remitted over
a longer period to the extent permitted by the SEC under extraordinary
circumstances. If an expedited redemption is requested, redemption proceeds will
be distributed only if the check used for investment is deemed to be cleared for
payment by your bank, currently considered by the Company to be a period of up
to ten (10) days after investment. The proceeds, of course, may be more or less
than cost. Payment of redemption proceeds may be made in securities, subject to
regulation by some state securities commissions.

REDEMPTION BY MAIL

1. Write a letter of instruction. Indicate the dollar amount or number of
shares to be redeemed. Refer to your Fund account number and provide either a
social security number or tax identification number (as applicable).

2. Sign the letter in exactly the same way the account is registered. If
there is more than one owner of the shares, all must sign.

16
<PAGE> 169

guarantees by notaries public are not acceptable. Further documentation will be
requested from corporations, administrators, executors, personal
representatives, trustees or custodians.

4. If shares to be redeemed are held in certificated form, enclose the
certificates with the letter. Do not sign the certificates and for protection
use registered mail.

5. Mail the letter to the Transfer Agent at the mailing address set forth
under "Purchase of Shares -- Initial Purchase of Fund Shares by Wire."

SYSTEMATIC WITHDRAWAL PLAN

The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your account and the proceeds, net of any contingent
deferred sales charge applicable with respect to Class D Shares, distributed to
you on a monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of the date of your election to
participate and are not also a participant in the Company's Systematic Purchase
Plan at any time while participating in this plan. To participate in the plan
you must specify an amount ($100 or more) to be distributed by check to your
address of record or deposited in your Approved Bank Account. The Transfer Agent
redeems sufficient shares and mails or deposits the proceeds of the redemption,
net of any contingent deferred sales charge applicable with respect to Class D
Shares, as instructed on or about the fifth business day prior to the end of
each month. There are no additional fees charged for participating in this plan.

EXPEDITED REDEMPTIONS BY LETTER AND TELEPHONE

If shares are not held in certificated form, you may request an expedited
redemption of shares by letter or telephone (unless you have elected not to
authorize telephone redemptions on your Account Application or other form that
is on file with the Transfer Agent) on any day the Fund is open for business.
See "Exchange Privileges" for additional information regarding telephone
redemption privileges.

You may request expedited redemption by telephone by calling the Transfer
Agent at (800) 572-7797.

17
<PAGE> 170

Account or wired to an authorized broker/dealer or financial institution
designated in your Account Application. The Company reserves the right to impose
charges for wiring redemption proceeds. When proceeds of an expedited redemption
are to be paid to someone other than yourself, to an address other than that of
record, or to a bank, broker/dealer or financial institution that has not been
predesignated, the expedited redemption must be made by letter and the
signature(s) on the letter must be guaranteed, regardless of the amount of the
redemption. If an expedited redemption request is received by the Transfer Agent
by the close of business on any day the Fund is open for business, the
redemption proceeds will be transmitted to your bank or predesignated
broker/dealer or financial institution on the next business day (assuming the
investment check has cleared as described above), absent extraordinary
circumstances. A check for proceeds of less than $5,000 will be mailed to your
address of record, except that, in the case of investments in the Company that
have been effected through broker/dealers, banks and other institutions that
have entered into special arrangements with the Company, the full amount of the
redemption proceeds may be transmitted by wire or credited to a designated
account.

REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Redemption requests placed through authorized broker/dealers and financial
institutions by the close of the Exchange on any day that the Fund's shares are
offered for sale will be effective on the same day the request is placed if
received by the Transfer Agent before the close of business. Redemption requests
that are received by a dealer or financial institution after the close of the
Exchange or by the Transfer Agent after the close of business generally will be
effective on the next day that shares are offered. The broker/dealer or
financial institution is responsible for the prompt transmission of redemption
requests to the Transfer Agent. Unless you have made other arrangements, and
have informed the Transfer Agent of such arrangements, proceeds of redemptions
made through authorized broker/dealers and financial institutions will be
credited to your account with such broker/dealer or institution. You may request
a check from the broker/dealer or financial institution or may elect to retain
the redemption proceeds in your account. The broker/dealer or financial
institution may benefit from the use of the redemption proceeds prior to the
clearance of a check issued to you for such proceeds or prior to disbursement or
reinvestment of such proceeds on your behalf.

------------------------

The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.

DISTRIBUTION PLANS

The Company's Board of Directors has adopted a Distribution Plan (the
"Plans") on behalf of each class of shares of the Fund. Under the Plans and
pursuant to the Distribution Agreement, the Fund may pay certain
distribution-related expenses. As discussed above, under the Distribution
Agreement, the Fund may pay Stephens, as compensation for distribution-related
services, a monthly fee at the annual rate of up to 0.25% of the average daily
net assets of the Class A Shares of the Fund and a monthly fee at the annual
rate of up to 0.50% of the average daily net assets of the Class D Shares of the
Fund. Since the fee payable

18
<PAGE> 171

to Stephens under the Distribution Agreement is based upon a percentage of the
average daily net assets of a class of shares of the Fund and not upon the
actual expenditures of Stephens, the expenses of Stephens (which may include
overhead expenses) may be more or less than the fees received by it under the
Distribution Agreement. All or a portion of the fees may be paid by Stephens to
broker-dealers or financial institutions who have entered into selling agent
agreements with Stephens, as compensation for sales support services.

SERVICING PLAN

DIVIDENDS AND DISTRIBUTIONS

Net capital gains of the Fund, if any, will be distributed annually (or
more frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI).

Dividends and/or capital gain distributions paid by the Fund may be
invested in additional shares of the same class of shares of the Fund at net
asset value (without any sales load) and credited to your account on the
reinvestment date or, at your election, paid by check. Dividend checks and
Statements of Account will be mailed within approximately three business days
after the payment date. In addition, you may elect to reinvest Fund dividends
and/or capital gain distributions in shares of another portfolio of the Company
with which you have an established account that has met the applicable minimum
initial investment requirement.

The Fund's net investment income available for distribution to the holders
of Class D Shares will be reduced by the amount of shareholder servicing fees
payable to shareholder servicing agents under the Servicing Plan and by the
incremental distribution fees payable under the Distribution Plan. There may be
certain other differences in fees (e.g. transfer agency fees) between Class A
Shares and Class D Shares that would affect their relative dividends.

19
<PAGE> 172

DIVIDEND AND DISTRIBUTION OPTIONS

When you fill out an Account Application, you can choose from three
dividend and distribution options:

C. The Check Payment Option allows you to receive a check for a
dividend or capital gain distribution, which is mailed either to the
designated address, or your Approved Bank Account, early in the month
following declaration. If the U.S. Postal Service cannot deliver such
checks, or if such checks remain uncashed for six months, those checks will
be reinvested in the investor's Fund account at the net asset value next
determined after the earlier of the date the checks have been returned to
the dividend disbursing agent or the date six months after the payment of
such dividend or distribution. Your Check Payment Option will be converted
to the Automatic Reinvestment Option.

TAXES

The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code, as long as such qualification is the best interest of
the Fund's shareholders. The Fund will be treated as a separate entity for tax
purposes and thus the provisions of the Code applicable to regulated investment
companies generally -- will be applied separately to each of the Company's
funds, rather than to the Company as a whole. In addition, net capital gains,
net investment income, and operating expenses will be determined separately for
each fund. By complying with the applicable provisions of the Code, the Fund
will not be subject to federal income taxes with respect to net investment
income and net realized capital gains distributed to its shareholders. The Fund
intends to pay out substantially all of its net investment income and net
realized capital gains (if any) for each year. Fund shareholders will not be
subject to federal income taxes on any dividends of the Fund attributable to
interest from tax-exempt securities. However, dividends attributable to interest
from taxable securities and all capital gain distributions (if any), will be
taxable to shareholders, irrespective of whether you take such dividends and
distributions in cash or have them automatically reinvested in additional shares
of any fund. Such dividends and distributions are generally taxable at the time
they are paid. However, such dividends and distributions declared payable in
October,

20
<PAGE> 173

November and December and made payable to shareholders of record in any such
month are treated as paid and are thereby taxable as of December 31, provided
that such dividends and distributions are actually paid no later than January 31
of the following year. The Fund's dividends will not qualify for the dividends
received deduction allowed to corporate shareholders.

The Fund will inform you by January 31 of each year of the amount and
nature of Fund dividends and capital gain distributions with respect to the
previous year. You should keep all statements you receive to assist in your
personal record-keeping. The Company is required by federal law to withhold,
subject to certain exemptions, at a rate of 31% on taxable dividends, capital
gain distributions, and redemption proceeds (including proceeds from exchanges)
paid or credited to individual shareholders of the Fund, if a shareholder has
not complied with IRS regulations or if a correct taxpayer identification
number, certified when required, is not on file with the Company or the Transfer
Agent. In connection with the withholding requirement, you will be asked to
certify on your Account Application that the social security or taxpayer
identification number you provide is correct and that you are not subject to 31%
back-up withholding for previous underreporting to the IRS.

Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes -- Foreign Shareholders" in the SAI.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

ORGANIZATION AND CAPITAL STOCK

The Company, an open-end investment company, was incorporated in Maryland
on April 27, 1987. The authorized capital stock of the Company consists of
20,000,000,000 shares having a par value of $.001 per share. The Company
currently offers the following series of shares, each representing an interest
in one of the following funds -- the Asset Allocation, California Tax-Free Bond,
California Tax-Free Money Market, Money Market, Municipal Income, National
Tax-Free Institutional Money Market, Overland Sweep, Short-Term
Government-Corporate Income, Short-Term Municipal Income, Strategic Growth, U.S.
Government Income, U.S. Treasury Money Market and Variable Rate Government
Funds. The Board of Directors may, in the future, authorize the issuance of
other series of capital stock representing shares of additional investment
portfolios or funds. All shares of the Company have equal voting rights and will
be voted in the aggregate, and not by series or class, except where voting by
series or class is required by law or where the matter involved affects only one
series or class. The Company may dispense with the annual meeting of
shareholders in any fiscal year in which it is not required by the 1940 Act to
elect Directors;

21
<PAGE> 174

however, shareholders are entitled to call a meeting of shareholders for
purposes of voting on removal of a Director or Directors. A more detailed
statement of the voting rights of shareholders is contained in the SAI. All
shares of the Company, when issued, will be fully paid and nonassessable.

22
<PAGE> 175

OVERLAND EXPRESS FUNDS, INC.

C/O OVERLAND EXPRESS SHAREHOLDER SERVICES, WELLS FARGO BANK, N.A.
POST OFFICE BOX 63084, SAN FRANCISCO, CALIFORNIA 94163
FOR PERSONAL SERVICE PLEASE CALL
[LOGO] YOUR INVESTMENT ADVISOR OR 1-800-572-7797

ACCOUNT APPLICATION PAGE 1 OF 5
MUNICIPAL INCOME FUND
<TABLE>
- -----------------------------------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / ADDITIONAL INVESTMENT OR CHANGE TO ACCOUNT # _____________
- -----------------------------------------------------------------------------------------------------------
<S> <C>
/ / INDIVIDUAL 1. Individual __________________________________________ _______-_____-_______
USE LINE 1 First Name Initial Last Name Soc. Security No.

<PAGE> 176
[LOGO] ACCOUNT APPLICATION PAGE 2 OF 5
MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $1,000.)
- --------------------------------------------------------------------------------
INVESTMENT AMOUNT: $

TYPE OF ACCOUNT (CHOOSE ONE ONLY):

/ / Class A Shares, or

/ / Class D Shares (not available for
purchases of $1,000,000 or more)

Note: If no choice is indicated, Class A Shares will be selected.

METHOD OF PAYMENT: / / Debit bank account designated in Section 3.

/ / Check attached (payable to Overland Express
Municipal Income Fund (designate Class A or D)

/ / Funds have been wired to Overland Express

- --------------------------------------------------------------------------------
SETTLEMENT ARRANGEMENTS: (Check only one if applicable)

- --------------------------------------------------------------------------------
SYSTEMATIC PURCHASE PLAN:

/ / Mail check to registration set forth in Section 1.

<PAGE> 177
[LOGO] ACCOUNT APPLICATION PAGE 3 OF 5
MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
4. REDUCED SALES CHARGES (If Applicable.)
- --------------------------------------------------------------------------------

LETTER OF INTENT -- CLASS A SHARES ONLY

/ / I agree to the Letter of Intent set forth above. It is my intention to
invest over a 13-month period in the Load Funds an aggregate amount equal
to at least:

/ / $100,000 / / $200,000 / / $600,000 / / $1,000,000

Existing accounts must be identified in advance. If the value of currently
owned shares is to be applied towards completion of this Letter of Intent,
please list accounts below.
Account #____________________ Account #____________________

RIGHT OF ACCUMULATION -- CLASS A SHARES ONLY

/ / Invest dividends in Account #____________________ of _________________ Fund
of the Overland Express Funds.

/ / Invest capital gain distributions in Account #____________________ of
____________________ Fund of the Overland Express Funds.

/ / Pay dividends by check and/or / / pay capital gain distributions by check

AND MAIL CHECKS TO:

/ / The registration address set forth in Section 1. / / The bank account
designated in Section 3.
- --------------------------------------------------------------------------------
(CONTINUED)
<PAGE> 178
[LOGO] ACCOUNT APPLICATION PAGE 4 OF 5
MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
7. AUTHORIZATION FOR TRUSTS AND ORGANIZATIONS (If Applicable.)
- --------------------------------------------------------------------------------

CORPORATIONS, TRUSTS, PARTNERSHIPS OR OTHER ORGANIZATIONS MUST COMPLETE
THIS SECTION.

<TABLE>
<S> <C> <C> <C> <C>
Registered Owner is a: / / Trust / / Corporation, Incorporated Association
/ / Partnership / / Other:______________________________________________________________
(such as Non-Profit Organization, Religious Organization, Sole
Proprietorship, Investment Club, Non-incorporated Association, etc.)
</TABLE>

<TABLE>
<S> <C> <C>
Name Title Specimen Signature

---------------------------------- ---------------------------------- ----------------------------------

---------------------------------- ---------------------------------- ----------------------------------
</TABLE>

________________________________________________
Secretary (Signature Guarantee or
Corporate Seal is Required)

FOR ALL OTHER ORGANIZATIONS: ________________________________________________
Certifying Trustee, General Partner, or Other
</TABLE>
- --------------------------------------------------------------------------------
(CONTINUED)
<PAGE> 179
[LOGO] ACCOUNT APPLICATION PAGE 5 OF 5
MUNICIPAL INCOME FUND
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------
8. SIGNATURE, TAX INFORMATION & CERTIFICATION
- ---------------------------------------------------------------------------------------------------------------
/ / U.S. CITIZEN OR RESIDENT
I understand that the Federal Government requires Overland Express Funds, Inc. to withhold and pay to
the Internal Revenue Service 31% from all interest, dividends, capital gains distributions and
proceeds from redemptions UNLESS I have provided a certified taxpayer identification (Social Security
or Employer Identification) number and certify in the Withholding Status below that I am NOT subject
to backup withholding. The taxpayer identification number I provided in Section 1 will be the number
under which any taxable earnings will be reported to the IRS.
WITHHOLDING STATUS: Unless I indicate that I am subject to backup withholding by checking the box
below, I certify that 1) I have NOT been notified by the IRS that I am subject to backup withholding
as a result of a failure to report all interest or dividends, OR 2) I have been notified by the IRS
that I am no longer subject to backup withholding: / / I am currently subject to backup withholding.
/ / NON-RESIDENT ALIEN (In order to claim this exemption, ALL owners on the account must be non-resident
aliens and sign below.)
I am not a U.S. citizen or resident (nor is this account held by a foreign corporation, partnership,
estate or trust) and my permanent address is:
Country:
By signing below, I (we) certify, under penalties of perjury, that I (we) have full authority and legal
capacity to purchase shares of the Fund and affirm that I (we) have received a current prospectus and agree
to be bound by its terms and further certify that 1) the correct taxpayer identification number has been
provided in Section 1 of this Application and that the Withholding Status information, above, is correct OR
2) all owners are entitled to claim non-resident alien status. Investors should be aware that the failure to
check the box under "Telephone Instructions" above means that the telephone exchange and redemption
privileges will be provided. A shareholder would bear the risk of loss in the event of the fraudulent use of
the pre-authorized redemption or exchange privileges. Please see "Exchange Privileges" and "Redemption of
Shares" in the prospectus for more information on these privileges.
X________________________________________________________ SIGNATURE GUARANTEE: NOT REQUIRED WHEN
Individual (or Custodian) date ESTABLISHING NEW ACCOUNTS. Required only if
establishing privileges in Block 2 on an
X________________________________________________________ existing account. Signature Guarantee may be
Joint Owner (if any) date provided by an "eligible guarantor
institution," which includes a commercial bank,
X________________________________________________________ trust company, member firm of a domestic stock
Corporate Officer or Trustee date exchange, savings association, or credit union
that is authorized by its charter to provide a
signature guarantee.

AFFIX SIGNATURE GUARANTEE STAMP
________________________________________________________ _______________________________________________
Title of Corporate Officer or Trustee Signature Guaranteed By
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

DEALER INFORMATION
<TABLE>
<S> <C> <C>
___________________________________________________ ____________________
Dealer Name Branch ID #
___________________________________________________ ____________________ ____________________
Representative's Last Name Rep ID # Rep Phone #
X ______________________________________________________________________________________________________
Authorized signature of Broker/Dealer Title date
</TABLE>
<PAGE> 180

SPONSOR, DISTRIBUTOR AND ADMINISTRATOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201

INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND
CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163

LEGAL COUNSEL

Morrison & Foerster LLP

2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111

NOT FDIC INSURED

FOR MORE INFORMATION ABOUT THE FUND, SIMPLY CALL (800) 572-9612,
OR WRITE:

OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163

LOGO

------------------------

PROSPECTUS
------------------------

Municipal Income Fund
------------------------

May 1, 1996

------------------------

NOT FDIC INSURED

79P 5/96

<PAGE> 181
Cross Reference Sheet

Short-Term Municipal Income Fund
Short-Term Government-Corporate Income Fund
Overland Sweep Fund

-------------------

Form N-1A Item Number

Part A Prospectus Captions

1 Cover Page
2 Prospectus Summary; Summary of Expenses
3 Financial Highlights
4 Management of the Fund and the Master Portfolio
5 Investment Objectives and Policies; Management of the Fund
and the Master Portfolio; Distribution Plan; Custodian, Transfer
and Dividend Disbursing Agent, Servicing Agent
6 Organization and Capital Stock
7 Determination of Net Asset Value, Dividends and Distributions;
Purchase and Redemption of Shares; Taxes
8 Purchase and Redemption of Shares
9 Not Applicable

Part B Statement of Additional Information Captions

10 Cover Page
11 Table of Contents
12 Introduction
13 Investment Restrictions; Additional Information About Permitted
Investment Activities; Appendix
14 Management
15 Management
16 Management; Distribution Plans; Independent Auditors
17 Portfolio Transactions
18 Capital Stock; Other
19 Determination of Net Asset Value
20 Federal Income Taxes
21 Distribution Plans
22 Calculation of Yield and Total Return
23 Financial Information

Part C Other Information

24-32 Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Document.
<PAGE> 182

Telephone: (800) 552-9612 [OVERLAND EXPRESS LOGO]

Stephens Inc. -- Sponsor, Administrator and Distributor

Wells Fargo Bank -- Investment Adviser to the CIT Master Portfolio, Transfer and
Dividend Disbursing

Agent and Custodian of the Fund and the CIT Master Portfolio

Overland Express Funds, Inc. (the "Company") is an open-end, series
investment company. This Prospectus contains information about one of the
Company's funds -- the OVERLAND SWEEP FUND (the "Fund").

The Fund's investment objective is to provide investors with a high level
of current income, while preserving capital and liquidity. The Fund seeks to
achieve its investment objective by investing all of its assets in the Cash
Investment Trust Master Portfolio (the "CIT Master Portfolio"), a professionally
managed diversified portfolio having the same investment objective as the Fund
and offered by Master Investment Trust (the "Trust"), a professionally managed,
open-end investment company. As a result, the performance of the Fund will
correspond directly with the investment experience of the CIT Master Portfolio.
The CIT Master Portfolio seeks to achieve this investment objective by investing
in high-quality, short-term instruments.

Wells Fargo Bank, N.A. ("Wells Fargo Bank") serves as the investment
adviser of the CIT Master Portfolio, and serves as the transfer and dividend
disbursing agent and custodian for the Fund and the CIT Master Portfolio.
Stephens Inc. ("Stephens") serves as the sponsor and administrator of the Fund
and the CIT Master Portfolio and serves as the distributor of Fund shares and of
CIT Master Portfolio interests.

Shares of the Fund are offered only to customers of certain financial
institutions that have entered into Shareholder Servicing Agreements with the
Company on behalf of the Fund ("Servicing Agents"). Servicing Agents will
automatically invest, or "sweep," customer funds into shares of the Fund. As
further described below, Wells Fargo Bank will serve as a Servicing Agent, and
will receive certain fees pursuant to a Shareholder Servicing Agreement. Wells
Fargo Bank also has entered into a Selling Agreement with Stephens pursuant to
which it will receive certain fees.

The Fund and the CIT Master Portfolio seek to maintain a net asset value of
$1.00 per share; however, there is no assurance that this objective will be
achieved.
------------------------

INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.

------------------------

FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK OR ANY OF ITS AFFILIATES. SUCH SHARES
ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL
AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

WELLS FARGO BANK IS THE INVESTMENT ADVISER TO THE CIT MASTER PORTFOLIO.
STEPHENS, WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK, IS THE
SPONSOR AND DISTRIBUTOR FOR THE FUND.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

PROSPECTUS DATED MAY 1, 1996

<PAGE> 183

TABLE OF CONTENTS

<PAGE> 184

PROSPECTUS SUMMARY

Q. WHAT IS THE INVESTMENT OBJECTIVE OF THE FUND AND THE CIT MASTER PORTFOLIO?

A. The Fund seeks to provide investors with a high level of current income,
while preserving capital and liquidity. The Fund seeks to achieve its
investment objective by investing all of its assets in the CIT Master
Portfolio, which has the same investment objective as the Fund. Both the
Fund and the CIT Master Portfolio seek to maintain a stable net asset
value of $1.00 per share. As with all mutual funds, there is no assurance
that the Fund will achieve its investment objective. See "Investment
Objective and Policies."

Q. WHAT ARE PERMISSIBLE INVESTMENTS?

A. The Fund invests all of its assets in the CIT Master Portfolio, a
professionally managed portfolio of the Trust, an open-end investment
company. The CIT Master Portfolio invests in high-quality, short-term
instruments including obligations of the U.S. Government, its agencies, or
instrumentalities (including government-sponsored enterprises), certain
short-term debt obligations of U.S. banks and the U.S. branches of foreign
banks, high-quality commercial paper, and certain repurchase agreements
and floating- and variable-rate instruments. See "Investment Objective and
Policies."

Q. WHO MANAGES MY INVESTMENTS?

A. Wells Fargo Bank, as investment adviser to the CIT Master Portfolio,
manages the investments of the Fund in the CIT Master Portfolio. The
Company has not retained the services of a separate investment adviser for
the Fund because the Fund invests all of its assets in the CIT Master
Portfolio. Wells Fargo Bank also provides the Fund and the CIT Master
Portfolio with transfer agency, dividend disbursing agency and custodial
services. In addition, Wells Fargo Bank is a Selling Agent and a Servicing
Agent with respect to the Fund. Stephens is the Sponsor, Administrator and
Distributor for the Company and the Trust. See "Management of the Fund and
the CIT Master Portfolio."

Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?

A. Shares of the Fund and the CIT Master Portfolio are not guaranteed or
insured against loss of principal or interest, although certain of the CIT
Master Portfolio's debt instruments may be insured or guaranteed as to
repayment of principal and/or the payment of interest. Although both the
Fund and the CIT Master Portfolio seek to maintain a stable net asset
value of $1.00 per share, there is no assurance that they will be able to
do so. See "Investment Objective and Policies."

ii
<PAGE> 185

Q. HOW MAY I PURCHASE SHARES?

A. Shares of the Fund may be purchased on any day the Fund is open through a
Servicing Agent that has entered into a Shareholder Servicing Agreement
with the Company. There is no sales load for purchasing shares of the
Fund. There is no minimum initial purchase or subsequent purchase amount
applicable to Fund Shares. See "Purchase and Redemption of Shares."

Q. HOW WILL I RECEIVE DIVIDENDS?

A. Dividends on shares of the Fund are declared daily each Business Day (as
defined below) and are paid in cash monthly. See "Determination of Net
Asset Value, Dividends and Distributions."

Q. HOW MAY I REDEEM SHARES?

A. Shares may be redeemed on any day the Fund is open for trading upon
request to a Servicing Agent. Proceeds of redemptions are credited to the
Servicing Agent's shareholder account with the Fund. The Fund imposes no
charge for redeeming its shares. See "Purchase and Redemption of Shares."

iii
<PAGE> 186

SUMMARY OF EXPENSES

ANNUAL OPERATING EXPENSES1

(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<S> <C>
Management Fees (after waivers and reimbursements)2...................................... 0.22%
12b-1 Fees............................................................................... 0.55%
Total Other Expenses..................................................................... 0.48%
------
Total Operating Expenses (after waivers and reimbursements)2............................. 1.25%
------
</TABLE>

EXAMPLE OF EXPENSES

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment in
the Fund, assuming (1) a 5% annual return and (2) redemption
at the end of each time period indicated...................... $ 13 $ 40 $69 $151
</TABLE>

- ---------------

1 Annual Fund Operating Expenses summarize expenses charged at the Fund and
Master Portfolio levels.

2 The percentages shown above under "Management Fees," and "Total Operating
Expenses" are based on amounts incurred during the most recent year, restated
to reflect voluntary fee waivers. The fee waivers are expected to continue to
reduce expenses during the current year. Absent waivers, the percentage shown
above under "Management Fees" and "Total Operating Expenses" would have been
0.25% and 1.28%, respectively. Long-term shareholders of the Fund could pay
more in distribution related charges than the economic equivalent of the
maximum front-end sales charges applicable to mutual funds sold by members of
the National Association of Securities Dealers, Inc. ("NASD"). Stephens and
Wells Fargo Bank each may elect, in its sole discretion, to otherwise waive
its respective fees or reimburse such expenses. In this regard, Wells Fargo
Bank has undertaken to waive a portion or all of its fees and/or reimburse the
Fund or the CIT Master Portfolio, to the extent the total operating expenses
exceed 1.25%, but only to the extent of its fees. Any such fee waivers or
expense reimbursements would reduce the total expenses of the Fund. There can
be no assurance that such waivers or reimbursements will continue.

--------------------------

The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. There are no sales loads or redemption fees charged by the Fund. You
may, however, be separately charged other fees by Servicing Agents for services
related to those provided under Shareholder Servicing Agreements.

The EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment over the periods shown, based on
the expenses in the table above and an assumed annual rate of return of 5%. This
rate of return should not be considered an indication of the actual or expected
performance of the Fund. In addition, the Example should not be considered a
representation of past or future expenses; actual expenses and returns may be
greater or lesser than those shown.

iv
<PAGE> 187

With regard to the combined fees and expenses of the Fund and CIT Master
Portfolio, the Board of Directors of the Company has considered whether various
costs and benefits of investing all the Fund's assets in the CIT Master
Portfolio rather than directly in portfolio securities would be more or less
than if the Fund invested in portfolio securities directly and believes that the
Fund should achieve economic efficiencies by investing in the CIT Master
Portfolio. Additionally, the Board of Directors has determined that the
aggregate fees assessed by the Fund and the CIT Master Portfolio should be less
than those expenses that the Directors believe would be incurred had the Fund
invested directly in the securities held by the CIT Master Portfolio. See
"Management of the Fund and the CIT Master Portfolio," "Custodian, Transfer and
Dividend Disbursing Agent and Servicing Agents," "Distribution Plan" and
"Purchase and Redemption of Shares" for more complete descriptions of the
various costs and expenses applicable to investors in the Fund. In addition, if
the Fund were to change its fundamental investment strategy and no longer invest
in the CIT Master Portfolio, these expenses may change.

v
<PAGE> 188

FINANCIAL HIGHLIGHTS

OVERLAND SWEEP FUND

FOR A SHARE OUTSTANDING AS SHOWN

- ---------------

* The Fund commenced operations on October 1, 1991.

** These ratios include expenses charged to the CIT Master Portfolio. Prior
year ratios have been adjusted for comparability purposes.

vi
<PAGE> 189

INVESTMENT OBJECTIVE AND POLICIES

Set forth below is a description of the investment objective and related
policies of the Fund and the CIT Master Portfolio. As with all mutual funds,
there can be no assurance that the Fund or the CIT Master Portfolio, which is a
diversified portfolio, will achieve their investment objectives.

INVESTMENT OBJECTIVE

Since the investment experience of the Fund will correspond directly to
that of the CIT Master Portfolio, the following is a discussion of the various
investments of and techniques employed by the CIT Master Portfolio, including
the investment objective and policies of the CIT Master Portfolio.

The CIT Master Portfolio seeks to achieve its investment objective by
investing only in U.S. dollar-denominated "Eligible Securities" with remaining
maturities not exceeding thirteen months, as defined in Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act"); the CIT Master Portfolio seeks
to maintain a dollar-weighted average portfolio maturity of 90 days or less. An
Eligible Security is a security that is determined to present minimal credit
risks and is rated in one of the two highest rating categories by the required
number of nationally recognized statistical rating organizations or, if unrated,
is determined by the investment adviser to be of comparable quality to such
rated securities. These determinations are made by the investment adviser under
guidelines adopted by the Trust's Board of Trustees, although in certain
instances, the Board of Trustees must approve or ratify the CIT Master
Portfolio's investments. The Board of Trustees of the Trust (or Wells Fargo
Bank, under authority delegated to it as investment adviser to the CIT Master
Portfolio) will determine on an ongoing basis that any Eligible Securities
purchased present minimal credit risks. The CIT Master Portfolio and the Fund
will endeavor to maintain a constant net asset value of $1.00 per share of the
Fund. As with all mutual funds, there can be no assurance that this investment
objective will be achieved.

The Eligible Securities in which the CIT Master Portfolio may invest are:

<TABLE>
<C> <S>
(i) obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities (including government-sponsored enterprises) ("U.S. Government
obligations");
(ii) negotiable certificates of deposit, fixed time deposits, bankers' acceptances or other
short-term obligations of U.S. 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 Federal Deposit Insurance Corporation;
(iii) commercial paper rated at the date of purchase Prime-1 by Moody's Investors Service,
Inc. ("Moody's") or "A-1" or better by Standard & Poor's Ratings Group ("S&P");
</TABLE>

1
<PAGE> 190

<TABLE>
<C> <S>
(iv) commercial paper unrated at the date of purchase but secured by a letter of credit from
a U.S. bank that meets the above criteria for investment;
(v) certain floating- and variable-rate instruments (discussed below);
(vi) certain repurchase agreements (discussed below); and
(vii) short-term, U.S. dollar-denominated obligations of domestic branches of foreign banks
that at the time of investment have more than $10 billion, or the equivalent in other
currencies, in total assets.
</TABLE>

Under the 1940 Act, the Fund and the CIT Master Portfolio are each
classified as "diversified," even though, in the case of the Fund, all of its
assets are invested in the CIT Master Portfolio.

U.S. GOVERNMENT OBLIGATIONS

U.S. Government obligations include securities issued or guaranteed as to
principal and interest by the U.S. Government and supported by the full faith
and credit of the U.S. Treasury. U.S. Treasury obligations differ mainly in the
length of their maturity. Treasury bills, the most frequently issued marketable
government securities, have a maturity of up to one year and are issued on a
discount basis. U.S. Government obligations also include securities issued or
guaranteed by federal agencies or instrumentalities, including
government-sponsored enterprises. Some obligations of agencies or
instrumentalities of the U.S. Government are supported by the full faith and
credit of the United States or U.S. Treasury guarantees; others, by the right of
the issuer or guarantor to borrow from the U.S. Treasury; still others, by the
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and others, only by the credit of the agency
or instrumentality issuing the obligation. In the case of obligations not backed
by the full faith and credit of the United States, the investor must look
principally to the agency or instrumentality, which may be privately owned,
issuing or guaranteeing the obligation for ultimate repayment. 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.

FLOATING- AND VARIABLE-RATE INSTRUMENTS

Certain of the debt instruments in which the CIT Master Portfolio may
purchase may bear interest at rates that are not fixed, but float or vary with,
for example, changes in specified market rates or indices or at specified
intervals. The CIT Master Portfolio may purchase certificates of participation
in pools of floating- and variable-rate instruments purchased from banks and
other financial institutions. The CIT Master Portfolio may invest in floating-
and variable-rate instruments even if they carry stated maturities in excess of
thirteen months, upon compliance with certain conditions of the SEC, in which
case such instruments will be treated, in accordance with these conditions, as
having maturities not exceeding thirteen months.

2
<PAGE> 191

Wells Fargo Bank, as investment adviser to the CIT Master Portfolio,
monitors on an ongoing basis the ability of an issuer of a demand instrument to
pay principal and interest on demand. Events occurring between the time the CIT
Master Portfolio elects to demand payment on a floating- or variable-rate
instrument and the time payment is due may affect the ability of the issuer to
make payment when due, and unless such demand instrument permits same-day
settlement, such events may affect the CIT Master Portfolio's ability to obtain
payment at par. Demand instruments whose demand feature is not exercisable
within seven days may be treated as liquid, provided that an active secondary
market exists.

REPURCHASE AGREEMENTS

The CIT Master Portfolio may enter into repurchase agreements wherein the
seller of a security to the CIT Master Portfolio agrees to repurchase that
security from the CIT Master Portfolio at a mutually agreed-upon time and price.
The period of maturity is usually quite short, often overnight or a few days,
although it may extend over a number of months. The CIT Master Portfolio may
enter into repurchase agreements only with respect to U.S. Government
obligations and other securities that are permissible investments for the CIT
Master Portfolio. All repurchase agreements will be fully collateralized at 102%
based on values that are marked to market daily. The maturities of the
underlying securities in a repurchase agreement transaction may be greater than
twelve months. However, the term of any repurchase agreement on behalf of the
CIT Master Portfolio will always be less than twelve months. If the seller
defaults and the value of the underlying securities has declined, the CIT Master
Portfolio may incur a loss. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the security, the CIT Master Portfolio's
disposition of the security may be delayed or limited.

The CIT Master Portfolio may not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 10% of the market
value of the CIT Master Portfolio's total net assets would be invested in
repurchase agreements with maturities of more than seven days, restricted
securities and/or illiquid securities. The CIT Master Portfolio will enter into
repurchase agreements only with primary broker/dealers and commercial banks that
meet guidelines established by the Board of Trustees of the Trust and that are
not affiliated with Wells Fargo Bank. The CIT Master Portfolio, subject to the
conditions described above, may participate in pooled repurchase agreement
transactions with other funds advised by Wells Fargo Bank.

LETTERS OF CREDIT

Certain of the debt obligations, certificates of participation, commercial
paper and other short-term obligations which the CIT Master Portfolio is
permitted to 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. Letter of credit-backed investments must, in the opinion
of Wells Fargo Bank, be of investment quality comparable to other permitted
high-quality investments of the CIT Master Portfolio.

------------------------

3
<PAGE> 192

The Fund's investment objective and its investment policy of investing all
of its assets in the CIT Master Portfolio, as set forth above, are fundamental.
Accordingly, they may not be changed without approval by the vote of the holders
of a majority of the Fund's outstanding voting securities, as described under
"Capital Stock" in the SAI. If the Company's Board of Directors determines,
however, that the Fund's investment objective can best be achieved by a
substantive change in a non-fundamental investment policy or strategy, the
Company may make such change without shareholder approval and will make
appropriate disclosure of any such material change in the Fund's prospectus.

The investment objective of the CIT Master Portfolio may not be changed
without approval of a majority vote of the investors in the CIT Master
Portfolio. The classification of the Fund and the CIT Master Portfolio as
"diversified" may not be changed, in the case of the Fund, without the approval
of the Fund's shareholders, or, in the case of the CIT Master Portfolio, without
the approval of a majority vote of the investors in the CIT Master Portfolio.

In addition, as a matter of fundamental policy, the CIT Master Portfolio
(and the Fund) may borrow from banks up to 10% of the current value of its net
assets only for temporary purposes in order to meet redemptions, and these
borrowings may be secured by the pledge of up to 10% of the current value of its
net assets (but investments may not be purchased while any such outstanding
borrowing in excess of 5% of its net assets exists). As a matter of fundamental
policy, neither the CIT Master Portfolio nor the Fund may invest more than 25%
of its assets (i.e., concentrate) in any particular industry, excluding U.S.
Government obligations and obligations of domestic banks. (Foreign branches of
U.S. banks and domestic branches of foreign banks are not domestic banks for
purposes of this exclusion.) As a matter of non-fundamental policy, the CIT
Master Portfolio (and the Fund) may invest up to 10% of the current value of its
net assets in repurchase agreements having maturities of more than seven days,
illiquid securities, and fixed time deposits that are subject to withdrawal
penalties and that have maturities of more than seven days, provided that this
restriction does not affect the Fund's ability to invest a portion or all of its
assets in the CIT Master Portfolio.

MANAGEMENT OF THE FUND AND THE CIT MASTER PORTFOLIO

The Company has retained the services of Stephens as administrator and
distributor for the Fund, but has not retained the services of an investment
adviser for the Fund since the Company seeks to achieve the investment objective
of the Fund by investing all of the Fund's assets in the CIT Master Portfolio.
The Company's Board of Directors supervises the actions of the Fund's
administrator and distributor, as set forth below, and decides upon matters of
general policy. As noted above, the Fund may withdraw its investment in the CIT
Master Portfolio only if the Board of Directors of the Company determines that
it is in the best interests of the Fund and its shareholders to do so. Upon any
such withdrawal, the Board of Directors of the Company would consider what
action might be taken, including the investment of all the assets of the Fund in
another pooled investment entity having the same investment objective as the
Fund or the hiring of an investment adviser to manage the Fund's assets in
accordance with the investment policies described above with respect to the CIT
Master Portfolio.

4
<PAGE> 193

The Trust, on behalf of the CIT Master Portfolio, has retained the services
of Wells Fargo Bank as investment adviser to the CIT Master Portfolio, and
Stephens as administrator and distributor of the CIT Master Portfolio. The Board
of Trustees of the Trust is responsible for the general management of the Trust
and supervising the actions of Wells Fargo Bank and Stephens in these
capacities. Additional Information regarding the Officers and Directors of the
Company and the Officers and Trustees of the Trust is included in the Funds' SAI
under "Management."

STRUCTURE OF THE FUND AND THE CIT MASTER PORTFOLIO

The Fund is a feeder fund in a master/feeder structure, which means that it
invests all of its assets in the CIT Master Portfolio, which has the same
investment objective as the Fund. The Trust is organized as a trust under the
laws of the State of Delaware. See "Organization and Capital Stock." In addition
to selling its shares to the Fund, the CIT Master Portfolio may sell its shares
to other mutual funds or qualified investors. Such other mutual funds and other
qualified investors may have different expenses and, accordingly, may experience
different investment returns and yields compared with the Fund. Information
regarding additional options, if any, for investing in shares of the CIT Master
Portfolio is available from Stephens and may be obtained by calling (800)
643-9691.

The Company's Board of Directors believes that if other investors invest
their assets in the CIT Master Portfolio, certain economic efficiencies may be
realized with respect to the CIT Master Portfolio. For example, fixed expenses
that otherwise would have been borne solely by the Fund would be spread across a
potentially larger asset base provided by more than one fund investing in the
CIT Master Portfolio. The Fund and any other entities investing in the CIT
Master Portfolio are each liable for all obligations of the Master Portfolio.
The risk of the Fund incurring financial loss on account of such liability,
however, is limited to circumstances in which both inadequate insurance exists
and the Trust itself is unable to meet its obligations. Accordingly, the
Company's Board of Directors believes that neither the Fund nor its shareholders
will be adversely affected by reason of investing the Fund's assets in the CIT
Master Portfolio. However, if a mutual fund or other investor withdraws its
investment from the CIT Master Portfolio, the economic efficiencies (e.g.,
spreading fixed expenses across a larger asset base) that the Company's Board
believes may be available through investment in the CIT Master Portfolio may not
be fully achieved. In addition, given the relatively novel nature of the
master/feeder structure, accounting and operational difficulties, although
unlikely, could occur.

The Fund may withdraw its investments in the CIT Master Portfolio only if
the Company's Board of Directors determines that such action would be in the
best interests of the Fund and its shareholders. Upon such withdrawal, the Board
would consider alternative investments, including investing all of the Fund's
assets in another investment company with the same investment objective as the
Fund or hiring an investment adviser to manage the Fund's assets in accordance
with the investment policies described in this section with respect to the CIT
Master Portfolio. For a description of the management and expenses of the Fund
and the CIT Master Portfolio, see "Investment Adviser" and "Sponsor,
Administrator and Distributor."

The investment objective and other fundamental policies of the Fund or the
CIT Master Portfolio cannot be changed without approval by the holders of a
majority, as defined in the 1940 Act, of the Fund's or CIT Master Portfolio's,
as applicable, outstanding voting securities. Whenever

5
<PAGE> 194

the Fund, as a CIT Master Portfolio interestholder, is requested to vote on
matters pertaining to any fundamental policy of the Master Portfolio, the
Company will hold a meeting of the Fund's shareholders to consider such matters,
and the Fund's votes will be cast in proportion to the votes received from Fund
shareholders. The Fund will vote those Fund shares for which it receives no
voting instructions in the same proportion as the votes received from Fund
shareholders. In addition, certain policies of the CIT Master Portfolio that are
non-fundamental could be changed by vote of a majority of the Trust's Trustees
without interestholder vote. If the CIT Master Portfolio's investment objective
or fundamental or non-fundamental policies are changed, the Fund could
subsequently change its objective or policies to correspond to those of the CIT
Master Portfolio, or the Fund could redeem its CIT Master Portfolio interests
and either seek a new investment company with a matching objective in which to
invest or it could retain its own investment adviser to manage the Fund's
portfolio in accordance with its investment objective. In the latter case, the
Fund's inability to find a substitute investment company in which to invest or
equivalent management services could adversely affect shareholders' investments
in the Fund. The Fund will provide shareholders with 30 days' written notice
prior to the implementation of any change in the investment objective of the
Fund or the CIT Master Portfolio, to the extent possible. See "Investment
Objective and Policies" for additional information regarding the Fund's and the
CIT Master Portfolio's investment objectives and policies. Additional
information regarding the Officers and Directors/Trustees of the Company and the
Trust is located in the Fund's SAI under "Management."

INVESTMENT ADVISER

Pursuant to an Advisory Contract, the CIT Master Portfolio is advised by
Wells Fargo Bank, 420 Montgomery Street, San Francisco, California 94104, a
wholly owned subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the
largest banks in the United States, was founded in 1852 and is the oldest bank
in the western United States. As of April 1, 1996, Wells Fargo Bank and its
affiliates provided investment advisory services for approximately $56 billion
of assets of individuals, trusts, estates and institutions. Wells Fargo Bank is
the investment adviser to other separately managed portfolios of the Company and
the Trust and serves as investment adviser or sub-adviser to four other
registered open-end management investment companies, each of which consists of
several separately managed investment portfolios.

The Advisory Contract with the Trust on behalf of the CIT Master Portfolio
provides that Wells Fargo Bank shall furnish to the CIT Master Portfolio
investment guidance and policy direction in connection with the daily portfolio
management of the CIT Master Portfolio. Pursuant to the Advisory Contract, Wells
Fargo Bank furnishes to the Board of Trustees of the Trust periodic reports on
the investment strategy and performance of the CIT Master Portfolio.

For its services under the Advisory Contract with the Trust, Wells Fargo
Bank is entitled to receive a monthly advisory fee at the annual rate of 0.25%
of the average daily net assets of the CIT Master Portfolio. For the year ended
December 31, 1995 Wells Fargo Bank was paid at the annual rate of 0.22% of the
average daily net assets of the Fund as compensation for its services as
investment adviser. From time to time, Wells Fargo Bank may waive such fees in
whole or in part. In this regard, Wells Fargo Bank has undertaken to waive a
portion or all of its fees and/or reimburse the Fund or the CIT Master
Portfolio, to the extent the Fund's total operating expenses exceed 1.25%

6
<PAGE> 195

of the Fund's average daily net assets, but only to the extent of its fees. Any
such waiver will reduce expenses of the CIT Master Portfolio and, accordingly,
have a favorable impact on the performance of the CIT Master Portfolio and, in
turn, the Fund.

Purchase and sale orders of the securities held by the CIT Master Portfolio
may be combined with those of other accounts that Wells Fargo Bank manages or
advises, and for which it has brokerage placement authority, in the interest of
seeking the most favorable overall net results. When Wells Fargo Bank determines
that a particular security should be bought or sold for the CIT Master Portfolio
and other accounts managed by Wells Fargo Bank, Wells Fargo Bank undertakes to
allocate those transaction costs among the participants equitably. From time to
time, the CIT Master Portfolio, to the extent consistent with its investment
objective, policies and restrictions, may invest in securities of companies with
which Wells Fargo Bank has a lending relationship.

Morrison & Foerster LLP, counsel to the Company and the Trust and special
counsel to Wells Fargo Bank, has advised the Company, the Trust and Wells Fargo
Bank that Wells Fargo Bank and its affiliates may perform the services
contemplated by the Advisory Contract and this Prospectus without violation of
the Glass-Steagall Act. Such counsel has pointed out, however, that there are no
controlling judicial or administrative interpretations or decisions and that
future judicial or administrative interpretations of, or decisions relating to,
present federal or state statutes, including the Glass-Steagall Act, and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in such statutes,
regulations and judicial or administrative decisions or interpretations, could
prevent such entities from continuing to perform, in whole or in part, such
services. If any such entity were prohibited from performing any such services,
it is expected that new agreements would be proposed or entered into with
another entity or entities qualified to perform such services.

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR

Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
agreements with the Company and the Trust under which Stephens acts as
administrator for the Fund and the CIT Master Portfolio, respectively. For
providing administrative services, Stephens is entitled to receive from each of
the Fund and the CIT Master Portfolio a monthly fee at the annual rate of 0.025%
of its respective average daily net assets. From time to time, Stephens may
waive its fees from the Fund or the CIT Master Portfolio in whole or in part.
Any such waivers will reduce expenses of the Fund and/or of the CIT Master
Portfolio and, accordingly, have a favorable impact on the performance of the
Fund and/or the CIT Master Portfolio.

The respective Administration Agreements with the Fund and the CIT Master
Portfolio state that Stephens shall provide as administrative services, among
other things, (i) general supervision of the operation of the Fund and the CIT
Master Portfolio, including coordination of the services performed by the
investment adviser (in the case of the CIT Master Portfolio), transfer agent,
shareholder servicing agents (in the case of the Fund), custodian, independent
auditors and legal counsel; (ii) general supervision of regulatory compliance
matters, including the compilation of information for documents such as reports
to, and filings with, the SEC and state securities commissions; and preparation
of proxy statements and shareholder or investor reports for the Fund and the CIT
Master Portfolio, as applicable; and (iii) general supervision of the
compilation of data required for the preparation of periodic reports distributed
to the Company's officers and Board of Directors and the

7
<PAGE> 196

Trust's officers and Board of Trustees. Stephens also furnishes office space and
certain facilities required for conducting the business of the Fund and the CIT
Master Portfolio and pays the compensation of the directors, officers and
employees of the Company and of the Trust who are affiliated with Stephens.

Stephens, as the principal underwriter of the Fund within the meaning of
the 1940 Act and in accordance with a plan of distribution ("Plan"), has entered
into a Distribution Agreement with the Company pursuant to which Stephens has
the responsibility for distributing shares of the Fund. The Distribution
Agreement provides that Stephens shall act as agent for the Fund for the sale of
its shares. See "Distribution Plan" below.

------------------------

The Advisory Contract and the Administration Agreements with the CIT Master
Portfolio and the Fund provide that if, in any fiscal year, the total aggregate
expenses of the CIT Master Portfolio and the Fund incurred by, or allocated to,
the CIT Master Portfolio and the Fund (excluding taxes, interest, brokerage
commissions and other portfolio transaction expenses, expenditures that are
capitalized in accordance with generally accepted accounting principles,
extraordinary expenses and amounts accrued or paid under a Plan) exceed the most
restrictive expense limitation applicable to the Fund imposed by the securities
laws or regulations of the states in which the Fund's shares are registered for
sale, Wells Fargo Bank and Stephens shall waive their fees and reimburse
expenses proportionately under the Advisory Contract and the Administration
Agreements, respectively, for the fiscal year to the extent of the excess, or
reimburse the excess, but only to the extent of their respective fees. In this
regard, Wells Fargo Bank has undertaken to waive a portion or all of its fees
and/or reimburse expenses to the Fund and the CIT Master Portfolio, to the
extent the total operating expenses exceed 1.25% of average daily net assets,
but only to the extent of its fees. The Advisory Contract and the Administration
Agreements further provide that the total expenses shall be reviewed monthly so
that, to the extent the annualized expenses for such month exceed the most
restrictive applicable annual expense limitation, the monthly fees under the
Advisory Contract and the Administration Agreements shall be reduced as
necessary. Currently, the most stringent applicable state expense ratio
limitation is 2.50% of the first $30 million of the Fund's average net assets
for its current fiscal year, 2% of the next $70 million of such assets, and
1.50% of such assets in excess of $100 million.

Except for the expenses borne by Wells Fargo Bank and Stephens, the Company
and the Trust bear all costs of their respective operations, including advisory
(in the case of the CIT Master Portfolio), shareholder servicing (in the case of
the Fund), transfer agency, custody and administration fees; payments pursuant
to any Plan (in the case of the Fund); fees and expenses of independent auditors
and legal counsel, and any extraordinary expenses. Expenses attributable to the
Fund and/or the CIT Master Portfolio are charged against the respective assets
of the Fund and/or the CIT Master Portfolio.

8
<PAGE> 197

DETERMINATION OF NET ASSET VALUE,

DIVIDENDS AND DISTRIBUTIONS

Net asset value per share for the Fund is determined by Wells Fargo Bank on
each day that the Fund is open for trading ("Business Day"). The net asset value
per share of the Fund is determined by dividing the value of the total assets of
the Fund (i.e., the value of its investments in the CIT Master Portfolio and
other assets) less all of its liabilities by the total number of outstanding
shares of the Fund. The net asset value of the Fund is determined as of 12:00
noon and 4:00 p.m. (New York time). It is anticipated that the net asset value
of each share of the Fund will remain constant at $1.00, although no assurance
can be given that the Fund will maintain a stable net asset value on a
continuing basis.

The CIT Master Portfolio uses the amortized cost method to value its
portfolio securities. The amortized cost method involves valuing a security at
its cost and amortizing any discount or premium over the period until maturity,
generally without regard to the impact of fluctuating interest rates on the
market value of the security. The net investment income of the CIT Master
Portfolio is determined, declared and paid as a dividend once each Business Day
as of 12:00 noon (New York time). All the net investment income of the CIT
Master Portfolio so determined is allocated pro rata among the Fund and the
other investors in the CIT Master Portfolio at the time of such determination.

For this purpose, the net investment income of the CIT Master Portfolio
(from the time of the immediately preceding determination thereof) consists of
(i) all income accrued, less the amortization of any premium, on the assets of
the CIT Master Portfolio, less (ii) all actual and accrued expenses of the CIT
Master Portfolio determined in accordance with generally accepted accounting
principles. Interest income includes discount earned (including both original
issue and market discount) on discount paper accrued ratably to the date of
maturity and any net realized gains or losses on the assets of the CIT Master
Portfolio.

The net investment income of the Fund, as defined below, is determined at
the same time and on the same days as the net investment income of the CIT
Master Portfolio is determined. All the Net Income of the Fund so determined is
declared as a dividend to shareholders of record at the time of such
determination. Net Income for a Saturday, Sunday or Holiday (as defined below)
will be declared as a dividend to shareholders of record as of 12:00 noon (New
York time) on the previous Business Day.

Dividends of the Fund declared in, and attributable to, any month will be
paid in cash once a month, early in the following month. Shareholders of the
Fund who redeem shares prior to a dividend payment date will be entitled to all
dividends declared but unpaid prior to redemption on such shares on the next
dividend payment date.

For this purpose, the net investment income of the Fund (from the time of
the immediately preceding determination thereof) consists of (i) all income
accrued on the assets of the Fund (i.e., the Fund's share of the net investment
income of the CIT Master Portfolio), less (ii) all actual and accrued expenses
of the Fund determined in accordance with generally accepted accounting
principles.

Since the net investment income of the Fund is declared as a dividend each
time the Net Income of the Fund is determined, the net asset value per share of
the Fund is expected to remain constant at $1.00 per share immediately after
each such determination and dividend declaration.

9
<PAGE> 198

PERFORMANCE DATA

From time to time, the Company may advertise yield information with respect
to shares of the Fund. Yield information is based on the historical earnings and
performance of the Fund and should not be considered representative of future
performance. From time to time, the Fund may advertise its current yield and/or
its effective yield. Current yield for the Fund is computed by dividing its net
investment income per share earned during a specified period by its net asset
value per share on the last day of such period and annualizing the result. The
current yield of the Fund will show the annualized income per share generated by
an investment in the Fund over a stated period. The effective yield is
calculated similarly but, when annualized, the income earned per share will be
assumed to have been reinvested. The effective yield will be slightly higher
than the current yield because of the compounding effect of this assumed
reinvestment. Additional information about the performance of the Fund is
contained in the Annual Report for the Fund. The Annual Report may be obtained
free of charge by calling the Company at 800-552-9612.

PURCHASE AND REDEMPTION OF SHARES

Shares of the Fund are offered exclusively to customers of Servicing Agents
who have entered into a Shareholder Servicing Agreement with the Company on
behalf of the Fund. However, other open-end investment companies that offer
their shares to the public, including other series of the Company, also may
invest all or substantially all of their assets in the CIT Master Portfolio.
Accordingly, there may be other investment companies through which public
investors can invest indirectly in the CIT Master Portfolio. The fees charged by
such other investment companies may be higher or lower than those charged by the
Fund, which may reflect, among other things, differences in the nature and level
of the services and features offered by such companies to their shareholders.

The Shareholder Servicing Agreements contemplate that customers of a
Servicing Agent will have entered into agency agreements with such Servicing
Agent whereby the Servicing Agent is authorized to invest certain amounts
maintained by the customer in an account with the Servicing Agent in shares of
the Fund through a single account in the name of the Servicing Agent on behalf
of its customers. Fund shares are offered continuously at the net asset value
next determined after a purchase order is received by the Servicing Agent. The
Servicing Agent is responsible for the prompt transmission of the purchase order
to the Fund. The net asset value is expected to remain constant at $1.00. No
sales load is imposed.

Shares of the Fund may be purchased on any day the Fund is open. The Fund
is open on the same days as the New York Stock Exchange (the "Exchange").
Currently, the Exchange is closed on New Year's 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 Saturday, the
Exchange usually is closed the preceding Friday, and when any Holiday falls on a
Sunday, the Exchange is usually closed the following Monday.

There is no minimum initial or subsequent purchase amount applicable to
Fund shares. The Company reserves the right to reject any purchase order for
shares of the Funds. All amounts accepted will be invested in full and
fractional shares. Inquiries regarding purchases and redemp-

10
<PAGE> 199

tions may be directed to the Company at (800) 572-7797 or at the address on the
front cover of the Prospectus.

Shares may be redeemed at their next determined net asset value after the
Servicing Agent has received a redemption order. The Servicing Agent is
responsible for the prompt transmission of the redemption order to the Fund. The
Company makes no charge for redemption transactions. Proceeds of redemptions
will be credited to the Servicing Agent's shareholder account with the Fund.

DISTRIBUTION PLAN

The Company's Board of Directors has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act on behalf of the Fund, and
shareholder approval has been obtained with respect to the Plan. Under the Plan
and pursuant to the Distribution Agreement, the Fund pays Stephens, as
compensation for distribution-related services, a monthly fee at the annual rate
of up to 0.55% of the average daily net assets of the Fund or the maximum amount
payable under applicable laws, regulations and rules, whichever is less. The
actual fee payable to Stephens is determined, within the applicable limit, from
time to time by mutual agreement between the Company and Stephens. Stephens may
enter into selling agreements with one or more Selling Agents under which such
agents may receive compensation for distribution-related services from Stephens,
including, but not limited to, commissions or other payments to such agents
based on the average daily net assets of Fund shares attributable to them.
Stephens may retain any portion of the total distribution fee payable under the
Distribution Agreement to compensate it for distribution-related services
provided by it or to reimburse it for other distribution-related expenses. Since
the fee payable to Stephens under the Distribution Agreement is not based upon
the actual expenditures of Stephens, the expenses of Stephens (which may include
overhead expenses) may be more or less than the fees received by it under the
Distribution Agreement. The Plan contemplates further that, to the extent any
fees payable pursuant to a Shareholder Servicing Agreement (discussed below) are
deemed to be for distribution-related services, rather than shareholder
services, such payments are approved and payable pursuant to the Plan. Stephens
has entered into a Selling Agreement with Wells Fargo Bank, pursuant to which
Wells Fargo Bank will receive periodic payments based on the average daily net
assets of Fund shares attributable to its customers.

CUSTODIAN, TRANSFER AND DIVIDEND

DISBURSING AGENT AND SERVICING AGENTS

Wells Fargo Bank has been retained to act as the custodian and transfer and
dividend disbursing agent for the Fund and the CIT Master Portfolio. Wells Fargo
Bank's principal place of business is 420 Montgomery Street, San Francisco,
California 94104, and its transfer and dividend disbursing agency activities are
managed at 525 Market Street, San Francisco, California 94105.

The Company has entered into a Shareholder Servicing Agreement on behalf of
the Fund with Wells Fargo Bank, and may enter into such Shareholder Servicing
Agreements with one or more other financial institutions which desire to act as
Servicing Agents. Pursuant to each such Shareholder Servicing Agreement, the
Servicing Agent, as agent for its customers, will, among other things:

11
<PAGE> 200

automatically invest cash balances maintained in customer accounts with the
Servicing Agent into the Fund, and redeem shares out of the Fund, in the amounts
specified pursuant to agency agreements between the Servicing Agent and its
customers; maintain a single shareholder account for the benefit of its
customers with the Fund; provide subaccounting services to monitor and account
for its customers' beneficial ownership of shares of the Fund held in the
Servicing Agent's shareholder account; answer customer inquiries regarding
account status and history, purchases and redemptions of shares of the Fund,
Fund yield and certain other matters pertaining to the Fund or the CIT Master
Portfolio; assist its customers in designating and changing account designations
and addresses; process Fund purchase and redemption transactions; forward and
receive funds in connection with purchases or redemptions of shares of the Fund;
provide periodic statements showing a customer's subaccount balance; furnish
(either separately or on an integrated basis with other reports sent to a
customer by the Servicing Agent) monthly statements and confirmations of
purchases and redemptions of Fund shares in the Servicing Agent's shareholder
account on behalf of the customer; forward to its customers proxy statements,
annual reports, updated prospectuses and other communications from the Fund or
the CIT Master Portfolio to shareholders of the Fund as required; receive,
tabulate and forward to the Company proxies executed by or on behalf of its
customers with respect to meetings of shareholders of the Fund; and provide such
other related services, and necessary personnel and facilities to provide all of
the shareholder services contemplated by the Shareholder Servicing Agreement, in
each case, as the Company or a customer of the Servicing Agent may reasonably
request. All purchases and redemptions are effected through Stephens as the
Fund's Distributor. For providing these services, each Servicing Agent is
entitled to receive a fee from the Fund, which may be paid periodically, of up
to 0.35%, on an annualized basis, of the average daily net assets of the Fund
represented by shares owned of record by the Servicing Agent on behalf of its
customers, or an amount which, when considered in conjunction with amounts
payable pursuant to the Fund's Distribution Agreement, equals the maximum amount
payable to the Servicing Agent under applicable laws, regulations or rules,
whichever is less.

A Servicing Agent also may impose certain conditions on its customers,
subject to the terms of this Prospectus, in addition to or different from those
imposed by the Fund, such as requiring a minimum initial investment or the
payment of additional fees for additional services offered to the customer. The
exercise of voting rights and the delivery to customers of shareholder
communications will be governed by the customers' agency agreements with the
Servicing Agent. The Servicing Agent has agreed to forward to its customers who
are shareholders of the Fund appropriate prior written disclosure of any fees
that it may charge them directly and to provide written notice at least 15 days
prior to imposition of any transaction fees.

TAXES

The Company intends to continue to qualify the Fund as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), as long as such qualification is in the best interest of
the Fund's shareholders. The Fund will be treated as a separate entity from the
other portfolios of the Company for tax purposes and thus the provisions of the
Code applicable to regulated investment companies generally will be applied to
the Fund separately, rather than to the Company as a whole. In addition, net
capital gains, if any, net investment income and

12
<PAGE> 201

operating expenses will be determined separately for the Fund. By complying with
the applicable provisions of the Code, the Fund will not be subject to federal
income taxes with respect to net investment income and net capital gains
distributed to its shareholders. The Fund intends to pay out substantially all
of its net investment income and net capital gains (if any) for each year.

Generally, dividends and capital gain distributions are taxable to
recipient shareholders when paid. However, such dividends and distributions of
capital gains declared payable as of a record date in October, November or
December of any calendar year are deemed to have been distributed by the Fund
and received by its shareholders on December 31 of that calendar year if the
dividend is actually paid in the following January. Such dividends will,
accordingly, be taxable to the recipient shareholders in the year in which the
record date falls.

The Fund seeks to qualify as a regulated investment company by investing
all of its assets in the CIT Master Portfolio. The CIT Master Portfolio will be
treated as a non-publicly traded partnership rather than as a regulated
investment company or a corporation under the Code and, as such, shall not be
subject to federal income tax. As a non-publicly traded partnership, any
interest, dividends, gains and losses of the CIT Master Portfolio shall be
deemed to have been "passed through" to the Fund (and other investors) in
proportion to the Fund's ownership interest in the CIT Master Portfolio. If the
CIT Master Portfolio were to accrue but not distribute any interest, dividends
or gains, the Fund would be deemed to have realized and recognized its
proportionate share of such income, regardless of whether or not such income has
been distributed by the Master Portfolio. However, the CIT Master Portfolio will
seek to minimize recognition by the Fund and other investors of interest,
dividends and gains without a corresponding distribution.

Dividends from net investment income (including net short-term capital
gains, if any) declared and paid by the Fund will be taxable as ordinary income
to the Fund's shareholders. Shareholders of record will receive information for
tax purposes following the end of each calendar year. No part of the
distributions to shareholders of the Fund is expected to qualify for the
dividends-received deduction allowed to corporate shareholders. The Company is
required to withhold, subject to certain exemptions, at a rate of 31% on
dividends, capital gain distributions, and redemption proceeds paid or credited
to individual shareholders of the Fund if a correct taxpayer identification
number, certified when required, is not on file with the Company or the Transfer
Agent.

The foregoing discussion is based on tax laws and regulations which were in
effect as of the date of this Prospectus and summarizes only some of the
important federal income tax considerations generally affecting the Fund and its
shareholders. It is not intended as a substitute for careful tax planning; you
should consult your tax advisor with respect to your particular tax situation as
well as the state and local tax status of investments in shares of the Fund.
Further federal income tax considerations are discussed in the SAI.

13
<PAGE> 202

ORGANIZATION AND CAPITAL STOCK

The Company was incorporated in Maryland on April 27, 1987. The authorized
capital stock of the Company consists of 20,000,000,000 shares having a par
value of $.001 per share. Currently, the Company offers the following series of
shares, each representing an interest in one of the following funds -- the Asset
Allocation, California Tax-Free Bond, California Tax-Free Money Market, Money
Market, Municipal Income, National Tax-Free Institutional Money Market, Overland
Sweep, Short-Term Government-Corporate Income, Short-Term Municipal Income,
Strategic Growth, U.S. Government Income, U.S. Treasury Money Market and
Variable Rate Government Funds. The Board of Directors may, in the future,
authorize the issuance of other series of capital stock. All shares of the
Company, when issued, will be fully paid and nonassessable.

The Trust was established on August 14, 1991, as a Delaware business trust.
The Trust is a "series fund", which is a mutual fund divided into separate
portfolios. The Trust currently offers eight portfolios, including the CIT
Master Portfolio. The Trust's Declaration of Trust permits the Board of Trustees
to issue beneficial interests in its separate series to investors based on their
proportionate investments in such series.

All shares of the Company have equal voting rights and will be voted in the
aggregate, and not by series or class, except where voting by series or class is
required by law or where the matter involved affects only one series or class.
The Company may dispense with the annual meeting of shareholders in any fiscal
year in which it is not required to elect Directors under the 1940 Act; however,
shareholders are entitled to call a meeting of shareholders for purposes of
voting on removal of a Director or Directors of the Company. In addition,
whenever the Fund is requested to vote on matters pertaining to the CIT Master
Portfolio, the Company will hold a meeting of the Fund's shareholders and will
cast its vote as instructed by Fund shareholders. The Directors of the Company
will vote shares for which they receive no voting instructions in the same
proportion as the shares for which they do receive voting instructions. A more
detailed statement of the voting rights of shareholders is contained in the SAI.

14
<PAGE> 203

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
OF THE FUND AND THE CIT MASTER PORTFOLIO
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201

INVESTMENT ADVISER TO THE

CIT MASTER PORTFOLIO; TRANSFER AND

DIVIDEND DISBURSING AGENT AND CUSTODIAN

OF THE FUND AND THE CIT MASTER PORTFOLIO

Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163

LEGAL COUNSEL

Morrison & Foerster LLP

2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111

NOT FDIC INSURED

FOR MORE INFORMATION ABOUT THE FUND,
SIMPLY CALL (800) 552-9612,
OR WRITE:

OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS SHAREHOLDER
SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163

80P 5/96

<PAGE> 204

Telephone: (800) 552-9612 LOGO

Stephens Inc. -- Sponsor Administrator and Distributor

Wells Fargo Bank -- Investment Adviser to the Master Portfolios, Transfer and

Dividend Disbursing Agent and Custodian to the Funds and Master Portfolios.

Overland Express Funds, Inc. (the "Company") is an open-end, series
investment company. This Prospectus contains information about two of the
Company's funds -- the SHORT-TERM MUNICIPAL INCOME FUND and the SHORT-TERM
GOVERNMENT-CORPORATE INCOME FUND (each, a "Fund," and together, the "Funds").

EACH FUND INVESTS ALL OF ITS ASSETS IN A SEPARATE PORTFOLIO (EACH, A
"MASTER PORTFOLIO") OF MASTER INVESTMENT TRUST (THE "TRUST"), AN OPEN-END,
SERIES INVESTMENT COMPANY, RATHER THAN IN A PORTFOLIO OF SECURITIES. EACH MASTER
PORTFOLIO HAS THE SAME INVESTMENT OBJECTIVE AS THE FUND BEARING THE
CORRESPONDING NAME. THEREFORE, EACH FUND'S INVESTMENT EXPERIENCE CORRESPONDS
DIRECTLY WITH THE RELEVANT MASTER PORTFOLIO'S INVESTMENT EXPERIENCE. SHARES OF
THE MASTER PORTFOLIOS MAY BE PURCHASED ONLY BY OTHER INVESTMENT COMPANIES OR
SIMILAR ACCREDITED INVESTORS.

The investment objective of the SHORT-TERM MUNICIPAL INCOME FUND is to
provide investors with a high level of income exempt from federal income taxes,
while managing principal volatility. The Fund seeks to achieve its investment
objective by investing all of its assets in the Short-Term Municipal Income
Master Portfolio of the Trust, which has the same investment objective as the
Fund.

THE INVESTMENT POLICIES OF EACH MASTER PORTFOLIO ARE SUMMARIZED ON THE NEXT
PAGE AND IN THE "INVESTMENT OBJECTIVES AND POLICIES" SECTION OF THE PROSPECTUS.

This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Funds. A Statement of Additional Information
("SAI") dated May 1, 1996, containing additional and more detailed information
about the Funds, has been filed with the Securities and Exchange Commission (the
"SEC") and is hereby incorporated by reference into this Prospectus. It is
available without charge and can be obtained by writing the Company at P.O. Box
63084, San Francisco, CA 94163 or by calling (800) 552-9612.

INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY

AND RETAIN IT FOR FUTURE REFERENCE.

------------------------

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. SUCH SHARES ARE NOT INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN
INVESTMENT IN A FUND INVOLVES CERTAIN
INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THESE AUTHORITIES PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

----------------------------------------

PROSPECTUS DATED MAY 1, 1996

<PAGE> 205

The SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO seeks to achieve its
investment objective by investing primarily in investment-grade municipal
securities.

The SHORT-TERM GOVERNMENT-CORPORATE INCOME MASTER PORTFOLIO seeks to
achieve its investment objective by investing primarily in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities (including
government-sponsored enterprises) and in investment-grade corporate obligations.

Each Master Portfolio's investments include fixed-, variable- and
floating-rate instruments. Except during temporary defensive periods, the
Short-Term Municipal Income and the Short-Term Government-Corporate Income
Master Portfolios each seek to maintain a portfolio of securities with an
average weighted maturity of 90 days to 2 years. Each Master Portfolio seeks to
manage principal volatility by diversifying its assets among permissible
investments based, in part, on maturity, duration or other characteristics that
affect such securities' sensitivity to changes in market interest rates.

WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER SERVICES
TO THE FUNDS AND MASTER PORTFOLIOS FOR WHICH IT IS COMPENSATED. STEPHENS
INC., ("STEPHENS") WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK,
IS THE SPONSOR AND DISTRIBUTOR FOR THE FUNDS.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................................................... ii
Summary of Expenses................................................... v
Financial Highlights.................................................. 1
Investment Objectives and Policies.................................... 3
Short-Term Municipal Income Master Portfolio........................ 3
Short-Term Government-Corporate Income Master Portfolio............. 4
Additional Information About Permitted Investment Activities.......... 4
Management of the Funds and the Master Portfolios..................... 10
Distribution Plans.................................................... 15
Determination of Net Asset Value...................................... 16
Performance Data...................................................... 16
Purchase of Shares.................................................... 17
Exchange Privileges................................................... 21
Redemption of Shares.................................................. 22
Dividends and Distributions........................................... 25
Taxes................................................................. 26
Custodian, Transfer and Dividend Disbursing Agent..................... 28
Organization and Capital Stock........................................ 28
</TABLE>

i
<PAGE> 206

PROSPECTUS SUMMARY

Q. WHAT ARE THE INVESTMENT OBJECTIVES AND PERMISSIBLE INVESTMENTS OF THE
FUNDS AND THE MASTER PORTFOLIOS?

A. The investment objective of the SHORT-TERM MUNICIPAL INCOME FUND is to
provide investors with a high level of income exempt from federal income
taxes, while managing principal volatility. The Fund seeks to achieve its
investment objective by investing all of its assets in the Short-Term
Municipal Income Master Portfolio of the Trust, which is a professionally
managed, open-end series investment company. The Short-Term Municipal
Income Master Portfolio has the same investment objective as the Fund. The
Short-Term Municipal Income Master Portfolio, a diversified portfolio,
seeks to achieve its investment objective by investing primarily in
investment-grade municipal securities. The Short-Term Municipal Income
Master Portfolio also may invest in certain U.S. Government obligations
and money market instruments.

The investment objective of the SHORT-TERM GOVERNMENT-CORPORATE INCOME
FUND is to provide investors with current income, while managing principal
volatility. The Fund seeks to achieve its investment objective by
investing all of its assets in the Short-Term Government-Corporate Income
Master Portfolio of the Trust, which has the same investment objective as
the Fund. The Short-Term Government-Corporate Income Master Portfolio, a
diversified portfolio, seeks to achieve its investment objective by
investing primarily in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (including
government-sponsored enterprises) and in investment-grade corporate
obligations. The securities that the Master Portfolio may purchase include
U.S. Treasury bonds, notes and bills; obligations of the U.S. Government,
its agencies or instrumentalities; investment-grade corporate bonds and
notes, asset-backed securities and money market instruments.

Q. WHO MANAGES MY INVESTMENTS?

A. Wells Fargo Bank, as the investment adviser to each Master Portfolio,
manages the investments of each Fund in the corresponding Master
Portfolio. The Company has not retained the services of a separate
investment adviser for the Funds because each Fund invests all of its
assets in the corresponding Master Portfolio. Wells Fargo Bank also
provides the Funds and the Master Portfolios with transfer agency,
dividend disbursing agency and custodial services. Stephens is the
sponsor, administrator and distributor for the Company and the Trust. See
"Management of the Funds and the Master Portfolios."

ii
<PAGE> 207

Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUNDS?

A. An investment in a Fund is not insured against loss of principal. The
market value of the debt securities held by each Master Portfolio is
subject to interest rate risk. Interest rate risk is the risk that
increases in market interest rates may adversely affect the value of the
debt securities in which each Master Portfolio invests, and hence the
value of your investment in a Fund. The values of such securities
generally change inversely to changes in market interest rates. The
portfolio investments of the Master Portfolios are also subject to credit
risk. Credit risk is the risk that the issuers of securities in which the
Master Portfolio invests may default in the payment of principal and/or
interest. Any such defaults may adversely affect the value of the
securities in which the Master Portfolio invests and, hence, the value of
your investment in the Fund. Given the relatively novel nature of the
master/feeder structure, accounting and operational difficulties could
arise. As with all mutual funds, there can be no assurance that the Funds
will achieve their investment objectives. For further information see
"Additional Information About Permitted Investment Activities."

Q. HOW MAY I PURCHASE SHARES?

A. You may purchase shares of each Fund on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is a maximum sales
load of 3.00% (3.09% of the net amount invested) for purchasing shares of
each Fund. If you make a combined investment in any of the Funds of
$1,000,000 or more you do not pay a sales load. See "Purchase of Shares"
and "Reduced Sales Loads." In most cases, the minimum initial purchase
amount for a Fund is $1,000. The minimum purchase amount is $100 for
shares purchased through the Systematic Purchase Plan and $250 for shares
purchased through a qualified retirement plan. The minimum subsequent
purchase amount is $100 or more. You may purchase shares of a Fund through
Stephens, Wells Fargo Bank as transfer agent (the "Transfer Agent"), or
any authorized broker/dealer or financial institution. Purchases of Fund
shares may be made by wire directly to the Transfer Agent. See "Purchase
of Shares."

Q. HOW WILL I RECEIVE DIVIDENDS?

A. Dividends on shares of each Fund are declared daily and paid monthly.
Monthly dividends are automatically reinvested in additional shares of the
Fund which paid such dividends, unless you elect to receive dividends by
check. Any capital gains are distributed annually and may be reinvested in
Fund shares or paid by check at your election. All reinvestments of
dividends and/or capital gain distributions in Fund shares are effected at
the then current net asset value free of any sales load. In addition to
the above options for receiving dividends and capital gain distributions,
you may elect to reinvest Fund dividends and/or capital gain distributions
in shares of another of the Company's funds with which you have an
established account. See "Dividends and Distributions."

iii
<PAGE> 208

Q. HOW MAY I REDEEM SHARES?

A. Shares may be redeemed on any day the Exchange is open upon request to
Stephens or the Transfer Agent directly or through any authorized
broker/dealer or financial institution. Shares may be redeemed by a
request in good form in writing or by telephone direction. Proceeds are
payable by check or, for shareholders who make prior arrangements, by
wire. Accounts maintaining less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. The Company
does not charge for redeeming your shares. However, the Company reserves
the right to impose charges for wiring your redemption proceeds. See
"Redemption of Shares."

Q. WHAT ARE DERIVATIVES AND DO THE FUNDS USE THEM?

Q. WHAT STEPS DO THE FUNDS TAKE TO CONTROL DERIVATIVES-RELATED RISKS?

A. Wells Fargo Bank, as investment adviser to each Fund, uses a variety of
internal risk management procedures to ensure that derivatives use is
consistent with each Fund's investment objective, does not expose the
Funds to undue risks and is closely monitored. These procedures include
providing periodic reports to the Board of Directors concerning the use of
derivatives. Derivatives use by each Fund also is subject to broadly
applicable investment policies. For example, the Funds may not invest more
than a specified percentage of their 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 SEC rules limiting the use of leverage.

iv
<PAGE> 209

SUMMARY OF EXPENSES

<TABLE>
<CAPTION>
SHORT-TERM SHORT-TERM
MUNICIPAL GOVERNMENT-
INCOME CORPORATE
FUND INCOME FUND
-------------- --------------
SHAREHOLDER TRANSACTION EXPENSES
- --------------------------------------------------------------

<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)......................... 3.00% 3.00%
Sales Charge Imposed on Reinvested Dividends.................. None None
Sales Charge Imposed on Redemptions........................... None None
Exchange Fees................................................. None None
</TABLE>

<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES(1)
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees (after waivers or reimbursements)(2).......... 0.00% 0.00%
12b-1 Fees.................................................... 0.25% 0.25%
Other Expenses
Administrative Fees (after waivers or reimbursements)(2).... 0.00% 0.00%
Miscellaneous Expenses (after waivers or
reimbursements)(2)....................................... 0.13% 0.05%
Total Other Expenses (after waivers or reimbursements)(2)..... 0.13% 0.05%
----- -----
Total Fund Operating Expenses (after waivers or
reimbursements)(2).......................................... 0.38% 0.30%
</TABLE>

EXAMPLE OF EXPENSES

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment in a
Fund, assuming (1) a 5% annual return and (2) redemption at
the end of each time period indicated:
Short-Term Municipal Income Fund.............................. $34 $42 $51 $77
Short-Term Government-Corporate Income Fund................... $33 $39 $46 $67
</TABLE>

- ---------------

(1) Annual Fund Operating Expenses summarize expenses charged at the Fund and
Master Portfolio levels. Other mutual funds may invest in a Master
Portfolio; such other funds' expenses and, accordingly, investment returns
may differ from those of the corresponding Fund.

(2) The percentages shown above under "Management Fees," "Administrative Fees,"
"Miscellaneous Expenses," "Total Other Expenses" and "Total Fund Operating
Expenses" are based on amounts incurred during the most recent fiscal year
restated to reflect voluntary fee waivers and expense reimbursements. The
fee waivers and expense reimbursements are expected to continue to reduce
expenses during the current fiscal year. Absent waivers and reimbursements,
the percentages shown above under "Management Fees," "Administrative Fees,"
"Miscellaneous Expenses," "Total Other Expenses" and "Total Fund Operating
Expenses" would have been 0.50%, 0.15%, 1.07%, 1.22% and 1.97%,
respectively, for the Short-Term Municipal Income Fund and 0.50%, 0.15%,
5.89%, 6.04% and 6.79%, respectively, for the Short-Term
Government-Corporate Income Fund.

Stephens and Wells Fargo Bank each may elect, in its sole discretion, to
waive or reimburse all or a portion of its respective fees charged to, or
expenses paid by a Fund. Any waivers or reimbursements would reduce a Fund's
total expenses. Stephens and Wells Fargo Bank each has agreed to waive its
fees for each Fund and the corresponding Master Portfolio, through at least
the current

v
<PAGE> 210

fiscal year, to the extent that a Fund's Total Fund Operating Expenses would
exceed 0.50% of average daily net assets. There can be no assurance that
waivers or reimbursements will continue. Long-term shareholders of a Fund
could pay more in distribution-related charges than the economic equivalent
of the maximum front-end sales charges applicable to mutual funds sold by
members of the National Association of Securities Dealers, Inc. ("NASD").

------------------------

The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that an investor in a Fund will bear directly or
indirectly. There are no redemption fees charged by the Funds. As noted above,
these fee and expense amounts summarize the fees and expenses of both a Fund and
its corresponding Master Portfolio.

THE EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment over the periods shown, based on
the expenses in the table on the previous page and an assumed annual rate of
return of 5%. This rate of return should not be considered an indication of the
actual or expected performance of the fund. In addition, the Example should not
be considered a representation of past or future expenses; actual expenses and
returns may be greater or lesser than those shown.

With regard to the combined fees and expenses of each Fund and the
corresponding Master Portfolio, the Board of Directors of the Company has
considered whether various costs and benefits of investing all of a Fund's
assets in the corresponding Master Portfolio rather than directly in portfolio
securities would be more or less than if the Fund invested in portfolio
securities directly. The Board of Directors has determined that the aggregate
fees assessed by each Fund and its corresponding Master Portfolio should be less
than those expenses that would be incurred had the Fund invested directly in the
securities held by the Master Portfolio. See "Management of the Funds and the
Master Portfolios," "Custodian, Transfer and Dividend Disbursing Agent,"
"Distribution Plans" and "Purchase of Shares" for more complete descriptions of
the various costs and expenses applicable to investors in each Fund. In
addition, if a Fund were to no longer invest in the corresponding Master
Portfolio, these expenses may change.

vi
<PAGE> 211

FINANCIAL HIGHLIGHTS

The following information has been derived from the Financial Highlights
included in the Funds' 1995 annual financial statements. The financial
statements are incorporated by reference into the SAI for each Fund and have
been audited by KPMG Peat Marwick LLP, independent auditors, whose report dated
February 14, 1996 also is incorporated by reference in the SAI. This information
should be read in conjunction with the Funds' 1995 annual financial statements
and notes thereto. The SAI has been incorporated by reference into the
Prospectus.

SHORT-TERM MUNICIPAL INCOME FUND
FOR A FUND SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1995 1994*
------------ ------------
<S> <C> <C>
Net Asset Value, Beginning of Period............................... $ 4.92 $ 5.00
-------- --------
Income from investment operations:
Net investment income............................................ 0.22 0.09
Net realized and unrealized gain (loss) on investments........... 0.07 (0.08)
-------- --------
Total from investment operations................................... 0.29 0.01
Less distributions:
Dividends from net investment income............................. (0.22) (0.09)
-------- --------
Distributions from net realized gain............................. 0.00 0.00
Tax return of capital............................................ 0.00 0.00
-------- --------
Total from distributions........................................... (0.22) (0.09)
-------- --------
Net Asset Value, End of Period..................................... $ 4.99 $ 4.92
======== ========
Total Return (not annualized)(3)................................... 6.10% 0.13%
Ratios/Supplemental Data(4):
Net assets, end of period (000).................................. $ 16,486 $ 11,778
Number of shares outstanding, end of period (000)................ 3,302 2,392
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)....................... 0.38% 0.27%
Ratio of net investment income to average net assets(2).......... 4.39% 3.67%
Portfolio Turnover................................................. 46% 8%
</TABLE>

- ---------------

<TABLE>
<S> <C> <C>
(1) Ratio of expenses to average net assets prior to waived fees
and reimbursed expenses....................................... 1.97% 1.98%
(2) Ratio of net investment income to average net assets prior to
waived fees and reimbursed expenses........................... 2.80% 1.96%
</TABLE>

(3) Total returns do not include any sales charges.

(4) These ratios include income and expenses charged to the Short-Term Municipal
Income Master Portfolio.

* The Fund commenced operations on June 3, 1994.

1
<PAGE> 212

SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND
FOR A FUND SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1995 1994*
------------ ------------
<S> <C> <C>
Net Asset Value, Beginning of Period................................ $ 4.93 $ 5.00
Income from investment operations:
Net investment income............................................. 0.30 0.08
Net realized and unrealized gain (loss) on investments............ 0.09 (0.07)
-------- --------
Total from investment operations.................................... 0.39 0.01
Less distributions:
Dividends from net investment income.............................. (0.30) (0.08)
Distributions from net realized gain.............................. 0.00 0.00
Tax return of capital............................................. 0.00 0.00
-------- --------
Total from distributions............................................ (0.30) (0.08)
-------- --------
Net Asset Value, End of Period...................................... $ 5.02 $ 4.93
======== ========
Total Return (not annualized)(3).................................... 8.05% 0.28%
Ratios/Supplemental Data(4):
Net assets, end of period (000)................................... $ 5,954 $ 96
Number of shares outstanding, end of period (000)................. 1,185 20
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)........................ 0.30% 0.30%
Ratio of net investment income to average net assets(2)........... 6.01% 5.77%
Portfolio Turnover.................................................. 227% 0%
(1) Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses............................................. 6.79% 67.89%
(2) Ratio of net investment income (loss) to average net assets
prior to waived fees and reimbursed expenses.................... (0.48)% (61.82)%
</TABLE>

- ---------------

(3) Total returns do not include any sales charges.

(4) These ratios include income and expenses charged to the Master Portfolio.

* The Fund commenced operations on September 19, 1994.

2
<PAGE> 213

INVESTMENT OBJECTIVES AND POLICIES

Set forth below is a description of the investment objective and related
policies of each Fund and its corresponding Master Portfolio. As with all mutual
funds, there can be no assurance that a Fund or its corresponding Master
Portfolio will achieve its investment objective.

Each Fund seeks to achieve its investment objective by investing all of its
assets in the corresponding Master Portfolio, which has the same investment
objective as the Fund.

Since the investment characteristics of each Fund correspond to those of
the respective Master Portfolio, the following is a discussion of the various
investments of and techniques employed by each Master Portfolio.

SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO

INVESTMENT OBJECTIVE -- The investment objective of the Short-Term
Municipal Income Master Portfolio is to provide investors with a high level of
income exempt from federal income taxes, while managing principal volatility.
Wells Fargo Bank, as investment adviser to the Short-Term Municipal Income
Master Portfolio, pursues the objective of the Master Portfolio by investing
(under normal market conditions) substantially all of the assets of the Master
Portfolio in the following types of municipal obligations that pay interest
which is exempt from federal income tax: bonds, notes and commercial paper
issued by or on behalf of states, territories, and possessions of the United
States (including the District of Columbia) and their political subdivisions,
agencies, instrumentalities (including government-sponsored enterprises) and
authorities, the interest on which, in the opinion of counsel to the issuer or
bond counsel, is exempt from federal income tax. These municipal obligations and
the taxable investments described below may bear interest at rates that are not
fixed ("floating- and variable-rate instruments"). The Master Portfolio seeks to
manage principal volatility by diversifying its assets among permissible
investments based, in part, on their duration, maturity or other characteristics
that affect their sensitivity to changes in market interest rates. As with all
mutual funds, there can be no assurance that the Master Portfolio, which is a
diversified portfolio, will achieve its investment objective.

As a fundamental policy, at least 80% of the net assets of the Master
Portfolio are invested (under normal market conditions) in municipal obligations
that pay interest that is exempt from federal income taxes. However, as a matter
of general operating policy, the Master Portfolio seeks to have substantially
all of its assets invested in such municipal obligations. The Master Portfolio's
investment adviser may rely either on an opinion of counsel to the issuer of the
municipal obligations or bond counsel regarding the tax treatment of these
obligations. In addition, the Master Portfolio may invest 25% or more of its
assets in municipal obligations that are related in such a way that an economic,
business or political development or change affecting one such obligation could
also affect the other obligations. For example, the Master Portfolio may own
different municipal obligations which pay interest based on the revenues of
similar types of projects. The Master Portfolio may also invest in U.S.
Government obligations and money market instruments.

3
<PAGE> 214

SHORT-TERM GOVERNMENT-CORPORATE INCOME MASTER PORTFOLIO

INVESTMENT OBJECTIVE -- The investment objective of the Short-Term
Government-Corporate Income Master Portfolio is to provide investors with
current income, while managing principal volatility. The Master Portfolio seeks
to achieve its objective by investing primarily in obligations issued by the
U.S. Government, its agencies or instrumentalities (including
government-sponsored enterprises) and investment-grade corporate obligations.
The securities that the Master Portfolio may purchase include U.S. Treasury
bonds, notes and bills; obligations of the U.S. Government, its agencies or
instrumentalities; investment-grade corporate bonds and notes, asset-backed
securities and money market instruments. The Short-Term Government-Corporate
Income Master Portfolio seeks to manage principal volatility by diversifying
assets among permissible investments based, in part, on their maturity, duration
or other characteristics that affect the sensitivity of such investments to
changes in market interest rates. There can be no assurance that the Master
Portfolio, which is a diversified portfolio, will achieve its investment
objective.

Under normal market conditions, the Master Portfolio will invest
substantially all of its assets in U.S. Government obligations and corporate
securities, and at least 65% of its assets in income-producing securities. The
Master Portfolio is a flexible portfolio, in that there is no minimum level of
assets that will be invested in either category of investments. The investment
adviser intends, as a general matter, to keep at least 20% of the Master
Portfolio's assets invested in U.S. Government obligations and at least 20% of
its assets invested in corporate securities. The allocation of assets between
these investment categories will vary, depending primarily on their relative
yields. Until the Master Portfolio achieves a certain asset size (approximately
$10 million), the investment adviser intends to invest substantially all of the
Master Portfolio's assets in U.S. Treasury bonds, notes and bills, and
repurchase agreements.

ADDITIONAL INFORMATION ABOUT PERMITTED INVESTMENT ACTIVITIES

U.S. GOVERNMENT OBLIGATIONS -- Certain of the debt instruments purchased by
the Master Portfolios may be U.S. Government obligations. U.S. Government
obligations include securities issued or guaranteed as to principal and interest
by the U.S. Government and supported by the full faith and credit of the U.S.
Treasury. U.S. Treasury obligations differ mainly in the length of their
maturity. Treasury bills, the most frequently issued marketable government
securities, have a maturity of up to one year and are issued on a discount
basis. U.S. Government obligations also include securities issued or guaranteed
by federal agencies or instrumentalities, including government-sponsored
enterprises. Some obligations of agencies or instrumentalities of the U.S.
Government are supported by the full faith and credit of the United States or
U.S. Treasury guarantees; others, by the right of the issuer or guarantor to
borrow from the U.S. Treasury; still others, by the discretionary authority of
the U.S. Government to purchase certain obligations of the agency or
instrumentality; and others, only by the credit of the agency or instrumentality
issuing the obligation. In the case of obligations not backed by the full faith
and credit of the United States, the investor must look principally to the
agency or instrumentality, which may be privately owned, issuing or guaranteeing
the obligation for ultimate repayment. 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

4
<PAGE> 215

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.

BONDS -- Certain of the debt instruments purchased by the Master Portfolios
may be bonds. A bond is an interest-bearing security issued by a company or
governmental unit. The issuer of a bond has a contractual obligation to pay
interest at a stated rate on specific dates and to repay principal (the bond's
face value) periodically or on a specified maturity date. An issuer may have the
right to redeem or "call" a bond before maturity, in which case the investor may
have to reinvest the proceeds at lower market rates.

Most bonds bear interest income at a "coupon" rate that is fixed for the
life of the bond. The value of a fixed rate bond usually rises when market
interest rates fall, and falls when market interest rates rise. Accordingly, a
fixed rate bond's yield (income as a percent of the bond's current value) may
differ from its coupon rate as its value rises or falls.

Other types of bonds bear income at an interest rate that is adjusted
periodically. Because of their adjustable interest rates, the value of
"floating-rate" or "variable-rate" bonds fluctuates much less in response to
market interest rate movements than the value of fixed rate bonds. Also, the
Master Portfolios may treat some of these bonds as having a shorter maturity for
purposes of calculating the weighted average maturity of their investment
portfolios.

Bonds may be senior or subordinated obligations. Senior obligations
generally have the first claim on a corporation's earnings and assets and, in
the event of liquidation, are paid before subordinated debt. Bonds may be
unsecured (backed only by the issuer's general creditworthiness) or secured
(also backed by specified collateral).

ASSET-BACKED SECURITIES -- The Short-Term Government-Corporate Income
Master Portfolio may invest in various types of asset-backed securities.
Asset-backed securities are typically backed by an underlying pool of assets
(such as credit card or automobile trade receivables or corporate loans or
bonds) which provides the interest and principal payments to investors. Credit
quality depends primarily on the quality of the underlying assets and the level
of credit support, if any, provided by the issuer. The underlying assets may be
subject to prepayment, which can shorten the life of asset-backed securities and
may lower their return. Asset-backed securities are subject to interest rate
risk, which means that this value typically declines when interest rates
increase. The value of asset-backed securities may also change because of actual
or perceived changes in the creditworthiness of the originator, servicing agent,
or of the financial institution providing any credit support.

FLOATING- AND VARIABLE-RATE INSTRUMENTS -- Certain of the debt instruments
that the Master Portfolios may purchase bear interest at rates that are not
fixed, but vary with changes in specified market rates or indices or at
specified intervals. Certain of these instruments may carry a demand feature
that permits the holder to tender them back to the issuer at par value prior to
maturity. The Master Portfolios may purchase certificates of participation in
pools of floating- and variable-rate instruments from banks or other financial
institutions. Wells Fargo Bank, as investment adviser, may rely upon either an
opinion of counsel to the issuer or bond counsel with respect to the tax-exempt

5
<PAGE> 216

status of these certificates. Wells Fargo Bank, as the Master Portfolios'
investment adviser, monitors on an ongoing basis the ability of an issuer of a
demand instrument to pay principal and interest on demand. Events affecting the
ability of the issuer of a demand instrument to make payment when due may occur
between the date the Master Portfolio elects to demand payment and the date
payment is due. Such events may affect the ability of the issuer of the
instrument to make payment when due, and unless such demand instrument permits
same-day settlement, such events may affect the Fund's ability to obtain payment
at par. Demand instruments whose demand feature is not exercisable within seven
days may be treated as liquid, provided that an active secondary market exists.

The Short-Term Municipal Income Master Portfolio may invest in
variable-rate instruments with a maximum final maturity of up to 30 years,
provided the period remaining until the next readjustment of the instrument's
interest rate, or the period remaining until the principal amount can be
recovered through demand, is less than 5 years.

REPURCHASE AGREEMENTS -- Each Master Portfolio may enter into repurchase
agreements wherein the seller of a security to such Master Portfolio agrees to
repurchase that security from the Master Portfolio at a mutually agreed-upon
time and price. The period of maturity is usually quite short, often overnight
or a few days, although it may extend over a number of months. A Master
Portfolio may enter into repurchase agreements only with respect to U.S.
Government obligations and other securities that are permissible investments for
the Master Portfolio. All repurchase agreements will be fully collateralized at
102% based on values that are marked to market daily. The maturities of the
underlying securities in a repurchase agreement transaction may be greater than
twelve months although the maximum term of a repurchase agreement will always be
less than twelve months. If the seller defaults and the value of the underlying
securities has declined, a Master Portfolio may incur a loss. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the security,
a Master Portfolio's disposition of the security may be delayed or limited.

A Master Portfolio 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 the Master Portfolio's total net assets will be invested in repurchase
agreements with maturities of more than seven days and other securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale. A Master Portfolio will only enter into
repurchase agreements with primary broker/dealers and commercial banks that meet
guidelines established by the Board of Trustees and are not affiliated with
Wells Fargo Bank. The Master Portfolios may enter into pooled repurchase
agreement transactions with other funds advised by Wells Fargo Bank.

MUNICIPAL SECURITIES -- This section describes certain instruments in which
the Short-Term Municipal Income Master Portfolio may invest. Municipal
securities are issued by states and municipalities to raise money for various
public purposes, including general purpose financing for state and local
governments as well as financing for specific projects or public facilities.
Municipal securities may be backed by the full taxing power of a state or
municipality, by the revenues from a specific project or the credit of a private
organization. In addition, certain municipal securities may be supported by
letters of credit furnished by domestic or foreign banks. Yields on municipal
securities generally depend on a variety of factors, including: the general
conditions of the municipal note and municipal bond markets; the size and
maturity of the particular offering; the maturity of the

6
<PAGE> 217

obligations; and the rating of the issue or issuer. Furthermore, any adverse
economic conditions or developments affecting a particular state or municipality
could impact the municipal securities issued by such entities. The two principal
classifications of municipal securities are "general obligation" securities and
"revenue" securities. General obligation securities are secured by the issuer's
pledge of its full faith, credit, and taxing power for the payment of principal
and interest. Revenue securities are payable only from the revenues derived from
a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise tax or other specific revenue source such as the
user of the facility being financed. "Private activity bonds," the interest on
which is generally includable for federal alternative minimum tax purposes, held
by the Short-Term Municipal Income Master Portfolio are in most cases revenue
securities and are not payable from the unrestricted revenues of the issuer.
Consequently, the credit quality of private activity bonds is usually directly
related to the credit standing of the corporate user of the facility involved.

The highest rating assigned by Standard & Poor's Ratings Group ("S&P") is
"AAA" for state and municipal bonds, "SP-1" for state and municipal notes, and
"A-1" for state and municipal paper. The highest rating assigned by Moody's
Investors Service, Inc. ("Moody's") is "Aaa," "MIG 1," and "Prime-1" for state
and municipal bonds, notes and commercial paper, respectively. These instruments
are judged to be the best quality and present minimal risks and a strong
capacity for repayment of principal and interest. If a municipal security ceases
to be rated or is downgraded below an investment grade rating after purchase by
the Master Portfolio, the Master Portfolio may retain or dispose of such
security. In any event, the Short-Term Municipal Income Master Portfolio does
not intend to purchase or retain any municipal security that is rated below the
top four rating categories by a nationally recognized statistical rating
organization ("NRSRO"), or, if unrated, is considered by the investment adviser
to be of comparable quality. Securities rated in the fourth highest category are
considered to have speculative characteristics. A description of ratings is
contained in the Appendix to the SAI.

Municipal securities may include "moral obligation" bonds, which are
normally issued by special purpose public authorities. If the issuer of moral
obligation bonds is unable to meet its debt service obligations from current
revenues, it may draw on a reserve fund, the restoration of which is a moral
commitment but not a legal obligation of the state or municipality which created
the issuer. An issuer's obligation to pay principal or interest on an instrument
may be backed by an unconditional bank letter or line of credit, guarantee or
commitment to lend.

Municipal securities may include variable- or floating-rate instruments
issued by industrial development authorities and other governmental entities.
While there may not be an active secondary market with respect to a particular
instrument purchased by the Short-Term Municipal Income Master Portfolio, the
Master Portfolio may demand payment of the principal and accrued interest on the
instrument or may resell it to a third party as specified in the instruments.
The absence of an active secondary market, however, could make it difficult for
the Master Portfolio to dispose of the instrument if the issuer defaulted on its
payment obligation or during periods the Master Portfolio is not entitled to
exercise its demand rights, and the Master Portfolio could, for these or other
reasons, suffer a loss.

Municipal securities also may include participations in privately arranged
loans to municipal borrowers, some of which may be referred to as "municipal
leases," and units of participation in

7
<PAGE> 218

trusts holding pools of tax-exempt leases. Such loans in most cases are not
backed by the taxing authority of the issuers and may have limited marketability
or may be marketable only by virtue of a provision requiring repayment following
demand by the lender. Any such loans made by the Short-Term Municipal Income
Master Portfolio may have a demand provision permitting the Master Portfolio to
require payment within seven days. Participations in such loans, however, may
not have such a demand provision and may not be otherwise marketable. To the
extent these securities are illiquid, they will be subject to the Master
Portfolio's limitation on investments in illiquid securities. As it deems
appropriate, Wells Fargo Bank will establish procedures to monitor the credit
standing of each such municipal borrower, including its ability to meet
contractual payment obligations. The Short-Term Municipal Income Master
Portfolio will not purchase any unrated municipal leases unless the investment
adviser, following procedures approved by the Trust's Board of Trustees,
determines that such leases are of comparable quality to municipal securities
that are rated in the top four rating categories by an NRSRO.

Municipal participation interests, which give the purchaser an undivided
interest in one or more underlying municipal securities, may be purchased from
financial institutions. To the extent that municipal participation interests are
considered to be "illiquid securities" such instruments are subject to the
Master Portfolio's limitation on the purchase of illiquid securities.

In addition, the Short-Term Municipal Income Master Portfolio may acquire
"stand-by commitments" from banks or broker/dealers with respect to municipal
securities held in its portfolios. Under a stand-by commitment, a dealer agrees
to purchase at the Master Portfolio's option specified municipal securities at a
specified price. The Master Portfolio acquires stand-by commitments solely to
facilitate portfolio liquidity and without intending to exercise its rights
thereunder for trading purposes.

Certain of the securities in which the Short-Term Municipal Income Master
Portfolio invests will be purchased on a when-issued basis, in which case
delivery and payment normally take place within 120 days after the date of the
commitment to purchase. The Master Portfolio will make commitments to purchase
securities on a when-issued basis with the intention of actually acquiring the
securities, but may sell them before the settlement date if it is deemed
advisable. When-issued securities are subject to market fluctuation, and no
income accrues to the purchaser during the period prior to issuance. The
purchase price and the interest rate that will be received on debt securities
are fixed at the time the purchaser enters into the commitment. Purchases on a
when-issued basis are subject to the risk that the market price at the time of
delivery may be lower than the agreed-upon purchase price, in which case there
could be an unrealized loss at the time of delivery.

The Short-Term Municipal Income Master Portfolio will establish a
segregated account in which it will maintain cash, U.S. Government obligations
or other high-grade debt securities in an amount at least equal in value to its
commitments to purchase when-issued securities. If the value of these assets
declines, the Master Portfolio 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.

TEMPORARY INVESTMENTS OF THE SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO

The Short-Term Municipal Income Master Portfolio may elect to invest
temporarily up to 20% of its net assets in: U.S. Government obligations;
negotiable certificates of deposit, bankers' acceptance

8
<PAGE> 219

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;
commercial paper rated at the date of purchase "Prime-1" by Moody's or "A-1+" or
"A-1" by S&P; high quality taxable municipal obligations; shares of taxable or
tax-free money market mutual funds; and repurchase agreements. The Short-Term
Municipal Income Master Portfolio may invest temporarily in shares of other
open-end, management investment companies, subject to the limitations of
Sections 12(d)(1) of the Investment Company Act of 1940 (the "1940 Act").
Purchases of shares of other investment companies will be limited to temporary
investments in shares of unaffiliated investment companies, and the Master
Portfolio's investment adviser will waive its fee for that portion of the Master
Portfolio's assets so invested. Such temporary investments would most likely be
made for cash management purposes or when there is an unexpected or abnormal
level of investor purchases or redemptions of shares of the Master Portfolio or
because of unusual market conditions. The income from these temporary
investments and investment activities may be subject to federal income taxes.
However, as stated above, Wells Fargo Bank seeks to invest substantially all of
the Short-Term Municipal Income Master Portfolio's assets in securities exempt
from such taxes. A more complete description of tax-free municipal obligations,
taxable money market instruments, and other investment activities is contained
in the "Additional Information About Permitted Investment Activities" section.

PORTFOLIO TURNOVER

Portfolio turnover generally involves some expenses to the Master
Portfolio, including dealer mark-ups and other transaction costs on the sale of
securities and the reinvestment in other securities. A high portfolio turnover
rate should not result in the Master Portfolio paying substantially more
brokerage commissions, since most transactions in municipal securities are
effected on a principal basis. Portfolio turnover can also generate short-term
capital gain tax consequences.

OTHER INVESTMENT POLICIES

Each Fund's investment objective and its investment policy of investing all
of its assets in the corresponding Master Portfolio, as set forth above, are
fundamental. Accordingly, they may not be changed without approval by the vote
of the holders of a majority of a Fund's outstanding voting securities, as
described under "Capital Stock" in the SAI. However, if the Company's Board of
Directors determines that a Fund's investment objective can best be achieved by
a substantive change in a non-fundamental investment policy or strategy, the
Company may make such change without shareholder approval and will make
appropriate disclosure of any such material change in the Fund's prospectus.

The investment objective of a Master Portfolio may not be changed without
approval of the investors in the Master Portfolio. The classification of each
Fund and each Master Portfolio as "diversified" may not be changed, in the case
of a Fund, without the approval of the Fund's shareholders, or, in the case of a
Master Portfolio, without the approval of the Fund and any other investors in
such Master Portfolio.

9
<PAGE> 220

In addition, as a matter of fundamental policy, each Fund and Master
Portfolio may borrow from banks up to 10% of the current value of its net assets
for temporary purposes in order to meet redemptions. These borrowings may be
secured by the pledge of up to 10% of the current value of such Fund's or Master
Portfolio's net assets (but investments may not be purchased while any such
outstanding borrowing exceeds 5% of the respective Fund's or Master Portfolio's
net assets). As a matter of fundamental policy, each Master Portfolio and its
corresponding Fund may not invest more than 25% of its assets (i.e.,
concentrate) in any particular industry, excluding U.S. Government obligations.
As a matter of non-fundamental policy, each Master Portfolio (and the
corresponding Fund) may invest up to 15% of the current value of its net assets
in securities that are illiquid by virtue of the absence of a readily available
market or legal or contractual restrictions on resale and fixed time deposits
that are subject to withdrawal penalties and that have maturities of more than
seven days, provided that this restriction does not affect a Fund's ability to
invest a portion or all of its assets in its corresponding Master Portfolio.
Disposing of illiquid or restricted securities may involve additional costs and
require additional time.

Except during temporary defensive periods, each Master Portfolio seeks to
maintain a portfolio of securities with an average weighted maturity of between
90 days and 2 years. The maximum final maturity of the Short-Term Municipal
Income Master Portfolio's investments will not exceed 5 years, excluding certain
variable rate instruments described above. The Short-Term Government-Corporate
Income Master Portfolio may invest in obligations of any maturity. The
Short-Term Government Corporate-Income Master Portfolio will not invest in the
shares of other open-end, management investment companies.

MANAGEMENT OF THE FUNDS AND THE MASTER PORTFOLIOS

The Company has retained the services of Stephens as administrator and
distributor for the Funds, but has not retained the services of an investment
adviser for the Funds since the Company seeks to achieve the investment
objective of each Fund by investing all of such Fund's assets in the
corresponding Master Portfolio of the Trust. The Company's Board of Directors
supervises the actions of the Funds' administrator and distributor, as set forth
below, and decides upon matters of general policy. As noted above, a Fund may
withdraw its investment in its corresponding Master Portfolio only if the Board
of Directors of the Company determines that it is in the best interests of the
Fund and its shareholders to do so. Upon any such withdrawal, the Board of
Directors of the Company would consider what action might be taken, including
the investment of all the assets of a Fund in another pooled investment entity
having the same investment objective as the Fund or the hiring of an investment
adviser to manage the Fund's assets in accordance with the investment policies
described above with respect to the corresponding Master Portfolio.

Each Master Portfolio has retained the services of Wells Fargo Bank as
investment adviser and Stephens as administrator and distributor. The Board of
Trustees of the Trust is responsible for the general management of each Master
Portfolio and supervising the actions of Wells Fargo Bank and Stephens in these
capacities. Additional information regarding the Officers and Directors of the
Company and the Officers and Trustees of the Trust is included in the Funds' SAI
under "Management."

10
<PAGE> 221

MASTER/FEEDER STRUCTURE

Each Fund is a feeder fund in a master/feeder structure, which means that
each Fund invests all of its assets in a Master Portfolio with the same
investment objective as the Fund. The Trust is organized as a trust under the
Laws of the State of Delaware. See "Investment Objectives and Policies." In
addition to selling their shares to the Funds, the Master Portfolios may sell
their shares to other mutual funds or qualified investors. Other mutual funds
and other qualified investors may have different expenses and, accordingly, may
experience different investment returns and yields compared with the Fund.
Information regarding additional options, if any, for investments in shares of
each Master Portfolio is available from Stephens and may be obtained by calling
(800)643-9691.

The Company's Board of Directors believes that if other investors invest
their assets in each Master Portfolio, certain economic efficiencies may be
realized with respect to such Master Portfolio. For example, fixed expenses that
otherwise would have been borne solely by a Fund would be spread across a
potentially larger asset base provided by more than one fund investing in a
Master Portfolio. The Funds and any other entities investing in the Master
Portfolios are each liable for all obligations of such Master Portfolio.
However, the risk of a Fund incurring financial loss on account of such
liability is limited to circumstances in which both inadequate insurance exists
and the Trust itself is unable to meet its obligations. Accordingly, the
Company's Board of Directors believes that neither the Funds nor their
shareholders will be adversely affected by reason of investing each Fund's
assets in the corresponding Master Portfolio. However, if a mutual fund or other
investor withdraws its investment from a Master Portfolio, the economic
efficiencies (e.g., spreading fixed expenses across a larger asset base) that
the Company's Board of Directors believes may be available through investment in
the Master Portfolio may not be fully achieved. In addition, given the
relatively novel nature of the master/feeder structure, accounting and
operational difficulties, although unlikely, could occur. See "Management of the
Funds and the Master Portfolios" for additional description of the Funds' and
Master Portfolios' expenses and management.

Each Fund may withdraw its investments in the Master Portfolio only if the
Company's Board of Directors determines that such action is in the best
interests of such Fund and its shareholders. Upon such withdrawal, the Board
would consider alternative investments, including investing all of the Fund's
assets in another investment company with the same investment objective as the
Fund or hiring an investment adviser to manage the Fund's assets in accordance
with the investment policies described in this section with respect to the
Master Portfolio.

The investment objective and other fundamental policies of a Fund or its
corresponding Master Portfolio cannot be changed without approval by the holders
of a majority, as defined in the 1940 Act, of the Fund's or Master Portfolio's,
as applicable, outstanding voting securities. Whenever a Fund, as a Master
Portfolio interestholder, is requested to vote on matters pertaining to any
fundamental policy of such Master Portfolio, the Company will hold a meeting of
the Fund's shareholders to consider such matters, and the Fund's votes will be
cast in proportion to the votes received from Fund shareholders. Each Fund will
vote those Fund shares for which it receives no voting instructions in the same
proportion as the votes received from Fund shareholders.

See "Investment Objective and Policies" for additional information
regarding the Funds' and the Master Portfolios' investment objectives and
policies. Additional information regarding the

11
<PAGE> 222

officers and directors/trustees of the Company and the Trust is located in the
Funds' SAI under "Management."

Certain policies of each Master Portfolio which are non-fundamental may be
changed by vote of a majority of the Trust's Trustees without shareholder
approval. If a Master Portfolio's investment objective or fundamental or
non-fundamental policies are changed, the corresponding Fund may elect to change
its objective or policies to correspond to those of the Master Portfolio. The
Fund may also elect to redeem its shares of the Master Portfolio and either seek
a new investment company with a matching objective in which to invest or retain
its own investment adviser to manage the Fund's portfolio in accordance with its
objective. In the latter case, a Fund's inability to find a substitute
investment company in which to invest or equivalent management services could
adversely affect shareholders' investments in such Fund. A Fund will provide
shareholders with 30 days' written notice prior to the implementation of any
change in the investment objective of the Fund or the corresponding Master
Portfolio, to the extent possible.

INVESTMENT ADVISER

Pursuant to separate Advisory Contracts, each Master Portfolio is advised
by Wells Fargo Bank, 420 Montgomery Street, San Francisco, California 94104, a
wholly owned subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the
largest banks in the United States, was founded in 1852 and is the oldest bank
in the western United States. As of April 1, 1996, Wells Fargo Bank and its
affiliates provided investment advisory services for approximately $56 billion
of assets of individuals, trusts, estates and institutions. Wells Fargo Bank is
the investment adviser to other separately managed portfolios of the Company and
the Trust and serves as investment adviser or sub-adviser to four other
registered open-end management investment companies that consist of several
separately managed investment portfolios.

Under the Advisory Contracts with the Master Portfolios, Wells Fargo Bank
has agreed to furnish to each Master Portfolio investment guidance and policy
direction in connection with the daily portfolio management of the Master
Portfolios. Pursuant to the Advisory Contracts, Wells Fargo Bank has also agreed
to furnish to the Board of Trustees of the Trust periodic reports on the
investment strategy and performance of each Master Portfolio.

For its services under the Advisory Contracts with the Master Portfolios,
Wells Fargo Bank is entitled to receive a monthly advisory fee at the annual
rate of 0.50% of the average daily net assets of each Master Portfolio. From
time to time, Wells Fargo Bank may waive such fees in whole or in part. Any such
waiver will reduce expenses of the corresponding Master Portfolio and,
accordingly, have a favorable impact on the performance of the Master Portfolio
and, in turn, the Fund. For the year ended December 31, 1995, Wells Fargo Bank
waived all advisory fees payable by each of the Short-Term Municipal Income
Master Portfolio and Short-Term Government-Corporate Income Master Portfolio.

Mr. Mark Kraschel, portfolio co-manager for the Short-Term
Government-Corporate Income Master Portfolio, has specialized in short-term bond
investment applications for over a decade. He joined Wells Fargo Bank in 1988
after five years in fixed-income management at First Boston Corporation. Mr.
Kraschel holds a B.S. in business administration from the University of Oregon
and

12
<PAGE> 223

an M.B.A. in finance from the University of San Francisco. Mr. Kraschel has
managed or co-managed the Short-Term Government-Corporate Income Master
Portfolio since its inception in September 1994.

Mr. Jeff L. Weaver has acted as portfolio co-manager to the Short-Term
Government-Corporate Income Master Portfolio since May 1, 1996. Mr. Weaver
joined Wells Fargo Bank after three years as a short-term fixed income trader
and portfolio manager in the investment management group of Bankers Trust
Company in New York. He holds a B.A. in economics from the University of
Colorado and is a chartered financial analyst candidate. Mr. Weaver also
co-manages the Company's Money Market Fund.

Ms. Laura L. Milner, portfolio co-manager for the Short-Term Municipal
Income Master Portfolio, joined Wells Fargo Bank in 1988. Her background
includes over seven years experience specializing in short- and long-term
municipal securities with Salomon Brothers. She is a member of the National
Federation of Municipal Analysts and its California chapter.

Mr. David Klug, portfolio co-manager for the Short-Term Municipal Income
Master Portfolio, has managed municipal bond portfolios for Wells Fargo Bank for
over nine years. Prior to joining Wells Fargo Bank, he managed the municipal
bond portfolio for a major property and casualty insurance company. His
investment experience exceeds 20 years and includes all aspects of tax-exempt
fixed-income investments. He holds an M.B.A. from the University of Chicago and
is a member of The National Federation of Municipal Analysts and its California
Chapter. Mr. Klug and Ms. Milner have co-managed the Short-Term Municipal Income
Master Portfolio since its inception in June 1994.

Purchase and sale orders of the securities held by each Master Portfolio
may be combined with those of other accounts that Wells Fargo Bank manages or
advises, and for which it has brokerage placement authority, in the interest of
seeking the most favorable overall net results. When Wells Fargo Bank determines
that a particular security should be bought or sold for a Master Portfolio and
other accounts managed by Wells Fargo Bank, Wells Fargo Bank has undertaken to
allocate those transaction costs among the participants equitably. From time to
time, each Master Portfolio, to the extent consistent with its investment
objective, policies and restrictions, may invest in securities of companies with
which Wells Fargo Bank has a lending relationship.

Morrison & Foerster LLP, counsel to the Company and the Trust and special
counsel to Wells Fargo Bank, has advised the Company, the Master Trust and Wells
Fargo Bank that Wells Fargo Bank and its affiliates may perform the services
contemplated by the Advisory Contracts and this Prospectus without violation of
the Glass-Steagall Act. Such counsel has pointed out, however, that there are no
controlling judicial or administrative interpretations or decisions and that
future judicial or administrative interpretations of, or decisions relating to,
present federal or state statutes, including the Glass-Steagall Act, and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in such statutes,
regulations and judicial or

13
<PAGE> 224

administrative decisions or interpretations, could prevent such entities from
continuing to perform, in whole or in part, such services. If any such entity
were prohibited from performing any such services, it is expected that new
agreements would be proposed or entered into with another entity or entities
qualified to perform such services.

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR

Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
agreements with the Company and the Trust under which Stephens acts as
administrator for the Funds and the Master Portfolios. For providing
administrative services, Stephens is entitled to receive from each Fund a
monthly fee at the annual rate of 0.15% of its respective average daily net
assets. This fee decreases to 0.10% of the average daily net assets of each Fund
in excess of $200 million. From time to time, Stephens may waive its fees from a
Fund in whole or in part. Any such waivers will reduce expenses of a Fund and,
accordingly, have a favorable impact on the performance of the Fund.

Under the respective Administration Agreements with the Funds and the
Master Portfolios Stephens has agreed to provide as administrative services,
among other things, (i) general supervision of the operation of the Funds and
the Master Portfolios, including coordination of the services performed by the
investment adviser (in the case of the Master Portfolios), transfer agent,
shareholder servicing agents (in the case of the Funds), custodian, independent
auditors and legal counsel; (ii) general supervision of regulatory compliance
matters, including the compilation of information for documents such as reports
to, and filings with, the SEC and state securities commissions; and preparation
of proxy statements and shareholder or investor reports for the Funds and the
Master Portfolios, as applicable; and (iii) general supervision of the
compilation of data required for the preparation of periodic reports distributed
to the Company's officers and Board of Directors and the Trust's officers and
Board of Trustees. Stephens also furnishes office space and certain facilities
required for conducting the business of the Funds and the Master Portfolios and
pays the compensation of the directors, officers and employees of the Company
and of the Trust who are affiliated with Stephens.

Stephens, as the principal underwriter of the Funds within the meaning of
the 1940 Act and in accordance with plans of distribution ("Plans"), has entered
into a Distribution Agreement with the Company pursuant to which Stephens has
the responsibility for distributing shares of the Funds. The Distribution
Agreement provides that Stephens shall act as agent for each Fund for the sale
of its shares. See "Distribution Plans" below.

------------------------

The Master Portfolios' Advisory Contracts and the Administration Agreements
with the Master Portfolios and the Funds provide that if, in any fiscal year,
the total aggregate expenses of a Master Portfolio and a Fund incurred by, or
allocated to, such Master Portfolio and Fund (excluding taxes,

14
<PAGE> 225

interest, brokerage commissions and other portfolio transaction expenses,
expenditures that are capitalized in accordance with generally accepted
accounting principles, extraordinary expenses and amounts accrued or paid under
a Plan) exceed the most restrictive expense limitation applicable to a Fund
imposed by the securities laws or regulations of the states in which the Fund's
shares are registered for sale, Wells Fargo Bank and Stephens shall waive their
fees proportionately under the Advisory Contracts and the Administration
Agreements, respectively, for the fiscal year to the extent of the excess, or
reimburse the excess, but only to the extent of their respective fees. The
Advisory Contracts and the Administration Agreements further provide that the
total expenses shall be reviewed monthly so that, to the extent the annualized
expenses for such month exceed the most restrictive applicable annual expense
limitation, the monthly fees under the Advisory Contracts and the Administration
Agreements shall be reduced as necessary. Currently, the most stringent
applicable state expense ratio limitation is 2.50% of the first $30 million of a
Fund's average daily net assets for its current fiscal year, 2% of the next $70
million of such assets, and 1.50% of such assets in excess of $100 million.

Except for the expenses borne by Wells Fargo Bank and Stephens, the Company
and the Trust bear all costs of their respective operations, including advisory
(in the case of the Master Portfolios), shareholder servicing (in the case of
the Funds), transfer agency, custody and administration fees, payments pursuant
to any Plans, fees and expenses of independent auditors and legal counsel and
any extraordinary expenses. Expenses attributable to each Fund and/or each
Master Portfolio are charged against the respective assets of the Fund and/or
the Master Portfolio.

DISTRIBUTION PLANS

The Company's Board of Directors has adopted Distribution Plans (the
"Plans") pursuant to Rule 12b-1 under the 1940 Act on behalf of each Fund. Under
the Plans and pursuant to the Distribution Agreement, each Fund may pay
Stephens, as compensation for distribution-related services, a monthly fee at
the annual rate of up to 0.25% of the average daily net assets of such Fund or
the maximum amount payable under applicable laws, regulations and rules,
whichever is less. The actual fee payable to Stephens is determined, within the
applicable limit, from time to time by mutual agreement between the Company and
Stephens. Stephens may enter into selling agreements with one or more Selling
Agents under which such agents may receive compensation for distribution-related
services from Stephens, including, but not limited to, commissions or other
payments to such agents based on the average daily net assets of Fund shares
attributable to them. Payments under the Plans also may be used to compensate or
reimburse servicing agents for shareholder liaison services provided by entities
that are dealers of record or which have a servicing relationship with the
beneficial owners of shares. Stephens may retain any portion of the total
distribution fee payable under the Distribution Agreement to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses. Since the fee payable to Stephens under the
Distribution Agreement is not based upon the actual expenditures of Stephens,
the expenses of Stephens (which may include overhead expenses) may be more or
less than the fees received by it under the Distribution Agreement. Stephens has
entered into a Selling Agreement with Wells Fargo Bank, pursuant to which Wells
Fargo Bank receives periodic payments based on the average daily net assets of a
Fund's shares attributable to its customers.

15
<PAGE> 226

DETERMINATION OF NET ASSET VALUE

Net asset value per share for each Fund is determined by Wells Fargo Bank
on each day that the Fund is open for trading ("Business Day"). Each Fund's net
asset value per share is determined by dividing the value of the total assets of
the Fund (i.e., the value of its investments in the corresponding Master
Portfolio and any cash instruments held for liquidity needs) less all of its
liabilities by the total number of outstanding shares of the Fund. The net asset
value of each Fund is determined as of the close of business of the Exchange
(currently 4:00 p.m. New York time).

The value of the assets of each Master Portfolio (other than debt
obligations maturing in 60 days or less) is determined as of the close of
regular trading on the Exchange (referred to hereafter as "the close of the
Exchange"), which is currently 4:00 p.m. New York time. Except for debt
obligations with remaining maturities of 60 days or less, which are valued at
amortized cost, assets are valued at current market prices, or if such prices
are not readily available, at fair value as determined in good faith by the
Board of Trustees. Prices used for such valuations may be provided by
independent pricing services.

PERFORMANCE DATA

From time to time, the Company may advertise yield and total return
information of each Fund. Total return and yield information of a Fund is based
on the historical earnings and performance of the Fund and should not be
considered representative of future performance.

The total return of a Fund is calculated by subtracting (i) the public
offering price (which includes the maximum sales charge) of one share of the
Fund at the beginning of the period, from (ii) the net asset value of all shares
an investor would own at the end of the period for the share held at the
beginning of the period (assuming reinvestment of all dividends and capital gain
distributions), and dividing by (iii) the public offering price per share of the
Fund at the beginning of the period. The resulting percentage indicates the
positive or negative rate of return that an investor would have earned from
reinvested dividends and capital gain distributions and changes in share price
during the period for a Fund. A Fund may also, at times, calculate total return
based on net asset value per share (rather than the public offering price), in
which case the figures would not reflect the effect of any sales charges that
would have been paid by an investor in the Fund, or by assuming that a sales
charge less than the maximum sales charge (reflecting the Volume Discounts set
forth below) is assessed, provided that total return data derived pursuant to
the calculation described above are also presented.

A Fund's yield is computed by dividing its net investment income per share
earned during a specified period by the Fund's public offering price per share
(which includes the maximum sales charge) on the last day of such period and
annualizing the result. For purposes of sales literature, these yields may also,
at times, be calculated on the basis of the net asset value per share (rather
than the public offering price), in which case the figures would not reflect the
effect of any sales charges that would have been paid by an investor in a Fund,
or by assuming that a sales charge less than the maximum sales charge
(reflecting the Volume Discounts set forth below) is assessed, provided that
yield data derived pursuant to the calculation described above are also
presented.

16
<PAGE> 227

Additional information about the performance of each Fund is contained in the
Annual Report which may be obtained free of charge by calling the Company at
800-552-9612.

PURCHASE OF SHARES

Shares of each Fund may be purchased on any day the Exchange is open for
trading through Stephens, any authorized broker/dealers or financial
institutions with which Stephens has entered into agreements, or through the
Transfer Agent. Such broker/dealers or financial institutions are responsible
for the prompt transmission of purchase, exchange or redemption orders, and may
independently establish and charge additional fees to their clients for such
services, other than services related to purchase orders, which would reduce
their clients' overall yield or return. The Exchange is closed on New Year's
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 Saturday, the Exchange usually is closed the preceding Friday, and when any
Holiday falls on a Sunday, the Exchange usually is closed the following Monday.

In most cases, the minimum initial purchase amount for each Fund is $1,000.
The minimum initial purchase amount is $100 for purchases through the Systematic
Purchase Plan and $250 for an investment by a retirement plan qualified under
the Internal Revenue Code of 1986, as amended (the "Code"). The minimum
subsequent purchase amount is generally $100. The minimum initial or subsequent
purchase amount requirements may be waived or lowered for investments effected
on a group basis by certain entities and their employees, such as pursuant to a
payroll deduction or other accumulation plan. The Company reserves the right to
reject any purchase order. All funds, net of sales loads, are invested in full
and fractional shares. Checks are accepted for the purchase of a Fund's shares
subject to collection at full face value in U.S. dollars. Inquiries concerning
purchases may be directed to the Company at (800) 572-7797 or at the address on
the front cover of the Prospectus.

Shares of each Fund are offered continuously at the applicable offering
price (including any sales load) next determined after a purchase order is
received. Payment for shares purchased through a broker/dealer is not due from
the broker/dealer until the settlement date, currently three business days after
the order is placed. It is the broker/dealer's responsibility to forward payment
for shares being purchased to a Fund promptly. Payment for orders placed
directly through the Transfer Agent must accompany the order.

------------------------

When payment for shares of the Fund purchased through the Transfer Agent is
by a check that is drawn on any domestic bank, federal funds normally become
available to the Fund on the business day after the day the check is deposited.
Checks drawn on a non-member bank or a foreign bank may take substantially
longer to be converted into federal funds and, accordingly, may delay execution
of an order.

When shares of a Fund are purchased through a broker/dealer or financial
institution, Stephens reallows that portion of the sales load designated below
as Dealer Allowance. Stephens has established a non-cash compensation program,
pursuant to which broker/dealers or financial institutions that sell shares of
the Funds may earn additional compensation in the form of trips to sales

17
<PAGE> 228

seminars or vacation destinations, tickets to sporting events, theater or other
entertainment, opportunities to participate in golf or other outings and gift
certificates for meals or merchandise. If all sales charges are paid or
reallowed to a broker/dealer or financial institution, it may be deemed an
"underwriter" under the Securities Act of 1933. When shares are purchased
directly through the Transfer Agent and no broker/dealer or financial
institution is involved with the purchase, the entire sales load is paid to
Stephens.

Sales loads relating to the purchase of shares in each Fund are as follows:

<TABLE>
<CAPTION>
DEALER
SALES LOAD SALES LOAD ALLOWANCE
AS % OF AS % OF AS % OF
OFFERING NET AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
----------------------------------------------- ---------- ---------- ---------
<S> <C> <C> <C>
Less than $100,000............................. 3.00% 3.09% 2.75%
$100,000 up to $199,999........................ 2.00 2.04 1.75
$200,000 up to $599,999........................ 1.00 1.01 0.90
$600,000 up to $999,999........................ 0.60 0.60 0.50
$1,000,000 and over............................ 0.00 0.00 0.00
</TABLE>

REDUCED SALES CHARGE

The above sales load schedule shows the Volume Discounts that are available
to you based on the combined dollar amount being invested in the Funds or in
Class A Shares of one or more of the portfolios of the Company which assess a
sales load (the "Load Funds").

The Right of Accumulation allows you to combine the amount being invested
in shares of the Funds with the total net asset value of Class A Shares in any
of the Load Funds in accordance with the above sales load schedule to reduce the
sales load. For example, if you own Class A Shares of one of the Load Funds with
an aggregate net asset value of $90,000 and invest an additional $20,000 in the
Funds, the sales load on the entire additional amount would be 2.00%. To obtain
such discount, you must provide sufficient information at the time of purchase
to permit verification that the purchase qualifies for the reduced sales load,
and confirmation of your order is subject to such verification. The Right of
Accumulation may be modified or discontinued at any time with respect to all
shares purchased thereafter.

A Letter of Intent allows you to purchase shares of the Funds over a
13-month period at reduced sales loads based on the total amount you intend to
purchase plus the total net asset value of Class A Shares in any of the Load
Funds you already own. Each investment made during the period receives the
reduced sales load applicable to the total amount of the intended investment. If
such amount is not invested within the period, you must pay the difference
between the sales loads applicable to the purchases when made and the charges
previously paid.

You may Reinvest proceeds from a redemption of Fund shares on which a load
was paid in shares of the Funds or in Class A Shares of another of the Company's
Load Funds at net asset value, without paying a sales load, within 120 days
after the redemption, provided that, if the investment portfolio being purchased
charges a sales load that is higher than the sales load that you paid in
connection with the Fund shares redeemed, you must pay the difference. In
addition, the Class A Shares of the other Load Funds to be acquired must be
registered for sale in your state of residence. The amount that may be so
reinvested may not exceed the amount of the redemption proceeds, and a written

18
<PAGE> 229

order for the purchase of the Class A Shares must be received by a Fund or the
Transfer Agent within 120 days after the effective date of the redemption.

If you realized a gain on your redemption, the reinvestment will not alter
the amount of any federal capital gains tax payable on the gain. If you realized
a loss on your redemption, the reinvestment may cause some or all of such loss
to be disallowed as a tax deduction, depending on the number of shares purchased
by reinvestment, the period of time that has elapsed after the redemption and
which Funds' shares are purchased. Although for federal income tax purposes, the
amount disallowed is added to the cost of the shares acquired upon the
reinvestment.

Reductions in front-end sales loads also apply to purchases by individual
members of a "qualified group." The reductions are based on the aggregate dollar
amount of Fund shares purchased by all members of the qualified group. For
purposes of this paragraph, a qualified group consists of a "company," as
defined in the 1940 Act, which has been in existence for more than six months
and which has a primary purpose other than acquiring shares of a Fund at a
reduced sales load, and the "related parties" of such company. For purposes of
this paragraph, a "related party" of a company is: (i) any individual or other
company who directly or indirectly owns, controls or has the power to vote five
percent or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls or has
the power to vote five percent of more of its outstanding voting securities;
(iii) any other company under common control with such company; (iv) any
executive officer, director or partner of such company or of a related party;
and (v) any partnership of which such company is a partner.

Shares of a Fund may be purchased at a purchase price equal to the net
asset value, without a sales load, by (i) directors, officers and employees (and
their spouses, parents, children and siblings) of the Company, Stephens, its
affiliates and other broker/dealers that have entered into agreements with
Stephens to sell such shares; (ii) present and retired directors, officers and
employees (and their spouses, parents, children and siblings) of Wells Fargo
Bank and its affiliates if Wells Fargo Bank and/or the respective affiliates
agree; (iii) employee benefit and thrift plans for such persons; and (iv) any
investment advisory, trust or other fiduciary account (other than an individual
retirement account) maintained, managed or advised by Wells Fargo Bank or
Stephens or their affiliates.

Shares of each Fund may be purchased at net asset value (without payment of
a sales load) by the following types of investors when the trades are placed
through an omnibus account maintained with such Fund by a broker/dealer -- trust
companies; retirement and deferred compensation plans and the trusts used to
fund these plans; investment advisers and financial planners who charge a
management, consulting or other fee for their services and who place trades on
their own behalf or on behalf of their clients; and clients of such investment
advisers or financial planners who place trades on their own behalf if the
clients' accounts are linked to the master account of such investment adviser or
financial planner on the books and records of the broker/dealer.

19
<PAGE> 230

By investing in a Fund, you appoint the Transfer Agent, as your agent, to
establish an open account to which all shares purchased are credited, together
with any dividends and capital gain distributions that are paid in additional
shares. See "Dividends and Distributions." Although most shareholders elect not
to receive stock certificates, certificates for full shares of a Fund can be
obtained on request. If you hold share certificates, it is more complicated to
redeem shares, and the expedited redemption described below is not available.

Shares of a Fund may be purchased in accordance with procedures described
below.

INITIAL PURCHASES OF FUND SHARES BY WIRE

1. If you wish to order Fund shares by wire, please call (800) 572-7797.
You will be asked to specify the Fund in which you wish to invest and the
name(s) in which the shares are to be registered. You will also be asked to
provide your address, social security number (or tax identification number,
where applicable), dividend payment election, amount to be wired, name of the
wiring bank and name and telephone number of the person to be contacted in
connection with the order. An account number will be assigned.

2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($1,000 or more) to:

Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express (Name of Fund)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)

Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082

4. Share purchases are effected at the public offering price, next
determined after the Account Application is received and accepted.

INITIAL PURCHASES OF FUND SHARES BY MAIL

If you wish to purchase Fund shares by mail:

1. Complete an Account Application. Indicate the services to be used.

2. Mail the Account Application and a check for $1,000 or more, payable to
"Overland Express (Name of Fund)" to the mailing address set forth above.

20
<PAGE> 231

ADDITIONAL PURCHASES

Additional purchases of Fund shares in amounts of $100 or more may be made
by instructing the Funds' Transfer Agent to debit an approved account designated
in your Account Application, by wire by instructing the wiring bank to transmit
the specified amount as directed above for initial purchases by wire, or by mail
with a check payable to "Overland Express (Name of Fund)" delivered to the
address above. Write your Fund account number on the check and include the
detachable stub from a Statement of Account or a letter providing the account
number.

SYSTEMATIC PURCHASE PLAN

The Company's Systematic Purchase Plan provides a convenient way for you to
add to your existing accounts on a monthly basis. You may elect to participate
in this plan by specifying an amount ($100 or more) to be withdrawn
automatically by the Transfer Agent on a monthly basis from an approved Bank
Account designated in your Account Application (an "Approved Bank Account"). The
Transfer Agent withdraws and uses this amount to purchase shares of a Fund for
you on or about the fifth business day of each month. The Transfer Agent
requires a minimum of ten (10) business days to implement your Systematic
Purchase Plan purchases. There are no additional fees charged for participating
in this plan.

You may change the investment amount, the date on which your Systematic
Purchase is effected, suspend purchases or terminate your participation in the
Systematic Purchase Plan at any time by providing written notice to the Transfer
Agent at least five (5) business days prior to any scheduled transaction. An
election will be terminated automatically if the designated Approved Bank
Account balance is insufficient to make a scheduled withdrawal, or if either
your designated Approved Bank Account or your Fund account is closed.

PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Purchase orders for shares of a Fund placed through authorized
broker/dealers and financial institutions by the close of the Exchange on any
day that the Fund's shares are offered for sale, including orders for which
payment is to be made from free cash credit balances in securities accounts held
by a dealer, are effective on the same day the order is placed if the order is
received by the Transfer Agent before the close of business. Purchase orders
that are received by a broker/dealer or financial institution after the close of
the Exchange or by the Transfer Agent after the close of business generally are
effective on the next day that shares are offered. The broker/dealer or
financial institution is responsible for the prompt transmission of purchase
orders to the Transfer Agent. Payment for Fund shares is not due until
settlement date. Broker/dealers and financial institutions may benefit from the
temporary use of payments to the Funds during the settlement period. A
broker/dealer or financial institution that is involved in a purchase
transaction may charge separate account, service or transaction fees. Financial
institutions may be required to register as dealers pursuant to applicable state
securities laws, which may differ from federal law and any interpretations
expressed herein.

EXCHANGE PRIVILEGES

Shares of each Fund may be exchanged for shares of any other Overland
Express Fund with a single class of shares, or for Class A Shares of any
Overland Express Fund with more than one class

21
<PAGE> 232

of shares, in an identically registered account at respective net asset values.
If the portfolio into which you are exchanging charges a sales load on the
purchase of its shares that is higher than the sales load that you have paid in
connection with the shares you are exchanging, you must pay the difference
between the sales loads. In addition, shares of the investment portfolio to be
acquired must be registered for sale in your state of residence. You should
obtain, read and retain the Prospectus for the investment portfolio into which
you desire to exchange before submitting an exchange order.

You may exchange shares by calling the Transfer Agent or your authorized
broker/dealer, financial institution or servicing agent, unless you have elected
not to authorize telephone exchanges in your Account Application (in which case
you may subsequently authorize such telephone exchanges by completing a
Telephone Exchange Authorization Form and submitting it to the Transfer Agent).
If share certificates are held, your shares may not be exchanged by telephone.
The Transfer Agent's telephone number for exchanges is (800) 572-7797.

Procedures for redemption of shares below also apply to exchanges of
shares, except that, with exchanges between accounts registered in identical
names, no signature guarantee is required unless the amount being exchanged
exceeds $25,000. (See "Redemption by Mail" below for information on signature
guarantees.) The Company reserves the right to limit the number of times shares
may be exchanged between Funds or to reject in whole or in part any exchange
request into a fund when management believes that such action would be in the
best interest of the fund's other shareholders. For example, management believes
that such action would be appropriate to protect a fund against disruptions in
portfolio management resulting from frequent transactions by those seeking to
time market fluctuations. Any such rejection is made by management on a
prospective basis only, upon notice to the shareholder, given not later than 10
days following such shareholder's most recent exchange. The Company reserves the
right to modify or discontinue exchange privileges at any time. Under SEC rules,
60 days' prior notice of any amendments or termination of exchange privileges
will be given to shareholders, except under certain extraordinary circumstances.
A capital gain or loss for federal income tax purposes may be realized upon an
exchange, depending upon the cost or other basis of shares exchanged.

Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you elect not to authorize the
privileges. These privileges authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Transfer Agent to be genuine. The Company
requires the Transfer Agent to employ reasonable procedures, such as requiring a
form of personal identification, to confirm that instructions are genuine and,
if it does not follow such procedures, the Company and the Transfer Agent may be
liable for any losses due to unauthorized or fraudulent instructions. Neither
the Company nor the Transfer Agent will be liable for following telephone
instructions reasonably believed to be genuine.

REDEMPTION OF SHARES

Shares of a Fund may be redeemed at their next determined net asset value
after receipt of a request in proper form by the Transfer Agent directly or
through any authorized broker/dealer or financial institution.

22
<PAGE> 233

The Company does not charge for redemption transactions. However, a
broker/dealer or financial institution that is involved in a redemption
transaction may charge separate account, service or transaction fees. On a day
the Funds are open for business, redemption orders received by an authorized
broker/dealer or financial institution before the close of the Exchange and
received by the Transfer Agent before the close of the Exchange are executed at
the net asset value per share determined at the close of the Exchange on that
day. Redemption orders received by authorized broker/dealers or financial
institutions after the close of the Exchange, or not received by the Transfer
Agent prior to the close of the Exchange, are generally executed at the net
asset value determined at the close of the Exchange on the next business day.

Redemption proceeds ordinarily are remitted within seven days after the
order is received in proper form, except that proceeds may be remitted over a
longer period to the extent permitted by the SEC under extraordinary
circumstances. If you request an expedited redemption, redemption proceeds are
distributed only if the check used for investment is deemed to be cleared for
payment by your bank, currently considered by the Company to be a period of up
to ten (10) days after investment. The proceeds, of course, may be more or less
than your investment cost. Payment of redemption proceeds may be made in
securities, subject to regulation by some state securities commissions.

REDEMPTION BY MAIL

If you wish to redeem Fund shares by mail please do the following:

1. Write a letter of instruction naming the Fund and the dollar amount or
number of shares to be redeemed. Refer to your Fund account number and give
either your social security or tax identification number (as applicable).

2. Sign the letter in exactly the same way your account is registered. If
there is more than one owner of the shares, all must sign.

3. If shares to be redeemed have a value of $5,000 or more or redemption
proceeds are to be paid to someone other than you at your address of record, the
signature(s) must be guaranteed by an "eligible guarantor institution," which
includes a commercial bank that is a member of the Federal Deposit Insurance
Corporation, a trust company, a member firm of a domestic stock exchange, a
savings association, or a credit union that is authorized by its charter to
provide a signature guarantee. Signature guarantees by notaries public are not
acceptable. Further documentation will be requested from corporations,
administrators, executors, personal representatives, trustees or custodians.

4. If you hold share certificates, enclose the certificates with the
letter. Do not sign the certificates, and for your protection use registered
mail.

5. Mail the letter (and any share certificates) to the Transfer Agent at
the mailing address set forth under "Purchase of Shares -- Initial Purchases of
Fund Shares by Wire."

Unless other instructions are given in proper form, a check for the
proceeds of redemption will be sent to your address of record.

23
<PAGE> 234

SYSTEMATIC WITHDRAWAL PLAN

The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your account and the proceeds distributed to you on a
monthly basis. To elect to participate in this plan, you must have a shareholder
account valued at $10,000 or more as of the date you elect to participate and
you must not also be a participant in the Company's Systematic Purchase Plan at
any time while participating in this plan. You may specify an amount ($100 or
more) to be distributed by check to your address of record or deposited in an
Approved Bank Account. The Transfer Agent redeems sufficient shares and mails or
deposits the proceeds of the redemption as instructed on or about the fifth
business day prior to the end of each month. You are not charged a fee for
participating in this plan.

It may take up to ten (10) days to establish your participation in the
Systematic Withdrawal Plan. You may change the withdrawal amount, suspend
withdrawals or terminate your participation in the Systematic Withdrawal Plan at
any time by providing written notice to the Transfer Agent at least five (5)
business days prior to a scheduled transaction. Your election will be terminated
automatically if your Fund account balance is insufficient to make a scheduled
withdrawal or if your Fund account or Approved Bank Account is closed.

EXPEDITED REDEMPTIONS BY LETTER AND TELEPHONE

If you do not hold share certificates and you have elected to authorize
telephone redemptions on the Account Application or other form that is on file
with the Transfer Agent, you may request an expedited redemption of shares by
letter or telephone on any day the Funds are open for business. See "Exchange
Privileges" for additional information regarding telephone redemption
privileges.

To request expedited redemption by telephone call the Transfer Agent at
(800) 572-7797.

To request expedited redemption by mail, mail the expedited redemption
request to the Transfer Agent at the mailing address set forth above under
"Purchase of Shares -- Initial Purchases of Fund Shares by Wire."

Upon request, proceeds of expedited redemptions of $5,000 or more will be
wired or credited to your Approved Bank Account or wired to an authorized
broker/dealer or financial institution designated in the Account Application.
The Company reserves the right to impose charges for wiring redemption proceeds.
When proceeds of an expedited redemption are to be paid to someone other than
the shareholder, to an address other than that of record, or to a bank,
broker/dealer or other financial institution that has not been predesignated,
the expedited redemption request must be made by letter and the signature(s) on
the letter must be guaranteed, regardless of the amount of the redemption. If an
expedited redemption request is received by the Transfer Agent by the close of
business on any day the Funds are open for business, the redemption proceeds
will be transmitted to your bank or predesignated broker/dealer or financial
institution on the next Business Day (assuming the investment check has cleared
as described above), absent extraordinary circumstances. A check for proceeds of
less than $5,000 will be mailed to your address of record, except that, in the
case of investments in the Company that have been effected through
broker/dealers, banks and other institutions that have entered into special
arrangements with the Company, the full amount of the redemption proceeds may be
transmitted by wire or credited to a designated account.

24
<PAGE> 235

REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Redemption requests placed through authorized broker/dealers and financial
institutions by the close of the Exchange on any day that the Funds' shares are
offered for sale will be effective on the same day the request is placed if
received by the Transfer Agent before the close of business. Redemption requests
that are received by a dealer or financial institution after the close of the
Exchange or by the Transfer Agent after the close of business generally will be
effective on the next day that shares are offered. The broker/dealer or
financial institution is responsible for the prompt transmission of redemption
requests to the Transfer Agent. Unless you have made other arrangements and have
informed the Transfer Agent of such arrangements, proceeds of redemptions made
through authorized broker/dealers and financial institutions are credited to
your account with such broker/dealer or institution. You may request a check
from the broker/dealer or financial institution or may elect to retain the
redemption proceeds in your account. The broker/dealer or financial institution
may benefit from the use of the redemption proceeds prior to the clearance of a
check issued to you for such proceeds or prior to disbursement or reinvestment
of such proceeds on your behalf.

------------------------

The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.

Due to the high cost of maintaining small accounts, the Company reserves
the right to redeem accounts that fall below $1,000 because of a shareholder
redemption. Prior to such a redemption, you will be notified in writing and
permitted 30 days to make additional investments to raise the account balance to
the specified minimum.

DIVIDENDS AND DISTRIBUTIONS

Each Fund intends to declare as a dividend to all shareholders of record as
of 4:00 p.m (New York time) substantially all of its net investment income at
the close of each business day to shareholders of record. Shares purchased in a
Fund begin earning dividends on the business day following the date the purchase
order settles, and shares redeemed earn dividends through the date of
redemption. Net investment income for a Saturday, Sunday or holiday is declared
as a dividend to shareholders of record at 4:00 p.m. (New York time) on the
prior business day.

Dividends of a Fund declared in, and attributable to, any month are paid
early in the following month. Shareholders of a Fund who redeem shares prior to
a dividend payment date are entitled to all dividends declared but unpaid prior
to their redemption of such shares on the next dividend payment date.

Any net capital gains of a Fund are distributed annually (or more
frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI).

Dividends and/or capital gain distributions paid by a Fund are invested in
additional shares of the Fund at net asset value (without any sales load) and
credited to your account on the reinvestment date unless you have elected
payment by check. In addition, you may elect to reinvest Fund dividends and/or
capital gain distributions in shares of another portfolio of the Company with
which you have an established account.

25
<PAGE> 236

DIVIDEND AND DISTRIBUTION OPTIONS

When you fill out an Account Application, you can choose from three
dividend and distribution options:

A. The Automatic Reinvestment Option provides for the reinvestment of
dividends and capital gain distributions in additional shares of the same
Fund. Dividends and distributions declared in a month are reinvested at net
asset value early in the following month. You are assigned this option
automatically if you make no choice on your Account Application.

B. The Automatic Clearing House Option permits you to have dividends
and capital gain distributions deposited in an Approved Bank Account. In
the event your Approved Bank Account is closed, and such distribution is
returned to the Funds' dividend disbursing agent, the distribution will be
reinvested in your Fund account at the net asset value next determined
after the distribution has been returned. Your Automatic Clearing House
Option will be converted to the Automatic Reinvestment Option.

TAXES

Dividends from net investment income (including net short-term capital
gains, if any) declared and paid by the Short-Term Government-Corporate Income
Fund will be taxable as ordinary income to shareholders. The Short-Term
Municipal Income Fund's shareholders will not be subject to federal income taxes
on any Fund dividends attributable to interest from tax-exempt securities.
However,

26
<PAGE> 237

dividends of the Fund attributable to interest from taxable securities, and
capital gains (if any) will be taxable to shareholders. To the extent any Fund
distributes taxable dividends and capital gain, such distributions will be
taxable to shareholders, regardless of whether the shareholder takes such
distributions in cash or has them automatically reinvested in additional shares
in the Funds. The Funds' dividends will not qualify for the dividends-received
deduction allowed to corporate shareholders.

Each Fund seeks to qualify as a regulated investment company by investing
all of its assets in a Master Portfolio. Each Master Portfolio will be treated
as a non-publicly traded partnership rather than as a regulated investment
company or a corporation under the Code, and as such, shall not be subject to
federal income tax. As a non-publicly traded partnership, any interest,
dividends, gains and losses of the Master Portfolio shall be deemed to have been
"passed through" to its corresponding Fund (and other investors) in proportion
to the Fund's ownership interest in the Master Portfolio. If the Master
Portfolio were to accrue but not distribute any interest, dividends or gains,
the corresponding Fund would be deemed to have realized and recognized its
proportionate share of such income, regardless of whether or not such income has
been distributed by the Master Portfolio. However, each Master Portfolio will
seek to minimize recognition by the Fund and other investors of interest,
dividends and gains without a corresponding distribution.

The Funds will inform you by January 31 of each year of the amount and
nature of such Fund dividends and capital gain distributions with respect to the
previous year. You should keep all statements you receive to assist in your
personal recordkeeping. The Company is required by federal law to withhold,
subject to certain exemptions, at a rate of 31% on taxable dividends, capital
gain distributions, and redemption proceeds (including proceeds from exchanges)
paid or credited to individual shareholders of the Funds, if a shareholder has
not complied with IRS regulations or if a correct taxpayer identification
number, certified when required, is not on file with the Company or the Transfer
Agent. In connection with this withholding requirement, you will be asked to
certify on your Account Application that the social security number or taxpayer
identification number you provide is correct and that you are not subject to 31%
backup withholding for previous underreporting to the IRS.

Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes -- Foreign Shareholders" in the SAI.

The foregoing discussion is based on tax laws and regulations which were in
effect as of the date of this Prospectus and summarizes only some of the
important federal income tax considerations generally affecting the Funds and
their shareholders. It is not intended as a substitute for careful tax planning;
you should consult your tax advisor with respect to your specific tax situation
as well as with respect to state and local taxes. Further federal tax
considerations are discussed in the SAI.

27
<PAGE> 238

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT

Wells Fargo Bank has been retained to act as the custodian and transfer and
dividend disbursing agent for the Funds and the Master Portfolios. Wells Fargo
Bank's principal place of business is 420 Montgomery Street, San Francisco,
California 94104, and its transfer and dividend disbursing agency activities are
managed at 525 Market Street, San Francisco, California 94105.

ORGANIZATION AND CAPITAL STOCK

The Company was incorporated in Maryland on April 27, 1987. The authorized
capital stock of the Company consists of 20,000,000,000 shares having a par
value of $.001 per share. Currently, the Company offers the following series of
shares, each representing an interest in one of the following funds -- the Asset
Allocation, California Tax-Free Bond, California Tax-Free Money Market, Money
Market, Municipal Income, National Tax-Free Institutional Money Market, Overland
Sweep, Short-Term Government-Corporate Income, Short-Term Municipal Income, U.S.
Government Income, U.S. Treasury Money Market, Strategic Growth and Variable
Rate Government Funds. The Board of Directors may, in the future, authorize the
issuance of other series of capital stock. All shares of the Company, when
issued, will be fully paid and nonassessable.

The Trust was established on August 14, 1991, as a Delaware business trust.
The Trust's Declaration of Trust permits the Board of Trustees to issue
beneficial interests in the Trust to investors based on their proportionate
investments in the Trust. The Trust currently offers eight series of beneficial
interests, including the Short-Term Government-Corporate Income and Short-Term
Municipal Income Master Portfolios.

All shares of the Company have equal voting rights and are voted in the
aggregate, and not by series, except where voting by series is required by law
or where the matter involved affects only one series. The Company may dispense
with the annual meeting of shareholders in any fiscal year in which it is not
required to elect Directors under the Act; however, at the written request of
10% or more of the holders of the Company's shares, the Board of Directors will
call a meeting of shareholders for purposes of voting on removal of a Director
or Directors of the Company. In addition, whenever a Fund is requested to vote
on matters pertaining to the corresponding Master Portfolio of the Trust, the
Company will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by Fund shareholders. The Directors of the Company will vote shares
for which they receive no voting instructions in the same proportion as the
shares for which they do receive voting instructions. A more detailed statement
of the voting rights of shareholders is contained in the SAI. All shares of the
Company, when issued, will be fully paid and nonassessable.

28
<PAGE> 239

1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / ADDITIONAL INVESTMENT OR CHANGE
TO ACCOUNT #
----------------------

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C> <C> <C>
/ / INDIVIDUAL 1. Individual - -
--------------------------------- ------ -------- ------
USE LINE 1 First Name Initial Last Name Soc. Security No.

/ / JOINT OWNERS 2. Joint Owner
--------------------------------- (Only one Soc. Security
USE LINES 1 & 2 First Name Initial Last Name No. is required for
Joint Owners)

Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is
indicated:

/ / Tenants in Common

/ / TRANSFER TO 3. Uniform
-----------------------------------------------------------
MINORS Transfer Custodian's Name (only one) Minor's State
of Residence
USE LINE 3 to Minors - -
--------------------------------- ------ -------- ------
Minor's Name (only one) Minor's Soc.
Security No.
/ / TRUST* 4. Trust Name
-----------------------------------------------------------
USE LINE 4 Trustee(s)
-----------------------------------------------------------
(If you would like Trustee's name included in
registration.)

Trust ID Number ---------------------------------------------
Please attach title page, the page(s) allowing investment in a mutual fund
("powers page") and signature page, and complete Section 6, "Authorization
for Trusts and Organizations."

/ / ORGANIZATION* 5. Organization Name -
-------------------------------- ------------ -----------
USE LINE 5 *Complete "Authorization for Trusts and Tax I.D. No.
Organizations" (Section 6).
</TABLE>

- --------------------------------------------------------------------------------
ADDRESS:

Number and Street Apartment No.
------------------------------------- ----------

City State Zip Code
---------------------------- ------------ -------------------

Telephone Numbers: (DAY) - - (EVENING) - -
------- ------ ------- ------ ----- -----
(Area Code) (Area Code)

(CONTINUED)

OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS SHAREHOLDER SERVICES, WELLS FARGO BANK, N.A.
POST OFFICE BOX 63084, SAN FRANCISCO, CALIFORNIA 94163
FOR PERSONAL SERVICE PLEASE CALL
YOUR INVESTMENT ADVISOR OR 1-800-572-7797

ACCOUNT APPLICATION PAGE 1 OF 5
OVERLAND EXPRESS FUNDS, INC.
<PAGE> 240

2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $1,000.)
- --------------------------------------------------------------------------------

INVESTMENT AMOUNT:

/ / OVERLAND EXPRESS SHORT-TERM MUNICIPAL INCOME FUND $
---------

/ / OVERLAND EXPRESS SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND $
---------

METHOD OF PAYMENT: / / Debit bank account designated in Section 3.

/ / Check attached (payable to Overland Express Funds
(designate Fund)

/ / Funds have been wired to Overland Express

- --------------------------------------------------------------------------------

SETTLEMENT ARRANGEMENTS: (Check only one if applicable)

- --------------------------------------------------------------------------------
SYSTEMATIC PURCHASE PLAN:

Monthly Investment Amount: $
--------------- (minimum $100)
- --------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWAL PLAN:

Monthly Withdrawal Amount: $
--------------- (minimum $100)

/ / Mail check to registration set forth in Section 1.

/ / Distribute funds to bank account designated in Section 3.
- --------------------------------------------------------------------------------

3. BANK ACCOUNT INFORMATION
- --------------------------------------------------------------------------------

------------------------------------------------------------------------------
Bank Name

------------------------------------------------------------------------------
Address City State Zip

------------------------------------------------------------------------------
Bank Account Number Bank Routing Number

(CONTINUED)

ACCOUNT APPLICATION PAGE 2 OF 5
OVERLAND EXPRESS FUNDS, INC.
<PAGE> 241

4. REDUCED SALES CHARGES (If Applicable.)
- --------------------------------------------------------------------------------

LETTER OF INTENT

/ / I agree to the Letter of Intent set forth above. It is my intention to
invest over a 13-month period in the Load Funds an aggregate amount equal
to at least:

/ / $100,000 / / $200,000 / / $600,000 / / $1,000,000

Existing accounts must be identified in advance. If the value of currently
owned shares is to be applied towards completion of this Letter of Intent,
please list accounts below.

Account # Account #
------------------------ ------------------------

RIGHT OF ACCUMULATION

Account # Account #
------------------------ ------------------------
- --------------------------------------------------------------------------------
5. TELEPHONE INSTRUCTIONS (Do NOT check this box if you wish to authorize
telephone instructions.)
- --------------------------------------------------------------------------------

/ / If this box is checked, you are NOT authorized to honor my telephone
instructions for purchase of additional Fund shares, redemptions of Fund
shares and exchanges of shares between Funds. If this box is not checked,
I understand that telephone instructions will be effected by
debiting/crediting the account designated in Section 3 (if approved) and
that if a designated account has not been authorized and approved, a
check or wire transfer will be required for a purchase and a check will
be sent for a redemption.
- --------------------------------------------------------------------------------
6. DISTRIBUTIONS (Do NOT check boxes if you want reinvestment.)
- --------------------------------------------------------------------------------
All dividends and capital gain distributions will be automatically reinvested
in shares of the Fund unless otherwise indicated:

/ / Invest dividends in Account # of Fund
------------------ ------------------

of the Overland Express Funds.

/ / Invest capital gain distributions in Account # of Fund
----------- --------

of the Overland Express Funds.

/ / Pay dividends by Automatic Clearing House ("ACH")* and/or / / pay capital
gain distributions by ACH by crediting amounts to the bank account
designated in Section 3 (a voided check or deposit slip is attached)

/ / Pay dividends by check and/or / / pay capital gains distributions by
check

AND MAIL CHECKS TO:

/ / The registration address set forth in Section 1, / / The bank account
designated in Section 3.

*Please verify that your bank participates in the ACH system.

------------------------------------------------------------------------------

(CONTINUED)

ACCOUNT APPLICATION PAGE 3 OF 5
OVERLAND EXPRESS FUNDS, INC.
<PAGE> 242

7. AUTHORIZATION FOR TRUSTS AND ORGANIZATIONS (If Applicable.)
- --------------------------------------------------------------------------------

CORPORATIONS, TRUSTS, PARTNERSHIPS OR OTHER ORGANIZATIONS MUST COMPLETE
THIS SECTION.

<TABLE>
<S> <C> <C> <C> <C>
Registered Owner is a: / / Trust / / Corporation, Incorporated Association

/ / Partnership / / Other:
--------------------------------------------------
(such as Non-Profit Organization, Religious
Organization, Sole Proprietorship, Investment Club,
Non-incorporated Association, etc.)
</TABLE>

<TABLE>
<S> <C> <C>
Name Title Specimen Signature

---------------------------------- ---------------------------------- ----------------------------------

---------------------------------- ---------------------------------- ----------------------------------
</TABLE>

FOR CORPORATIONS AND INCORPORATED ASSOCIATIONS:
I, , Secretary of the
-------------------------------------------
above-named Registered Owner, do hereby certify that at a meeting on
at which a quorum was present throughout, the Board of
-----------------
Directors of the corporation/the officers of the association duly adopted
a resolution, which is in full force and effect and in accordance with the
Registered Owner's charter and by-laws, which resolution: (1) empowered
the above-named Authorized Person(s) to effect securities transactions for
the Registered Owner on the terms described above; (2) authorized the
Secretary to certify, from time to time, the names and titles of the
officers of the Registered Owner and to notify you when changes in the
office occur; and (3) authorized the Secretary to certify that such a
resolution has been duly adopted and will remain in full force and effect
until you receive a duly executed amendment to the Authorization Form.

Witness my hand on behalf of the corporation/association on this
day of , 19
------------- --------------------- -----

------------------------------------------------
Secretary (Signature Guarantee or
Corporate Seal is Required)

FOR ALL OTHER ORGANIZATIONS: ------------------------------------------------
Certifying Trustee, General Partner, or Other
</TABLE>

(CONTINUED)

ACCOUNT APPLICATION PAGE 4 OF 5
OVERLAND EXPRESS FUNDS, INC.
<PAGE> 243

<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
8. SIGNATURE, TAX INFORMATION & CERTIFICATION
- ------------------------------------------------------------------------------------------------------------------
/ / U.S. CITIZEN OR RESIDENT

I understand that the Federal Government requires Overland Express Funds, Inc. to withhold and pay to
the Internal Revenue Service 31% from all interest, dividends, capital gains distributions and
proceeds from redemptions UNLESS I have provided a certified taxpayer identification (Social Security
or Employer Identification) number and certify in the Withholding Status below that I am NOT subject
to backup withholding. The taxpayer identification number I provided in Section 1 will be the number
under which any taxable earnings will be reported to the IRS.

WITHHOLDING STATUS: Unless I indicate that I am subject to backup withholding by checking the box
below, I certify that 1) I have NOT been notified by the IRS that I am subject to backup withholding
as a result of a failure to report all interest or dividends, OR 2) I have been notified by the IRS
that I am no longer subject to backup withholding: / / I am currently subject to backup withholding.

/ / NON-RESIDENT ALIEN (In order to claim this exemption, ALL owners on the account must be non-resident
aliens and sign below.)

I am not a U.S. citizen or resident (nor is this account held by a foreign corporation, partnership,
estate or trust) and my permanent address is:

Country:
--------------------------------------------------------------------- ----------------------

By signing below, I (we) certify, under penalties of perjury, that I (we) have full authority and legal
capacity to purchase shares of the Fund and affirm that I (we) have received a current prospectus and agree
to be bound by its terms and further certify that 1) the correct taxpayer identification number has been
provided in Section 1 of this Application and that the Withholding Status information, above, is correct OR
2) all owners are entitled to claim non-resident alien status. Investors should be aware that the failure to
check the box under "Telephone Instructions" above means that the telephone exchange and redemption
privileges will be provided. A shareholder would bear the risk of loss in the event of the fraudulent use of
the pre-authorized redemption or exchange privileges. Please see "Exchange Privileges" and "Redemption of
Shares" in the Prospectus for more information on these privileges.

X SIGNATURE GUARANTEE: NOT REQUIRED WHEN
----------------------------------------------------- ESTABLISHING NEW ACCOUNTS. Required only if
Individual (or Custodian) date establishing privileges in Block 2 on an
existing account. Signature Guarantee may be
X provided by an "eligible guarantor institution,"
----------------------------------------------------- which includes a commercial bank, trust company,
Joint Owner (if any) date member firm of a domestic stock exchange,
savings association, or credit union that is
authorized by its charter to provide a signature
X guarantee.
-----------------------------------------------------
Corporate Officer or Trustee date
AFFIX SIGNATURE GUARANTEE STAMP

----------------------------------------------------- ---------------------------------------------------
Title of Corporate Officer or Trustee Signature Guaranteed By

DEALER INFORMATION

------------------------------------------------- ----------------------
Dealer Name Branch ID #

------------------------------------------------- ---------------------- ----------------
Representative's Last Name Rep ID # Rep Phone #

X
----------------------------------------------------------------------------------------------------
Authorized signature of Broker/Dealer Title date

</TABLE>

ACCOUNT APPLICATION PAGE 5 OF 5
OVERLAND EXPRESS FUNDS, INC.
<PAGE> 244

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201

INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND
CUSTODIAN OF THE FUNDS
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163

LEGAL COUNSEL

Morrison & Foerster LLP

2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111

FOR MORE INFORMATION ABOUT THE FUNDS,
SIMPLY CALL (800) 552-9612, OR WRITE:

OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS SHAREHOLDER
SERVICES

Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

NOT FDIC INSURED

LOGO

------------------------

PROSPECTUS

------------------------

Short-Term Municipal
Income Fund

Short-Term Government-
Corporate Income Fund

------------------------

May 1, 1996

------------------------

NOT FDIC INSURED

100 P 5/96

<PAGE> 245

Telephone: (800) 552-9612 LOGO

Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian

Overland Express Funds, Inc. (the "Company") is an open-end, series
investment company. This Prospectus contains information about one of the
Company's funds -- the U.S. GOVERNMENT INCOME FUND (the "Fund").

The U.S. GOVERNMENT INCOME FUND primarily seeks to provide investors with
current income, while preserving capital, by investing in a portfolio consisting
of securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities.

This Prospectus describes two classes of shares of the Fund -- Class A
Shares and Class D Shares.

------------------------

INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.

------------------------

PROSPECTUS DATED MAY 1, 1996

<PAGE> 246

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................................................... ii
Summary of Expenses......................................................................... v
Financial Highlights........................................................................ vii
Investment Objective and Policies........................................................... 1
Additional Permitted Investment Activities.................................................. 1
Advisory, Administration and Distribution Arrangements...................................... 3
Determination of Net Asset Value............................................................ 5
Purchase of Shares.......................................................................... 7
Exchange Privileges......................................................................... 13
Redemption of Shares........................................................................ 14
Distribution Plans.......................................................................... 17
Servicing Plan.............................................................................. 17
Dividends and Distributions................................................................. 17
Taxes....................................................................................... 19
Custodian and Transfer and Dividend Disbursing Agent........................................ 19
Organization and Capital Stock.............................................................. 20
</TABLE>

i
<PAGE> 247

PROSPECTUS SUMMARY

The Company, as an open-end series investment company, provides a
convenient way for you to invest in portfolios of securities selected and
supervised by professional management. The following provides information about
the Fund and its investment objective.

Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

A. The U.S. GOVERNMENT INCOME FUND primarily seeks to provide investors with
current income, while preserving capital, by investing in a portfolio
consisting of securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities. As with all mutual funds, there can be no
assurance that the Fund will achieve its investment objective. See
"Investment Objective and Policies."

Q. WHAT ARE PERMISSIBLE INVESTMENTS?

A. The Fund invests in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, including
government-sponsored enterprises ("U.S. Government obligations"). The Fund
may, subject to the restrictions described herein and in the SAI, employ
interest rate futures contracts and options thereon, and may invest in
certain put and call options. Transactions in futures contracts and put
and call options bear the risk that commodity exchange limitations or
market conditions may adversely affect the Fund's ability to liquidate its
positions. See "Additional Permitted Investment Activities."

Q. WHO IS THE INVESTMENT ADVISER?

Q. WHO IS THE SPONSOR, ADMINISTRATOR AND DISTRIBUTOR?

Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?

A. An investment in the Fund is not insured against loss of principal. When
the value of the securities that the Fund owns declines, so does the value
of your Fund shares. Therefore, you should be prepared to accept some risk
with the money you invest in the Fund. The Fund invests primarily in U.S.
Government obligations. U.S. Government obligations include securities
issued or guaranteed as to principal and interest by the U.S. Government
and supported by the full faith and credit of the U.S. Treasury. U.S.
Government obligations also include securities issued or guaranteed by
federal agencies or instrumentalities, including government-sponsored
enterprises. Some obligations of agencies or instrumentalities of the U.S.
Government are supported by the full faith and credit of the United States
or U.S. Treasury guarantees; others, by the right of the issuer or
guarantor to borrow from the U.S. Treasury; still others, by the
discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, only by the
credit of the agency or instrumentality issuing the obligation. In the
case of obligations not backed by the full

ii
<PAGE> 248

faith and credit of the United States, the investor 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.

Moreover, principal on the mortgages underlying certain of the securities
in which the Fund may invest may be prepaid in advance of maturity; these
prepayments tend to increase when interest rates decline, presenting the
Fund with more principal to invest at lower rates.

As with all mutual funds, there can be no assurance that the Fund will
achieve its investment objective. See "Investment Objective and Policies."

Q. HOW MAY I PURCHASE SHARES?

A. Shares of the Fund may be purchased on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is a maximum sales
load of 4.50% (4.71% of the net amount invested) for purchasing Class A
Shares of the Fund. Class D Shares are subject to a maximum contingent
deferred sales charge of 1.00% of the lesser of net asset value at
purchase or net asset value at redemption. In most cases, the minimum
initial purchase amount for the Fund is $1,000. The minimum initial
purchase amount is $100 for shares purchased through the Systematic
Purchase Plan and $250 for shares purchased through qualified retirement
plans. The minimum subsequent purchase amount is $100. You may purchase
shares of the Fund through Stephens, Wells Fargo Bank, as transfer agent
(the "Transfer Agent"), or any authorized broker/dealer or financial
institution. Purchases of shares of the Fund may be made by wire directly
to the Transfer Agent. See "Purchase of Shares."

Q. HOW WILL I RECEIVE DIVIDENDS?

Q. HOW MAY I REDEEM SHARES?

iii
<PAGE> 249

the applicable minimum initial purchase amount may be redeemed at the
option of the Company. Except for any contingent deferred sales charge
which may be applicable upon redemption of Class D Shares, the Company
does not charge for redeeming your shares. However, the Company reserves
the right to impose charges for wiring your redemption proceeds. See
"Redemption of Shares."

Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?

A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or
rate. Some of the permissible investments described in this Prospectus,
such as adjustable rate mortgage-backed securities which have an interest
rate that is reset periodically based on an index, are considered
derivatives. Some derivatives may be more sensitive than direct securities
to changes in interest rates or sudden market moves. Some derivatives also
may be susceptible to fluctuations in yield or value due to their
structure or contract terms.

Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES-RELATED RISKS?

iv
<PAGE> 250

SUMMARY OF EXPENSES

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)..... 4.50% 0.00%
Maximum Deferred Sales Load (as a percentage of the lesser of net asset value at
purchase or net asset value at redemption)
Redemption during year 1...................................................... 0.00% 1.00%
Redemption after year 1....................................................... 0.00% 0.00%
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
CLASS A SHARES CLASS D SHARES
-------------- --------------
<S> <C> <C> <C> <C>
Management Fees (after waivers and reimbursements)(1)........... 0.46% 0.46%
12b-1 Fees (after waivers and reimbursements)(1)................ 0.00% 0.50%
Other Expenses
Servicing Fees................................................ 0.00% 0.25%
Administrative Fees........................................... 0.10% 0.10%
Miscellaneous Expenses (after waivers and
reimbursements)(1)......................................... 0.32% 0.31%
Total Other Expenses (after waivers and reimbursements)(1)...... 0.42% 0.66%
----- -----
Total Fund Operating Expenses (after waivers and
reimbursements)(1)............................................ 0.88% 1.62%
</TABLE>

- ---------------

(1) The percentages shown above under "Management Fees," "Miscellaneous
Expenses," "Total Other Expenses" and "Total Fund Operating Expenses" for
the Class A and Class D Shares and "12b-1 Fees" for the Class A Shares are
based on amounts incurred during the most recent fiscal year restated to
reflect voluntary fee waivers and expense reimbursements. The fee waivers
and expense reimbursements are expected to continue to reduce expenses
during the current fiscal year. Absent waivers and reimbursements, the
percentages shown above under "Management Fees," "Miscellaneous Expenses,"
"Total Other Expenses" and "Total Fund Operating Expenses" would be 0.50%,
0.59%, 0.69% and 1.24%, respectively, for the Class A Shares, and 0.50%,
0.94%, 1.29% and 2.29%, respectively, for the Class D Shares. Absent waivers
and reimbursements, the percentage shown above under "12b-1 Fees" would be
0.05% for the Class A Shares.

Stephens and Wells Fargo Bank each may elect, in its sole discretion, to
otherwise waive all or a portion of its respective fees or reimburse
expenses. Any such waivers or reimbursements with respect to the Fund would
reduce the total expenses of the Fund. Long-term shareholders of the Fund
could pay more in distribution related charges than the economic equivalent
of the maximum front-end sales charges applicable to mutual funds sold by
members of the National Association of Securities Dealers, Inc. ("NASD").
There can be no assurances that the voluntary fee waivers and expense
reimbursements will continue.

v
<PAGE> 251

EXAMPLE OF EXPENSES

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment in Class A Shares of the Fund, assuming (1)
a 5% annual return and (2) redemption at the end of
each time period indicated............................. $ 54 $ 72 $ 92 $ 149
You would pay the following expenses on a $1,000
investment in Class D Shares of the Fund, assuming (1)
a 5% annual return and (2) redemption at the end of
each time period indicated............................. $ 26 $ 51 $ 88 $ 192
You would pay the following expenses on the same
investment in Class D Shares of the Fund, assuming no
redemption............................................. $ 16 $ 51 $ 88 $ 192
</TABLE>

------------------------

The EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment over the periods shown, based on
the expenses in the table on the previous page and an assumed annual rate of
return of 5%. This rate of return should not be considered an indication of the
actual or expected performance of the Fund. In addition, the Example should not
be considered a representation of past or future expenses; actual expenses and
returns may be greater or lesser than those shown. See "Advisory, Administration
and Distribution Arrangements," "Distribution Plans" and "Purchase of Shares"
for more complete descriptions of the various costs and expenses applicable to
the Fund.

vi
<PAGE> 252

FINANCIAL HIGHLIGHTS

The following information has been derived from the Financial Highlights in
the Fund's 1995 annual financial statements. The financial statements are
incorporated by reference into the SAI and have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated February 14, 1996 also is
incorporated by reference into the SAI. This information should be read in
conjunction with the Fund's 1995 annual financial statements and the notes
thereto. The SAI has been incorporated by reference into this Prospectus.

U.S. GOVERNMENT INCOME FUND

FOR A CLASS A SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993 1992 1991 1990 1989 1988*
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period............................. $ 9.66 $ 10.87 $ 10.56 $ 10.97 $ 10.30 $ 10.22 $ 9.78 $10.00
Income from investment operations:
Net investment income (loss)...... 0.69 0.70 0.74 0.79 0.86 0.87 0.90 0.54
Net realized and unrealized gain
(loss) on investments........... 1.12 (1.21) 0.36 (0.14) 0.90 0.10 0.50 (0.21)
------- -------- ------- ------- ------- ------- ------ ------
Total from investment operations.... 1.81 (0.51) 1.10 0.65 1.76 0.97 1.40 0.33
Less distributions:
Dividends from net investment
income.......................... (0.69) (0.70) (0.74) (0.79) (0.86) (0.89) (0.90) (0.54)
Distributions from net realized
gain............................ 0.00 0.00 (0.05) (0.27) (0.23) 0.00 (0.06) (0.01)
Tax return of capital............. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------- -------- ------- ------- ------- ------- ------ ------
Total from distributions............ (0.69) (0.70) (0.79) (1.06) (1.09) (0.89) (0.96) (0.55)
------- -------- ------- ------- ------- ------- ------ ------
Net Asset Value, end of period...... $ 10.78 $ 9.66 $ 10.87 $ 10.56 $ 10.97 $ 10.30 $10.22 $ 9.78
======= ======== ======= ======= ======= ======= ====== ======
Total return (not annualized)(3).... 19.32% (4.81)% 10.67% 6.27% 18.08% 10.17% 14.82% 3.24%
Ratios/supplemental data:
Net assets, end of period (000)... $30,471 $ 35,838 $50,301 $40,883 $20,457 $11,116 $4,238 $3,264
Number of shares outstanding, end
of period (000)................. 2,826 3,711 4,628 3,871 1,865 1,079 415 334
Ratios to average net assets
(annualized):
Ratio of expenses to average net
assets(1)....................... 0.88% 0.76% 0.53% 0.47% 0.00% 0.07% 0.54% 0.29%
Ratio of net investment income to
average net assets(2)........... 6.79% 6.84% 6.79% 6.26% 8.30% 8.65% 8.89% 7.88%
Portfolio turnover.................. 95% 50% 115% 128% 100% 4% 11% N/A
- ------------
(1) Ratio of expenses to average net
assets prior to waived fees and
reimbursed expenses............. 1.24% 1.08% 1.01% 1.13% 1.87% 2.72% 4.45% 7.31%
(2) Ratio of net investment income
to average net assets prior to
waived fees and reimbursed
expenses........................ 6.44% 6.52% 6.31% 5.60% 6.43% 6.00% N/A N/A
(3) Total returns do not include any
sales charges.

* The Fund commenced operations on
April 7, 1988.
</TABLE>

vii
<PAGE> 253

U.S. GOVERNMENT INCOME FUND

FOR A CLASS D SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993*
-------- -------- --------
<S> <C> <C> <C>
Net Asset Value, beginning of period................................................ $13.20 $14.85 $15.00
Income from investment operations:
Net investment income (loss)...................................................... 0.85 0.86 0.42
Net realized and unrealized capital gain (loss) on investments.................... 1.54 (1.65) (0.08)
------ ------ ------
Total from investment operations.................................................... 2.39 (0.79) 0.34
Less distributions:
Dividends from net investment income.............................................. (0.85) (0.86) (0.42)
Distributions from net realized gain.............................................. 0.00 0.00 (0.07)
Tax return of capital............................................................. 0.00 0.00 0.00
------ ------ ------
Total from distributions............................................................ (0.85) (0.86) (0.49)
Net Asset Value, end of period...................................................... $14.74 $13.20 $14.85
====== ====== ======
Total Return (not annualized)(3).................................................... 18.54% (5.45)% 2.25%
Ratios/supplemental data:
Net assets, end of period (000)................................................... $2,793 $3,722 $9,594
Number of shares outstanding, end of period (000)................................. 189 282 646
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)........................................ 1.62% 1.37% 0.90%
Ratio of net investment income to average net assets(2)........................... 6.07% 6.14% 5.90%
Portfolio turnover.................................................................. 95% 50% 115%
- ------------
(1) Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses............................................................. 2.29% 1.87% 2.03%
(2) Ratio of net investment income to average net assets prior to
waived fees and reimbursed expenses............................................. 5.40% 5.64% 4.77%
(3) Total returns do not include any sales charges.
* This class commenced operations on July 1, 1993.
</TABLE>

viii
<PAGE> 254

INVESTMENT OBJECTIVE AND POLICIES

Set forth below is a description of the investment objective and related
policies of the Fund. As with all mutual funds, there can be no assurance that
the Fund, which is a diversified portfolio, will achieve its investment
objective.

The U.S. Government Income Fund primarily seeks to provide investors with
current income, while preserving capital, by investing in a portfolio consisting
of securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities ("U.S. Government obligations").

The Fund may invest in obligations of any maturity. Under ordinary
circumstances, the weighted average maturity of the portfolio is generally
expected to be between 10 and 30 years. However, under unusual market
circumstances, it may be shorter than 10 years. Wells Fargo Bank will seek to
preserve the stability of the net asset value of Fund shares during periods when
it believes that the bond markets are vulnerable to decline, by reducing the
weighted average maturity of the Fund's portfolio, by purchasing or retaining
securities with a lower expected volatility and/or by engaging in hedging
activities as more fully described below. Substantially all, and, in any event,
at least 65%, of the total assets of the Fund will under normal circumstances be
invested in income-producing U.S. Government obligations.

Not all U.S. Government Obligations are direct obligations of the U.S.
Treasury. Payment of principal and interest on U.S. Government Obligations may
be backed by the full faith and credit of the United States (e.g., U.S. Treasury
bills and Government National Mortgage Association certificates) or solely by
the issuing or guaranteeing agency or instrumentality itself (including
government-sponsored enterprises) (e.g., Federal National Mortgage Association
notes). In the latter case, investors must look to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment. In addition, the
Fund may invest cash balances temporarily in money market instruments rated at
the date of purchase "Prime-1" or "Prime-2" by Moody's Investors Service, Inc.
("Moody's") "A-2" or better by Standard & Poor's Ratings Group ("S&P"), or if
not rated, which are of comparable quality in the opinion of Wells Fargo Bank,
under the Direction of the Board of Directors.

Certificates of the Government National Mortgage Association represent
ownership interests in pools of mortgages and the resulting cash flow from those
mortgages. The stated maturities of these obligations may be shortened by
unscheduled prepayments of principal and interest on the underlying mortgages,
thereby affecting the Fund's yield. The Fund may also purchase securities which
represent the interest portion or the principal portion (sometimes referred to
as "STRIPs") of securities in which the Fund may otherwise invest. STRIPs may
have different investment characteristics than the instruments from which they
derive.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

FLOATING- AND VARIABLE-RATE INSTRUMENTS

1
<PAGE> 255

adviser, monitors on an ongoing basis the ability of an issuer of a demand
instrument to pay principal and interest on demand. Events occurring between the
date the Fund elects to demand payment on a floating- or variable-rate
instrument and the date payment is due may affect the ability of the issuer of
the instrument to make payment when due, and unless such demand instrument
permits same-day settlement, such events may affect the Fund's right to obtain
payment at par. Demand instruments whose demand feature is not exercisable
within seven days may be treated as liquid, provided an active secondary market
exists.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements wherein the seller of a
security to the Fund agrees to repurchase that security from the Fund at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. The Fund may enter into repurchase agreements only with respect to U.S.
Government obligations and other securities that are permissible investments for
the Fund. All repurchase agreements will be fully collateralized at 102% based
on values that are marked to market daily. The maturities of the underlying
securities in a repurchase agreement transaction may be greater than twelve
months, although the maximum term of a repurchase agreement will always be less
than twelve months. If the seller defaults and the value of the underlying
securities has declined, the Fund may incur a loss. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security, the Fund's
disposition of the security may be delayed or limited.

The Fund may not enter into a repurchase agreement with a maturity of more
than seven days, if, as a result, more than 10% of the market value of the
Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. The Fund will only enter into repurchase agreements with primary
broker/dealers and commercial banks that meet guidelines established by the
Board of Directors and are not affiliated with the investment adviser. The Fund
may participate in pooled repurchase agreement transactions with other funds
advised by Wells Fargo Bank.

------------------------

The Fund's investment objective, as set forth in the first paragraph of the
subsection discussing the Fund's objective and policies, is fundamental; that
is, the investment objective may not be changed without approval by the vote of
the holders of a majority of the Fund's outstanding voting securities, as
described under "Capital Stock" in the SAI. If the Board of Directors
determines, however, that the Fund's investment objective can best be achieved
by a substantive change in a non-fundamental investment policy or strategy, the
Company may make such change without shareholder approval and will disclose any
such material changes in the then current prospectus.

2
<PAGE> 256

ADVISORY, ADMINISTRATION AND
DISTRIBUTION ARRANGEMENTS

The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decides
upon matters of general policy.

INVESTMENT ADVISER

Pursuant to an Advisory Contract, the Fund is advised by Wells Fargo Bank,
420 Montgomery Street, San Francisco, California 94104, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the largest banks
in the United States, was founded in 1852 and is the oldest bank in the western
United States. As of April 1, 1996, Wells Fargo Bank and its affiliates provided
investment advisory services for approximately $56 billion of assets of
individuals, trusts, estates and institutions. Wells Fargo Bank is the
investment adviser to other separately managed portfolios of the Company, and
serves as investment adviser or sub-adviser to five other registered open-end
management investment companies, each of which consist of several separately
managed investment portfolios.

For its services under the Advisory Contract, Wells Fargo Bank is entitled
to monthly advisory fees at the annual rates of 0.50% of the average daily net
assets of the Fund. From time to time, Wells Fargo Bank may waive such fees in
whole or in part. Any such waiver would reduce expenses of the Fund and,
accordingly, have a favorable impact on the performance of the Fund. For the
year ended December 31, 1995, Wells Fargo Bank was paid 0.46% of the average
daily net assets of the Fund as compensation for its services as investment
adviser.

Mr. Paul Single has been responsible as portfolio co-manager for the
day-to-day management of the Fund since May 1, 1995. Mr. Single has managed
taxable bond portfolios for over a decade, and has specific expertise in
mortgage-backed securities. Prior to joining Wells Fargo Bank, in early 1988, he
was a senior portfolio manager for Benham Capital Management Group. Mr. Single
received his B.S. from Springfield College.

Ms. Tamyra Thomas has been responsible as portfolio co-manager for the
day-to-day management of the Fund since May 1, 1996. Ms. Thomas is a senior
vice-president and the chief fixed income investment officer of the Investment
Management Group of Wells Fargo Bank. She is also Chair of the Investment
Management Group Policy Committee. Ms. Thomas has managed bond portfolios for
over a decade. She currently manages in excess of $1 billion of long-term
taxable bond portfolios for various foundations, defined benefit plans and other
clients. Prior to joining Wells Fargo in early 1988, she held a number of senior
investment positions for the Valley Bank & Trust Company of Utah including vice
president and manager of the investment department and chairman of the Trust
Investment Committee. She holds a B.S. from the University of Utah and was past
president of the Utah Bond Club. Ms. Thomas is a chartered financial analyst.

Mr. Scott Smith also has been responsible as portfolio co-manager for the
day-to-day management of the Fund since May 1, 1996. He joined Wells Fargo Bank
in 1988 as a taxable money market portfolio

3
<PAGE> 257

specialist. His experience includes a position with a private money management
firm with mutual fund investment operations. Mr. Smith holds a B.A. degree from
the University of San Diego and is a chartered financial analyst.

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR

The Administration Agreement between Stephens and the Fund states that
Stephens shall provide as administrative services, among other things, (i)
general supervision of the operation of the Fund, including coordination of the
services performed by the Fund's investment adviser, transfer agent, custodian,
independent auditors and legal counsel, (ii) general supervision of regulatory
compliance matters, including the compilation of information for documents such
as reports to, and filings with, the SEC and state securities commissions and
the preparation of proxy statements and shareholder reports for the Fund; and
(iii) general supervision of the compilation of data required for the
preparation of periodic reports distributed to the Company's officers and Board
of Directors. Stephens also furnishes office space and certain facilities
required for conducting the business of the Fund and pays the compensation of
the Company's directors, officers and employees who are affiliated with
Stephens.

4
<PAGE> 258

Shares and Class D Shares and may enter into selling agreements with
broker/dealers or financial institutions to market and make available Class A
Shares and Class D Shares to their respective customers.

Under the Distribution Agreement, Stephens is entitled to receive from the
Fund a monthly fee at an annual rate of up to the greater of $100,000 or 0.05%
of the average daily net assets of the Class A Shares of the Fund and a monthly
fee at an annual rate of up to 0.50% of the average daily net assets of the
Class D Shares of the Fund. The actual fee payable to Stephens is determined,
within such limits, from time to time by mutual agreement between the Company
and Stephens, and may not exceed the maximum amount payable under the Rules of
Fair Practice of the NASD. With respect to the Class D Shares of the Fund,
Stephens may enter into selling agreements with one or more selling agents under
which such agents may receive from Stephens compensation for sales support
services. Such compensation may include, but is not limited to, commissions or
other payments based on the average daily net assets of Class D Shares of the
Fund attributable to such agents. The principal sales support services provided
to the Fund are services provided by selling agents in exchange for commissions
and other payments to selling agents. Stephens may retain any portion of the
total distribution fee payable under the Distribution Agreement to compensate it
for distribution-related services provided by Stephens or to reimburse it for
other distribution-related expenses. Since the Distribution Agreement provides
for fees that are used by Stephens to pay for distribution services, a plan of
distribution for each class of shares (individually a "Plan", collectively the
"Plans") and the Distribution Agreement are approved and reviewed in accordance
with Rule 12b-1 under the 1940 Act, which regulates the manner in which an
investment company may, directly or indirectly, bear the expense of distributing
its shares. See "Distribution Plans" for a more complete description of the
Plans.

SERVICING AGENTS

The Fund may enter into servicing agreements with one or more servicing
agents on behalf of the Class D Shares of the Fund. Under such agreements,
servicing agents provide shareholder liaison services, which may include
responding to customer inquiries and providing information on shareholder
investments, and provide such related services as the Fund or a Class D
Shareholder may reasonably request. For these services, a servicing agent
receives a fee which will not exceed, on an annualized basis for the Fund's then
current fiscal year, the lesser of 0.25% of the average daily net assets of the
Class D Shares of the Fund (represented by Class D Shares owned by investors
with whom the servicing agent maintains a servicing relationship), or an amount
which equals the maximum amount payable to the servicing agent under applicable
laws, regulations or rules.

5
<PAGE> 259

DETERMINATION OF NET ASSET VALUE

Net asset value per share for the Fund is determined by Wells Fargo Bank on
each day that the Exchange is open for trading. The net asset value of a class
of the Fund is the value of total net assets attributable to such class divided
by the number of outstanding shares of that class. The value of net assets per
class is determined daily by adjusting the net assets per class at the beginning
of the day by the value of each class's shareholder activity, net investment
income and net realized and unrealized gains or losses for that day. Net
investment income is calculated each day for each class by attributing to each
class a pro rata share of daily income and common expenses, and by assigning
class-specific expenses to each class as appropriate. The net asset value of
each class is expected to fluctuate daily.

PERFORMANCE DATA

The total return of a class of shares of the Fund is calculated by
subtracting (i) the public offering price of the class of shares (which includes
the maximum sales charge of the class of shares) of one share of the class of
shares at the beginning of the period, from (ii) the net asset value of all
shares for the class of shares an investor would own at the end of the period
for the share held at the beginning of the period (assuming reinvestment of all
dividends and capital gain distributions), and dividing by (iii) the public
offering price per share of the class of shares at the beginning of the period.
The resulting percentage indicates the positive or negative rate of return that
an investor would have earned from reinvested dividends and capital gain
distributions and changes in share price during the period for the class of
shares. The Fund may also, at times, calculate total return of a class of shares
based on net asset value per share of a class of shares (rather than the public
offering price), in which case the figures would not reflect the effect of any
sales charges that would have been paid by an investor in the class of shares,
or by assuming that a sales charge other than the maximum sales charge
(reflecting the Volume Discounts set forth below) is assessed, provided that
total return data derived pursuant to the calculation described above are also
presented.

6
<PAGE> 260

data derived pursuant to the calculation described above are also presented. The
Fund's Annual Report contains additional performance information and is
available upon request without charge from the Fund.

Because of differences in the fees and/or expenses borne by Class D Shares
of the Fund, the net yield on such shares can be expected, at any given time, to
differ from the net yield on Class A Shares. Performance information quotations
will be computed separately for Class A Shares and Class D Shares.

Additional information about the performance of the Fund is contained in
the Annual Report for the Fund. The Annual Report may be obtained free of charge
by calling the Company at 800-552-9612.

PURCHASE OF SHARES

In most cases, the minimum initial purchase amount for the Fund is $1,000.
The minimum initial purchase amount is $100 for purchases through the Systematic
Purchase Plan and $250 for an investment by a retirement plan qualified under
the Internal Revenue Code of 1986, as amended (the "Code"). The minimum
subsequent purchase amount is generally $100. The minimum initial or subsequent
purchase amount requirements may be waived or lowered for investments effected
on a group basis by certain entities and their employees, such as pursuant to a
payroll deduction or other accumulation plan. The Company reserves the right to
reject any purchase order. All funds, net of sales loads, will be invested in
full and fractional shares. Checks will be accepted for the purchase of the
Fund's shares subject to collection at full face value in U.S. dollars.
Inquiries concerning purchases may be directed to the Company at (800) 572-7797
or at the address on the front cover of the Prospectus.

Shares of the Fund are offered continuously at the applicable offering
price (including any sales load) next determined after a purchase order is
received. Payment for shares purchased through a broker/dealer will not be due
from the broker/dealer until settlement date, currently three business days
after the order is placed. It is the broker/dealer's responsibility to forward
payment for shares being purchased to the Fund promptly. Payment for orders
placed directly through the Transfer Agent must accompany the order.

------------------------

7
<PAGE> 261

Sales loads relating to the purchase of Class A Shares in the Fund are as
follows:

Class D Shares are not subject to a front-end sales load. However, Class D
Shares which are redeemed within one year from the receipt of a purchase order
will be subject to a contingent deferred sales charge equal to 1% of the dollar
amount equal to the lesser of the net asset value at the time of purchase of the
shares being redeemed or the net asset value of such shares at the time of
redemption.

REDUCED SALES CHARGE -- CLASS A SHARES

8
<PAGE> 262

the Fund, the sales load on the entire additional amount would be 4.00% of the
offering price. To obtain such discount, you must provide sufficient information
at the time of purchase to permit verification that the purchase qualifies for
the reduced sales load, and confirmation of the order is subject to such
verification. The Right of Accumulation may be modified or discontinued at any
time with respect to all Class A Shares purchased thereafter.

You may Reinvest proceeds from a redemption of Class A Shares of the Fund
in Class A Shares of the Fund or in Class A Shares of another of the Company's
investment portfolios that offers Class A Shares at net asset value, without a
sales load, within 120 days after such redemption. However, if the other
investment portfolio charges a sales load that is higher than the sales load
that you have paid in connection with the Class A Shares you have redeemed, you
pay the difference between the sales loads. In addition, the Class A Shares of
the investment portfolio to be acquired must be registered for sale in your
state of residence. The amount that may be so reinvested may not exceed the
amount of the redemption proceeds, and a written order for the purchase of the
Class A Shares must be received by the Fund or the Transfer Agent within 120
days after the effective date of the redemption.

9
<PAGE> 263

Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by Directors, officers
and employees (and their spouses, parents, children and siblings) of the
Company, Stephens, its affiliates and other broker-dealers that have entered
into agreements with Stephens to sell such shares. Class A Shares of the Fund
also may be purchased at a purchase price equal to the net asset value of such
shares, without a sales load, by present and retired Directors, officers and
employees (and their spouses, parents, children and siblings) of Wells Fargo
Bank and its affiliates if Wells Fargo Bank and/or the respective affiliates
agree. Such shares also may be purchased at such price by employee benefit and
thrift plans for such persons and by any investment advisory, trust or other
fiduciary account (other than an individual retirement account) maintained,
managed or advised by Wells Fargo Bank or Stephens or their affiliates.

CONTINGENT DEFERRED SALES CHARGE -- CLASS D SHARES

Class D Shares which are redeemed within one year of receipt of a purchase
order for such shares will be subject to a contingent deferred sales charge
equal to 1.00% of an amount equal to the lesser of the net asset value at the
time of purchase for the Class D Shares being redeemed or the net asset value of
such shares at the time of redemption. Accordingly, a contingent deferred sales
charge will not be imposed on amounts representing increases in net asset value
above the net asset value at the time of purchase. In addition a charge will not
be assessed on Class D Shares purchased through reinvestment of dividends or
capital gain distributions. In determining whether a contingent deferred sales
charge is applicable to a redemption, Class D Shares are considered to be
redeemed on a first-in, first-out basis so that Class D Shares held for a longer
period of time are considered redeemed prior to more recently acquired shares.

10
<PAGE> 264

Shares of the Fund may be purchased by any of the methods described below.

INITIAL PURCHASES OF FUND SHARES BY WIRE

2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($1,000 or more) to:

Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express U.S. Government Income Fund (designate Class
A or D)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)

Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082

4. Share purchases are effected at the public offering price, or, in the
case of Class D Shares, the net asset value, next determined after the Account
Application is received and accepted.

INITIAL PURCHASES OF FUND SHARES BY MAIL

1. Complete an Account Application. Indicate the services to be used.

2. Mail the Account Application and a check for $1,000 or more, payable to
"Overland Express U.S. Government Income Fund (designate Class A or D)" at its
mailing address set forth above.

11
<PAGE> 265

ADDITIONAL PURCHASES

Additional purchases of $100 or more may be made by instructing the Fund's
Transfer Agent to debit an approved account designated in the Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Overland Express U.S. Government Income Fund (designate Class A or D)" to
the above address. Write the Fund account number on the check and include the
detachable stub from a Statement of Account or a letter providing the account
number.

SYSTEMATIC PURCHASE PLAN

The Company's Systematic Purchase Plan provides you with a convenient way
to establish and add to your existing accounts on a monthly basis. If you elect
to participate in this plan, you must specify an amount ($100 or more) to be
withdrawn automatically by the Transfer Agent on a monthly basis from an
approved bank account designated in your Account Application (an "Approved Bank
Account"). The Transfer Agent withdraws and uses this amount to purchase shares
of the Fund on or about the fifth business day of each month. The Transfer Agent
requires a minimum of ten (10) business days to implement your Systematic
Purchase Plan purchases. There are no additional fees charged for participating
in this plan.

You may change the investment amount, the date on which your Systematic
Purchase is effected and suspend purchases or terminate your participation in
the Systematic Purchase Plan at any time by providing written notice to the
Transfer Agent at least five (5) business days prior to any scheduled
transaction. An election will be terminated automatically if the designated
Approved Bank Account balance is insufficient to make a scheduled withdrawal, or
if either your Approved Bank Account or your Fund account is closed.

PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Purchase orders for shares in the Fund placed through authorized
broker/dealers and financial institutions by the close of the Exchange on any
day that the Fund's shares are offered for sale, including orders for which
payment is to be made from free cash credit balances in securities accounts held
by a dealer, will be effective on the same day the order is placed if received
by the Transfer Agent before the close of business. Purchase orders that are
received by a dealer or financial institution after the close of the Exchange or
by the Transfer Agent after the close of business generally will be effective on
the next day that shares are offered. The broker/dealer or financial institution
is responsible for the prompt transmission of purchase orders to the Transfer
Agent. Payment for Fund shares is not due until settlement date. Broker/dealers
and financial institutions may benefit from the temporary use of payments to the
Fund during the settlement period. A broker/dealer or financial institution that
is involved in a purchase transaction may charge separate account, service or
transaction fees. Financial institutions may be required to register as dealers
pursuant to applicable state securities laws, which may differ from federal law
and any interpretations expressed herein.

12
<PAGE> 266

EXCHANGE PRIVILEGES

You may exchange Class A Shares of the Fund for shares of the same class of
the Company's other investment portfolios or for shares of the California
Tax-Free Money Market, Money Market, National Tax-Free Institutional Money
Market or U.S. Treasury Money Market Funds in an identically registered account
at respective net asset values. If the other investment portfolio charges a
sales load on the purchase of the class of shares being exchanged that is higher
than the sales load that you have paid in connection with the shares you are
exchanging, you pay the difference between the sales loads. Class D Shares of
the Fund may be exchanged for Class D Shares of one of the Company's other
investment portfolios that offers Class D Shares or for Class A Shares of the
Money Market Fund in an identically registered account at respective net asset
values. You are not charged a contingent deferred sales charge on exchanges of
Class D Shares for shares of the same class of another of the Company's
investment portfolios or for Class A Shares of the Money Market Fund. If you
exchange Class D Shares of an investment portfolio for shares of the same class
of another investment portfolio, or for Class A Shares of the Money Market Fund,
the remaining period of time (if any) that the contingent deferred sales charge
is in effect will be computed from the time of the initial purchase of the
previously held shares. Accordingly, if you exchange Class D Shares of an
investment portfolio for Class A Shares of the Money Market Fund, and redeem the
shares of the Money Market Fund within one year of the receipt of the purchase
order for the exchanged Class D Shares, you will have to pay a deferred sales
charge equal to the contingent deferred sales charge applicable to the
previously exchanged Class D Shares. If you exchange Class D Shares of an
investment portfolio for Class A Shares of the Money Market Fund, you may
subsequently re-exchange the Class A Shares of the Money Market Fund only for
Class D Shares. If you re-exchange the Class A Shares of the Money Market Fund
for Class D Shares of an investment portfolio, the remaining period of time (if
any) that the contingent deferred sales charge is in effect will be computed
from the time of your initial purchase of Class D Shares. In addition, shares of
the investment portfolio to be acquired must be registered for sale in your
state of residence. You should obtain, read and retain the Prospectus for the
investment portfolio into which you desire to exchange before submitting an
exchange order.

You may exchange shares by writing the Transfer Agent as indicated below
under "Redemption by Mail," or by calling the Transfer Agent or your authorized
broker/dealer or financial institution or Servicing Agent, unless you have
elected not to authorize telephone exchanges in the Account Application (in
which case you may subsequently authorize such telephone exchanges by completing
a Telephone Exchange Authorization Form and submitting it to the Transfer Agent
in advance of the first such exchange). Shares held in certificated form may not
be exchanged by telephone. The Transfer Agent's telephone number for exchanges
is (800) 572-7797.

13
<PAGE> 267

shareholder's most recent exchange. The Company reserves the right to reject any
telephone exchange order or otherwise to modify or discontinue exchange
privileges at any time. Under SEC rules, 60 days prior notice of any amendments
or termination of exchange privileges will be given to shareholders, except
under certain extraordinary circumstances. A capital gain or loss for federal
income tax purposes may be realized upon an exchange, depending upon the cost or
other basis of shares exchanged.

REDEMPTION OF SHARES

Except for any contingent deferred sales charge which may be applicable
upon redemption of Class D Shares, as described under "Purchase of Shares," the
Company does not charge for redemption transactions. However, a broker/dealer or
financial institution that is involved in a redemption transaction may charge
separate account, service or transaction fees. On a day the Fund is open for
business, redemption orders received by an authorized broker/dealer or financial
institution before the close of the Exchange and received by the Transfer Agent
before the close of business on that day will be executed at the net asset value
per share determined at the close of the Exchange on that day. Redemption orders
received by authorized broker/dealers or financial institutions after the close
of the Exchange, or not received by the Transfer Agent prior to the close of
business, will be executed at the net asset value determined at the close of the
Exchange on the next business day.

Redemption proceeds, net of any contingent deferred sales charge applicable
with respect to Class D Shares, ordinarily will be remitted within seven days
after the order is received in proper form, except proceeds may be remitted over
a longer period to the extent permitted by the SEC under extraordinary
circumstances. If an expedited redemption is requested, redemption proceeds will
be distributed only if the check used for investment is deemed to be cleared for
payment by your bank, currently considered by the Company to be a period of ten
(10) days after investment. The proceeds, of course, may be more or less than
cost. Payment of redemption proceeds may be made in securities, subject to
regulation by some state securities commissions.

REDEMPTION BY MAIL

14
<PAGE> 268

2. Sign the letter in exactly the same way the account is registered. If
there is more than one owner of the shares, all must sign.

4. If shares to be redeemed are held in certificated form, enclose the
certificates with the letter. Do not sign the certificates and for protection
use registered mail.

5. Mail the letter to the Transfer Agent at the mailing address set forth
under "Purchase of Shares."

SYSTEMATIC WITHDRAWAL PLAN

The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your account and the proceeds, net of any contingent
deferred sales charge applicable with respect to Class D Shares, distributed to
you on a monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of the date of your election to
participate and are not also a participant in the Company's Systematic Purchase
Plan at any time while participating in this plan. To participate in the plan,
specify an amount ($100 or more) to be distributed by check to your address of
record or deposited in an Approved Bank Account. The Transfer Agent redeems
sufficient shares and mails or deposits the proceeds of the redemption, net of
any contingent deferred sales charge applicable with respect to Class D Shares,
as instructed, on or about the fifth business day prior to the end of each
month. There are no additional fees charged for participating in this plan.

It may take up to ten (10) days to establish your participation in the
Systematic Withdrawal Plan. You may change the withdrawal amount, suspend
withdrawals or terminate your participation in the Systematic Withdrawal Plan by
providing written notice to the Transfer Agent at least five (5) business days
prior to a scheduled transaction. An election will be terminated automatically
if your Fund account balance is insufficient to make a scheduled withdrawal or
if your Fund account or Approved Bank Account is closed.

EXPEDITED REDEMPTIONS BY LETTER AND TELEPHONE

If shares are not held in certificated form, you may request an expedited
redemption of shares by letter or telephone (unless you have elected not to
authorize telephone redemptions on your Account Application or another form that
is on file with the Transfer Agent) on any day the Fund is open for business.
See "Exchange Privileges" for additional information regarding telephone
redemption privileges.

15
<PAGE> 269

You may request expedited redemption by telephone by calling the Transfer
Agent at (800) 572-7797.

REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

Redemption requests placed through authorized broker/dealers and financial
institutions by the close of the Exchange on any day that the Fund's shares are
offered for sale will be effective on the same day the request is placed if
received by the Transfer Agent before the close of business. Redemption requests
that are received by a dealer or financial institution after the close of the
Exchange or by the Transfer Agent after the close of business generally will be
effective on the next day that shares are offered. The broker/dealer or
financial institution is responsible for the prompt transmission of redemption
requests to the Transfer Agent. Unless you have made other arrangements, and
have informed the Transfer Agent of such arrangements, proceeds of redemptions
made through authorized broker/dealers and financial institutions will be
credited to your account with such broker/dealer or institution. You may request
a check from your broker/dealer or financial institution or may elect to retain
the redemption proceeds in your account. The broker/dealer or financial
institution may benefit from the use of the redemption proceeds prior to the
clearance of a check issued to you for such proceeds or prior to disbursement or
reinvestment of such proceeds on your behalf.

------------------------

The proceeds of a redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.

16
<PAGE> 270

DISTRIBUTION PLANS

The Company's Board of Directors has adopted a Distribution Plan (the
"Plans") on behalf of each class of shares of the Fund. Under the Plans and
pursuant to the Distribution Agreement, the Fund may defray all or part of the
cost of preparing and printing prospectuses and other promotional materials, and
of delivering prospectuses and those materials to prospective shareholders of
the Fund, by paying on an annual basis up to the greater of $100,000 or 0.05% of
the average daily net assets of the Class A Shares of the Fund and a monthly fee
at an annual rate of 0.50% of the average daily net assets of the Class D Shares
of the Fund to the distributor. Under the Plan for the Class D Shares of the
Fund, the distributor may enter into selling agreements with one or more selling
agents under which such agents may receive compensation for distribution-related
services from the distributor, including, but not limited to, commissions or
other payments to such agents based on the average daily net assets of Class D
Shares attributable to them. The distributor may retain any portion of the total
distribution fee payable under the Plans to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses. The Plans provide only for the reimbursement of
actual expenses. The Fund may participate in joint distribution activities with
any other class or portfolio of the Company, in which event expenses reimbursed
out of the assets of the Fund may be attributable, in part, to the
distribution-related activities of another portfolio. Generally, the expenses
attributable to joint distribution activities will be allocated among the Fund,
and any other portfolio of the Company in proportion to their relative net asset
sizes, although the Board of Directors may allocate such expenses in any other
manner that it deems fair and equitable.

SERVICING PLAN

DIVIDENDS AND DISTRIBUTIONS

Net capital gains of the Fund, if any, will be distributed annually (or
more frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI).

17
<PAGE> 271

The Fund's net investment income available for distribution to the holders
of Class D Shares will be reduced by the amount of shareholder servicing fees
payable to shareholder servicing agents under the Servicing Plan and by the
incremental distribution fees payable under the Distribution Plan. There may be
certain other differences in fees (e.g. audit fees, transfer agent fees) between
Class A Shares and Class D Shares that would affect their relative dividends.

DIVIDEND AND DISTRIBUTION OPTIONS

When you fill out an Account Application, you can choose from three
dividend and distribution options:

A. The AUTOMATIC REINVESTMENT OPTION provides for the reinvestment of
dividends and capital gain distributions in additional shares of the same
class of the Fund. Dividends and distributions declared in a month are
reinvested at net asset value early in the following month. You are
assigned this option automatically if you make no choice on your Account
Application.

B. The AUTOMATIC CLEARING HOUSE OPTION permits you to have dividends
and capital gain distributions deposited in an Approved Bank Account. In
the event your Approved Bank Account is closed, and such distribution is
returned to the Fund's dividend disbursing agent, the distribution will be
reinvested in your Fund account at the net asset value next determined
after the distribution has been returned. Your Automatic Clearing House
Option will be converted to the Automatic Reinvestment Option.

C. The CHECK PAYMENT OPTION allows you to receive a check for a
dividend or capital gain distribution, which is mailed either to the
designated address, or your Approved Bank Account, early in the month
following declaration. If the U.S. Postal Service cannot deliver such
checks, or if such checks remain uncashed for six months, those checks will
be reinvested in your Fund account at the net asset value next determined
after the earlier of the date the checks have been returned to the dividend
disbursing agent or the date six months after the payment of such dividend
or distribution. Your Check Payment Option will be converted to the
Automatic Reinvestment Option.

18
<PAGE> 272

TAXES

The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code, as long as such qualification is in the best interest
of the Fund's shareholders. The Fund will be treated as a separate entity for
tax purposes and thus the provisions of the Code applicable to regulated
investment companies generally will be applied to each of the Company's funds,
rather than to the Company as a whole. By complying with the applicable
provisions of the Code, the Fund will not be subject to federal income taxes
with respect to net investment income and net capital gains distributed to its
shareholders. The Fund intends to pay out substantially all of its net
investment income and net capital gains (if any) for each year. Dividends from
net investment income (which includes net short-term capital gains, if any)
declared and paid by the Fund will be taxable as ordinary income to the Fund's
shareholders. Whether you take such dividend payments and distributions of
capital gain in cash or have them automatically reinvested in additional shares,
they will be taxable to you. The Fund's dividends will not qualify for the
dividends-received deduction allowed to corporate shareholders. Generally,
dividends and distributions of capital gain are taxable to shareholders at the
time they are paid. However, such dividends and distributions declared payable
in October, November and December and made payable to shareholders of record in
such a month are treated as paid and are thereby taxable as of December 31,
provided that such dividends and distributions are actually paid no later than
January 31 of the following year. You may be eligible to defer the taxation of
dividends and capital gain distributions on shares of the Fund which are held
under a qualified tax-deferred retirement plan.

The Fund, or your Shareholder Servicing Agent on its behalf, will inform
you by January 31 of each year of the amount and nature of Fund dividends and
capital gain distributions with respect to the previous year. You should keep
all statements you receive to assist in your personal record keeping. The
Company is required by federal law to withhold, subject to certain exemptions,
at a rate of 31% on dividends, capital gain distributions, and redemption
proceeds (including proceeds from exchanges) paid or credited to individual
shareholders of the Fund, if a shareholder has not complied with IRS regulations
or if a correct taxpayer identification number, certified when required, is not
on file with the Company or the Transfer Agent. In connection with this
withholding requirement, you will be asked to certify on your Account
Application that the social security or taxpayer identification number you
provide is correct and that you are not subject to 31% backup withholding for
previous underreporting to the IRS.

Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes -- Foreign Shareholders" in the SAI.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Wells Fargo Bank, N.A. has been retained to act as the Fund's custodian and
transfer and dividend disbursing agent. Its principal place of business is 420
Montgomery Street, San Francisco, California 94104 and its transfer and dividend
disbursing agency activities are managed at 525 Market Street, San Francisco,
California 94105.

19
<PAGE> 273

ORGANIZATION AND CAPITAL STOCK

The Company, an open-end investment company, was incorporated in Maryland
on April 27, 1987. The authorized capital stock of the Company consists of
20,000,000,000 shares having a par value of $.001 per share. The Company
currently offers the following series of shares, each representing an interest
in one of the following funds -- the Asset Allocation, California Tax-Free Bond,
California Tax-Free Money Market, Money Market, Municipal Income, National
Tax-Free Institutional Money Market, Overland Sweep, Short-Term
Government-Corporate Income, Short-Term Municipal Income, Strategic Growth, U.S.
Government Income, U.S. Treasury Money Market and Variable Rate Government
Funds. The Board of Directors may, in the future, authorize the issuance of
other series of capital stock representing shares of additional investment
portfolios or funds. All shares of the Company have equal voting rights and will
be voted in the aggregate, and not by series or class, except where voting by
series or class is required by law or where the matter involved affects only one
series or class. The Company may dispense with the annual meeting of
shareholders in any fiscal year in which it is not required by the 1940 Act to
elect Directors; however, shareholders are entitled to call a meeting of
shareholders for purposes of voting on removal of a Director or Directors. A
more detailed statement of the voting rights of shareholders is contained in the
SAI. All shares of the Company, when issued, will be fully paid and
nonassessable.

20
<PAGE> 274

OVERLAND EXPRESS FUNDS

C/O OVERLAND EXPRESS SHAREHOLDER SERVICES, WELLS FARGO BANK, N.A.
POST OFFICE BOX 63084, SAN FRANCISCO, CALIFORNIA 94163
[LOGO] FOR PERSONAL SERVICE PLEASE CALL
YOUR INVESTMENT ADVISOR OR 1-800-572-7797

ACCOUNT APPLICATION PAGE 1 OF 5
U.S. GOVERNMENT INCOME FUND
<TABLE>
- -----------------------------------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / ADDITIONAL INVESTMENT OR CHANGE TO ACCOUNT # _____________
- -----------------------------------------------------------------------------------------------------------
<S> <C>
/ / INDIVIDUAL 1. Individual __________________________________________ _______-_____-_______
USE LINE 1 First Name Initial Last Name Soc. Security No.

TYPE OF ACCOUNT (CHOOSE ONE ONLY):

/ / Class A Shares, or

/ / Class D Shares (not available for
purchases of $9,000,000 or more)

Note: If no choice is indicated, Class A Shares will be selected.

METHOD OF PAYMENT: / / Debit bank account designated in Section 3.

/ / Check attached (payable to Overland Express U.S.
Government Income Fund
(designate Class A or D))

/ / Funds have been wired to Overland Express

- --------------------------------------------------------------------------------
SETTLEMENT ARRANGEMENTS: (Check only one if applicable)

- --------------------------------------------------------------------------------
SYSTEMATIC PURCHASE PLAN:

/ / Mail check to registration set forth in Section 1.

<PAGE> 276
[LOGO] ACCOUNT APPLICATION PAGE 3 OF 5
U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
4. REDUCED SALES CHARGES (If Applicable.)
- --------------------------------------------------------------------------------

LETTER OF INTENT -- CLASS A SHARES

/ / I agree to the Letter of Intent set forth above. It is my intention to
invest over a 13-month period in the Load Funds an aggregate amount equal
to at least:

/ / $100,000 / / $200,000 / / $400,000 / / $600,000
/ / $800,000 / / $1,000,000 / / $2,500,000 / / $5,000,000
/ / $9,000,000

RIGHT OF ACCUMULATION -- CLASS A SHARES

All dividends and capital gain distributions will be automatically reinvested
in shares of the same class of the Fund unless otherwise indicated:

/ / Invest dividends in Account #____________________ of _________________ Fund
of the Overland Express Funds.

/ / Invest capital gain distributions in Account #____________________ of
____________________ Fund of the Overland Express Funds.

/ / Pay dividends by check and/or / / pay capital gain distributions by check

AND MAIL CHECKS TO:

/ / The registration address set forth in Section 1. / / The bank account
designated in Section 3.
- --------------------------------------------------------------------------------
(CONTINUED)

<PAGE> 277
[LOGO] ACCOUNT APPLICATION PAGE 4 OF 5
U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
7. AUTHORIZATION FOR TRUSTS AND ORGANIZATIONS (If Applicable.)
- --------------------------------------------------------------------------------

CORPORATIONS, TRUSTS, PARTNERSHIPS OR OTHER ORGANIZATIONS MUST COMPLETE
THIS SECTION.

<TABLE>
<S> <C> <C> <C> <C>
Registered Owner is a: / / Trust / / Corporation, Incorporated Association
/ / Partnership / / Other:______________________________________________________________
(such as Non-Profit Organization, Religious Organization, Sole
Proprietorship, Investment Club, Non-incorporated Association, etc.)
</TABLE>

<TABLE>
<S> <C> <C>
Name Title Specimen Signature

---------------------------------- ---------------------------------- ----------------------------------

---------------------------------- ---------------------------------- ----------------------------------
</TABLE>

<TABLE>
<S> <C>
________________________________________________
Secretary (Signature Guarantee or
Corporate Seal is Required)
FOR ALL OTHER ORGANIZATIONS: ________________________________________________
Certifying Trustee, General Partner, or Other
</TABLE>
- --------------------------------------------------------------------------------
(CONTINUED)

<PAGE> 278
[LOGO] ACCOUNT APPLICATION PAGE 5 OF 5
U.S. GOVERNMENT INCOME FUND
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------
8. SIGNATURE, TAX INFORMATION & CERTIFICATION
- ---------------------------------------------------------------------------------------------------------------
/ / U.S. CITIZEN OR RESIDENT
I understand that the Federal Government requires Overland Express Funds, Inc. to withhold and pay to
the Internal Revenue Service 31% from all interest, dividends, capital gains distributions and
proceeds from redemptions UNLESS I have provided a certified taxpayer identification (Social Security
or Employer Identification) number and certify in the Withholding Status below that I am NOT subject
to backup withholding. The taxpayer identification number I provided in Section 1 will be the number
under which any taxable earnings will be reported to the IRS.
WITHHOLDING STATUS: Unless I indicate that I am subject to backup withholding by checking the box
below, I certify that 1) I have NOT been notified by the IRS that I am subject to backup withholding
as a result of a failure to report all interest or dividends, OR 2) I have been notified by the IRS
that I am no longer subject to backup withholding: / / I am currently subject to backup withholding.
/ / NON-RESIDENT ALIEN (In order to claim this exemption, ALL owners on the account must be non-resident
aliens and sign below.)
I am not a U.S. citizen or resident (nor is this account held by a foreign corporation, partnership,
estate or trust) and my permanent address is:____________________________________ Country:____________

X________________________________________________________ SIGNATURE GUARANTEE: NOT REQUIRED WHEN
Individual (or Custodian) date ESTABLISHING NEW ACCOUNTS. Required only if
establishing privileges in Block 2 on an
X________________________________________________________ existing account. Signature Guarantee may be
Joint Owner (if any) date provided by an "eligible guarantor
institution," which includes a commercial bank,
X________________________________________________________ trust company, member firm of a domestic stock
Corporate Officer or Trustee date exchange, savings association, or credit union
that is authorized by its charter to provide a
signature guarantee.

AFFIX SIGNATURE GUARANTEE STAMP
________________________________________________________ _______________________________________________
Title of Corporate Officer or Trustee Signature Guaranteed By
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

DEALER INFORMATION

<TABLE>
<S> <C> <C>
_____________________________________________________ ____________________
Dealer Name Branch ID #
_____________________________________________________ ____________________ ____________________
Representative's Last Name Rep ID # Rep Phone #
X_______________________________________________________________________________________________________
Authorized signature of Broker/Dealer Title date
</TABLE>

<PAGE> 279

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201

INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163

LEGAL COUNSEL

Morrison & Foerster LLP

2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111

NOT FDIC INSURED

FOR MORE INFORMATION ABOUT FUNDS,
SIMPLY CALL (800) 552-9612,
OR WRITE:

OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163

LOGO

------------------------

PROSPECTUS
------------------------

U.S. Government Income Fund

------------------------

May 1, 1996

------------------------
NOT FDIC INSURED

76P 5/96

<PAGE> 280

Telephone: (800) 552-9612 [OVERLAND EXPRESS LOGO]

Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian

Overland Express Funds, Inc. (the "Company") is an open-end, series
investment company. This Prospectus contains information about one of the
Company's funds -- the VARIABLE RATE GOVERNMENT FUND (the "Fund").

The Fund seeks to earn a high level of current income, while reducing
principal volatility, by investing primarily in adjustable rate mortgage
securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities.

This Prospectus describes two classes of shares of the Fund -- Class A
Shares and Class D Shares.

------------------------

INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.

------------------------

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. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND
INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.

PROSPECTUS DATED MAY 1, 1996

<PAGE> 281

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................................................... ii
Summary of Expenses.................................................. v
Financial Highlights................................................. vii
Investment Objective and Policies.................................... 1
Additional Permitted Investment Activities........................... 3
Advisory, Administration and Distribution Arrangements............... 4
Determination of Net Asset Value..................................... 6
Purchase of Shares................................................... 7
Exchange Privileges.................................................. 13
Redemption of Shares................................................. 15
Distribution Plans................................................... 17
Servicing Plan....................................................... 18
Dividends and Distributions.......................................... 18
Taxes................................................................ 19
Custodian and Transfer and Dividend Disbursing Agent................. 20
Organization and Capital Stock....................................... 21
Other Matters........................................................ 21
</TABLE>

i
<PAGE> 282

PROSPECTUS SUMMARY

Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

A. The VARIABLE RATE GOVERNMENT FUND seeks to earn a high level of current
income, while reducing principal volatility, by investing primarily in
adjustable rate mortgage securities ("ARMS") issued or guaranteed by the
U.S. Government, its agencies and instrumentalities. As with all mutual
funds, there can be no assurance that the Fund will achieve its investment
objective. See "Investment Objective and Policies."

Q. WHAT ARE PERMISSIBLE INVESTMENTS?

A. This Fund invests primarily in adjustable rate mortgage securities
("ARMS") issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, including the Government National Mortgage Association
("GNMA"), the Federal National Mortgage Association ("FNMA") and the
Federal Home Loan Mortgage Corporation ("FHLMC"). The Fund also may invest
in the adjustable rate portions of collateralized mortgage obligations
("CMOs") issued by government agencies or instrumentalities, including
primarily FNMA and FHLMC, and collateralized by pools of mortgage loans.

Q. WHO IS THE INVESTMENT ADVISER?

Q. WHO IS THE SPONSOR, ADMINISTRATOR AND DISTRIBUTOR?

A. Stephens serves as the sponsor, administrator and distributor for the
Company. Stephens is entitled to receive a monthly administration fee at
the annual rate of 0.15% of the first $200 million of the average daily
net assets of the Fund and 0.10% of the average daily net assets of the
Fund in excess of $200 million. See "Advisory, Administration and
Distribution Arrangements."

Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?

A. An investment in the Fund is not insured against loss of principal. When
the value of the securities that the Fund owns declines so does the value
of your investment in the Fund. Although the ARMS in the Fund's portfolio
are guaranteed by the U.S. Government, its agencies or instrumentalities
(including government-sponsored enterprises), these securities are subject
to interest rate risk and the market value of these securities, upon which
the Fund's daily net asset value is based, will fluctuate. Interest rate
risk is the risk that increases in market interest rates may adversely
affect the value of the securities in which the Fund invests, and hence
the value of your investment in the Fund. The values of such securities
generally change inversely to changes in market interest rates. However,
the adjustable rate feature of the mortgages underlying the ARMS and CMOs
in which the Fund invests should reduce, but not eliminate, price
fluctuations in such securities. No assurance can be given that the U.S.
Government would provide financial support to U.S. Government-sponsored
enterprises such as FNMA and FHLMC in the event of a default in payment on
the underlying mortgages which such entity is unable to satisfy. Some of
the Fund's investments may be subject to

ii
<PAGE> 283

credit risks, which is the risk that an issuer may default on the payment
of principal and/or interest. As with all mutual funds, there can be no
assurance that the Fund will achieve its investment objective. You should
be prepared to accept some risk with the money you invest in the Fund. See
"Investment Objective and Policies."

Q. HOW MAY I PURCHASE SHARES?

A. Shares of the Fund may be purchased on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is a maximum sales
load of 3.00% (3.09% of the net amount invested) for purchasing Class A
Shares of the Fund. Class D Shares are subject to a maximum contingent
deferred sales charge of 1.00% of the lesser of net asset value at
purchase or net asset value at redemption. In most cases, the minimum
initial purchase amount for the Fund is $1,000. The minimum purchase
amount is $100 for shares purchased through the Systematic Purchase Plan
and $250 for shares purchased through qualified retirement plans. The
minimum subsequent purchase amount is $100. You may purchase shares of the
Fund through Stephens, Wells Fargo Bank, as transfer agent (the "Transfer
Agent"), or any authorized broker/dealer or financial institution.
Purchases of shares of the Fund may be made by wire directly to the
Transfer Agent. See "Purchase of Shares".

Q. HOW WILL I RECEIVE DIVIDENDS?

Q. HOW MAY I REDEEM SHARES?

A. Shares may be redeemed on any day the Exchange is open, upon request to
Stephens or the Transfer Agent directly or through any authorized
broker/dealer or financial institution. Shares may be redeemed by a
request in good form in writing or through telephone direction. Proceeds
are payable by check or, for shareholders who make prior arrangements, by
wire. Accounts maintaining less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. Except for
any contingent deferred sales charge which may be applicable upon
redemption of Class D Shares, the Company does not charge for redeeming
its shares. However, the Company reserves the right to impose charges for
wiring redemption proceeds. See "Redemption of Shares."

iii
<PAGE> 284

Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?

A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or
rate. Many of the permissible investments described in this Prospectus,
such as ARMS which have an interest rate that is reset periodically based
on an index, are considered derivatives. Some derivatives may be more
sensitive than direct securities to changes in interest rates or sudden
market moves. Some derivatives also may be susceptible to fluctuations in
yield or value due to their structure or contract terms.

Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES-RELATED RISKS?

iv
<PAGE> 285

SUMMARY OF EXPENSES

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
CLASS A SHARES CLASS D SHARES
-------------- --------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price)................................................. 3.00% 0.00%
Maximum Deferred Sales Load (as a percentage of the lesser of net
asset value at purchase or net asset value at redemption)
Redemption during year 1........................................ 0.00% 1.00%
Redemption after year 1......................................... 0.00% 0.00%
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
CLASS A SHARES CLASS D SHARES
---------------- ----------------
<S> <C> <C> <C> <C>
Management Fees (after waivers and reimbursements)(1)........ 0.43% 0.43%
12b-1 Fees................................................... 0.25% 0.50%
Other Expenses
Servicing Fees............................................. 0.00% 0.25%
Administrative Fees........................................ 0.11% 0.11%
Miscellaneous Expenses (after waivers and
reimbursements)(1)...................................... 0.05% 0.06%
Total Other Expenses (after waivers and reimbursements)(1)... 0.16% 0.42%
------ ------
Total Fund Operating Expenses (after waivers and
reimbursements)(1)......................................... 0.84% 1.35%
</TABLE>

- ---------------

(1)The percentages shown above for the Class A and Class D Shares under
"Management Fees," "Miscellaneous Expenses," "Total Other Expenses" and
"Total Fund Operating Expenses" are based on amounts incurred during the most
recent fiscal year restated to reflect voluntary fee waivers and expense
reimbursements. The fee waivers and expense reimbursements are expected to
continue to reduce expenses during the current fiscal year. Absent waivers
and reimbursements, the percentages shown above under "Management Fees,"
"Miscellaneous Expenses," "Total Other Expenses" and "Total Fund Operating
Expenses" would have been 0.50%, 0.10%, 0.21% and 0.96%, respectively, for
the Class A Shares, and 0.50%, 0.28%, 0.64% and 1.64%, respectively, for the
Class D Shares.

Stephens and Wells Fargo Bank each may elect, in its sole discretion, to
otherwise waive all or a portion of its respective fees or reimburse expenses.
Any such waivers or reimbursements would reduce the total expenses of the
Fund. Long-term Class A or Class D shareholders of the Fund could pay more in
distribution related charges than the economic equivalent of the maximum
front-end sales charges applicable to mutual funds sold by members of the
National Association of Securities Dealers, Inc. ("NASD"). There can be no
assurances that waivers and reimbursements will continue.

v
<PAGE> 286

EXAMPLE OF EXPENSES

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment in
Class A Shares of the Fund, assuming (1) a 5% annual return
and (2) redemption at the end of each time period
indicated.................................................... $ 38 $ 56 $ 75 $ 131
You would pay the following expenses on a $1,000 investment in
Class D Shares of the Fund, assuming (1) a 5% annual return
and (2) redemption at the end of each time period
indicated.................................................... $ 24 $ 43 $ 74 $ 162
You would pay the following expenses on the same investment in
Class D Shares of the Fund, assuming no redemption........... $ 14 $ 43 $ 74 $ 162
</TABLE>

------------------------

THE EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment over the periods shown, based on
the expenses in the table on the previous page and an assumed annual rate of
return of 5%. This rate of return should not be considered an indication of the
actual or expected performance of the fund. In addition, the Examples should not
be considered a representation of past or future expenses; actual expenses and
returns may be greater or lesser than those shown. See "Advisory, Administration
and Distribution Arrangements," "Distribution Plan" and "Purchase of Shares" for
more complete descriptions of the various costs and expenses applicable to the
Fund.

vi
<PAGE> 287

FINANCIAL HIGHLIGHTS

VARIABLE RATE GOVERNMENT FUND

FOR A CLASS A SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993 1992 1991 1990*
--------- ---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period............................. $ 9.19 $ 9.99 $ 9.95 $ 10.13 $ 10.12 $10.00
Income from investment operations:
Net investment income (loss)....... 0.53 0.43 0.44 0.59 0.78 0.08
Net realized and unrealized
gain/(loss) on investments....... 0.16 (0.80) 0.04 (0.18) 0.01 0.12
Total from investment operations..... 0.69 (0.37) 0.48 0.41 0.79 0.20
Less distributions:
Dividends from net investment
income........................... (0.53) (0.43) (0.44) (0.59) (0.78) (0.08)
Distributions from net realized
gain............................. 0.00 0.00 0.00 0.00 0.00 0.00
Tax return of capital.............. 0.00 0.00 0.00 0.00 0.00 0.00
Total distributions.................. (0.53) (0.43) (0.44) (0.59) (0.78) (0.08)
Net Asset Value, end of period....... $ 9.35 $ 9.19 $ 9.99 $ 9.95 $ 10.13 $10.12
Total Return (not annualized)(3)..... 7.69% (3.81)% 4.87% 4.23% 8.60% 2.75%
Ratios/supplemental data:
Net assets, end of period (000).... $653,897 $1,215,546 $1,949,013 $2,559,363 $566,840 $6,858
Number of shares outstanding, end
of period (000).................. 69,952 132,256 195,132 257,238 55,933 678
Ratios to average net assets
(annualized):
Ratio of expenses to average net
assets(1)........................ 0.84% 0.79% 0.76% 0.75% 0.50% 0.00%
Ratio of net investment income to
average net assets(2)............ 5.71% 4.40% 4.37% 5.62% 7.36% 4.93%
Portfolio turnover................... 317% 164% 201% 197% 250% N/A**

- ---------------
(1) Ratio of expenses to average net
assets prior to waived fees and
reimbursed expenses.............. 0.96% 0.94% 0.95% 0.94% 1.08% 5.48%
(2) Ratio of net investment income to
average net assets prior to
waived fees and reimbursed
expenses......................... 5.59% 4.25% 4.18% 5.43% 6.78% (0.55)%
</TABLE>

(3) Total returns do not include any sales charges.

* The Fund commenced operations on November 1, 1990.

** The Fund sold no securities during the period.

vii
<PAGE> 288

VARIABLE RATE GOVERNMENT FUND

FOR CLASS D SHARE OUTSTANDING AS SHOWN

<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993*
-------- -------- --------
<S> <C> <C> <C>
Net Asset Value, beginning of period..................................... $13.74 $14.93 $ 15.00
Income from investment operations:
Net investment income (loss)........................................... 0.73 0.57 0.27
Net realized and unrealized gain/(loss) on investments................. 0.23 (1.19) (0.07)
Total from investment operations......................................... 0.96 (0.62) 0.20
Less distributions:
Dividends from net investment income................................... (0.73) (0.57) (0.27)
Distributions from net realized gain................................... 0.00 0.00 0.00
Tax return of capital.................................................. 0.00 0.00 0.00
Total distributions...................................................... (0.73) (0.57) (0.27)
Net Asset Value, end of period........................................... $13.97 $13.74 $ 14.93
Total Return (not annualized)(3)......................................... 7.08% (4.25%) 1.32%
Ratios/supplemental data:
Net assets, end of period (000).......................................... $7,730 $12,220 $11,319
Number of shares outstanding, end of period (000)........................ 553 889 758
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)............................. 1.35% 1.29% 1.26%
Ratio of net investment income to average net assets(2)................ 5.23% 3.94% 3.41%
Portfolio turnover....................................................... 317% 164% 201%

- ---------------
(1) Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses.................................................. 1.64% 1.55% 1.75%
(2) Ratio of net investment income to average net assets prior to waived
fees and reimbursed expenses......................................... 4.95 3.68% 2.92%
</TABLE>

(3) Total Returns do not include any sales charges.

* The class commenced operations on July 1, 1993.

viii
<PAGE> 289

INVESTMENT OBJECTIVE AND POLICIES

The Fund seeks to earn a high level of current income, while reducing
principal volatility, by investing primarily in adjustable rate mortgage
securities ("ARMS") issued or guaranteed by the U.S. Government, its agencies
and instrumentalities. As with all mutual funds, there can be no assurance that
the Fund, which is a diversified portfolio, will achieve its investment
objective.

The Fund may invest in obligations of any maturity. Under ordinary
circumstances, the dollar weighted average maturity of the Fund's portfolio is
expected to be between 10 and 30 years. However, under unusual circumstances,
the dollar weighted average maturity of the portfolio may be shorter than 10
years. At least 65% of the value of the total assets of the Fund will, under
normal circumstances, be invested in ARMS issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (including government-sponsored
enterprises).

ARMS are pass-through certificates representing ownership interests in a
pool of adjustable rate mortgages and the resulting cash flow from those
mortgages. The ARMS in which the Fund may invest are issued and guaranteed by
GNMA, FNMA or FHLMC. Unlike conventional debt securities, which provide for
periodic (usually semi-annual) payments of interest and payments of principal at
maturity or on specified call dates, ARMS provide for monthly payments based on
a pro-rata share of both periodic interest and principal payments and
prepayments of principal on the underlying mortgage pool (less GNMA's, FNMA's or
FHLMC's fees and applicable loan servicing fees).

The full and timely payment of principal and interest on GNMA ARMS is
guaranteed by GNMA and backed by the full faith and credit of the U.S.
Government. FNMA also guarantees full and timely payment of both interest and
principal, while FHLMC guarantees full and timely payment of interest and
ultimate payment of principal. FNMA and FHLMC ARMS are not backed by the full
faith and credit of the United States. However, because FNMA and FHLMC are
government-sponsored enterprises, these securities are generally considered to
be high quality investments that present minimal credit risks. The yields
provided by these ARMS have historically exceeded the yields on other types of
U.S. Government securities with comparable maturities, although there can be no
assurance that this historical performance will continue.

The mortgages underlying ARMS guaranteed by GNMA are fully insured or
guaranteed by the Federal Housing Administration, the Veterans Administration or
the Farmers Home Administration, while those underlying ARMS issued by FNMA or
FHLMC are typically conventional residential mortgages which are not so insured
or guaranteed, but which conform to specific underwriting, size and maturity
standards.

The Fund also may invest in the adjustable rate portions of CMOs issued by
government agencies, instrumentalities or government-sponsored enterprises
including, primarily, FNMA and FHLMC, and collateralized by pools of mortgage
loans. Payments of principal and interest on the collateral mortgages are used
to pay debt service on the CMO. In a CMO, a series of bonds or certificates is
issued in multiple classes. Each class of CMOs, often referred to as a
"tranche," is issued at a specified coupon rate and has a stated maturity or
final distribution date. The principal and interest payment on the underlying
mortgages may be allocated among the classes of CMOs in several ways. Typically,
payments of principal, including any prepayments, on the underlying mortgages
would be applied to the classes in the order of their respective stated
maturities or final distribution dates, so that no payment of principal will be
made on CMOs of a class until all CMOs of other classes having earlier stated
maturities or final distribution dates have been paid in full. One or more
classes of CMOs may have coupon rates that reset periodically based on

1
<PAGE> 290

an index, such as the London Interbank Offered Rate ("LIBOR"). All CMOs
purchased by the Fund will be rated, at the time of purchase, AAA by Standard &
Poor's Ratings Group ("S&P") or Aaa by Moody's Investors Service, Inc.
("Moody's"). The Fund will not invest in CMOs that, at the time of purchase, are
"high-risk mortgage securities" as defined in the then current Federal Financial
Institutions Examination Council ("FFIEC") Supervisory Policy Statement on
Securities Activities.

The interest rates on the mortgages underlying the ARMS and the CMOs in
which the Fund may invest generally are readjusted at intervals of one year or
less in response to changes in a predetermined interest rate index. There are
two main categories of indices: those based on U.S. Treasury securities and
those derived from a calculated measure, such as a cost-of-funds index or a
moving average of mortgage rates. Commonly utilized indices include the one-year
and five-year constant maturity Treasury note rates, the three-month Treasury
bill rate, the 180-day Treasury bill rate, rates on longer-term Treasury
securities, the National Median Cost of Funds, the one-month, three-month,
six-month or one-year LIBOR, a published prime rate, or commercial paper rates.
Certain of these indices follow overall market interest rates more closely than
others.

Adjustable rate mortgages, an increasingly common form of residential
financing, generally are originated by banks, mortgage banks and thrift
institutions and have a specified maturity date. Most provide for amortization
of principal in a manner similar to fixed-rate mortgages, but have interest
payment amounts that change in response to changes in a specified interest rate
index. The rate of interest due on such a mortgage is calculated by adding an
agreed-upon "margin" to the specified index, although there generally are
limitations or "caps" on interest rate movements in any given period or over the
life of the mortgage. To the extent that the interest rates on adjustable rate
mortgages that back the ARMS or the CMOs in which the Fund may invest cannot be
adjusted in response to interest rate changes because of such caps, the ARMS or
CMOs are likely to respond to changes in market rates more like fixed rate
securities. In other words, interest rate increases in excess of such caps can
be expected to cause the CMOs or ARMS backed by mortgages that have such caps to
decline in value to a greater extent than would be the case in the absence of
such caps. Conversely, interest rate decreases below such floors can be expected
to cause the CMOs or ARMS backed by mortgages that have such floors to increase
in value to a greater extent than would be the case in the absence of such
floors.

The adjustable rate feature of the mortgages underlying the ARMS and the
CMOs in which the Fund may invest should reduce, but will not eliminate, price
fluctuations in such securities, particularly during periods of extreme
fluctuations in market interest rates. Since the interest rates on many
mortgages underlying ARMS and CMOs are reset on an annual basis and generally
are subject to caps, it can be expected that the prices of such ARMS and CMOs
will fluctuate to the extent prevailing market interest rates are not reflected
in the interest rates payable on the underlying adjustable rate mortgages or
CMOs. In this regard, the net asset value of the Fund's shares could fluctuate
to the extent interest rates on underlying mortgages differ from prevailing
market interest rates during interim periods between interest rate reset dates.
Accordingly, investors could experience some principal loss or less gain than
might otherwise be achieved if they redeem their shares of the Fund before the
interest rates on the mortgages underlying the Fund's portfolio securities are
adjusted to reflect prevailing market interest rates.

The holder of ARMS and certain CMOs receives not only monthly scheduled
payments of principal and interest, but also may receive unscheduled principal
payments representing prepayments on the underlying mortgages. An investor,
therefore, may have to reinvest the periodic payments and any

2
<PAGE> 291

unscheduled prepayments of principal it receives at a rate of interest which is
lower than the rate on the ARMS and CMOs held by it.

The Fund also may invest cash balances in U.S. Treasury securities with
remaining maturities of two years or less. As described further in the SAI,
certain securities in which the Fund may otherwise invest may be purchased on a
when-issued basis, but the Fund does not presently intend to invest more than 5%
of its net assets in when-issued securities during the coming year.

Portfolio turnover generally involves some expenses to the Fund, including
brokerage commissions or dealer mark-ups and other transaction costs on the sale
of securities and the reinvestment in other securities. Portfolio turnover also
can generate short-term capital gain tax consequences.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements wherein the seller of a
security to the Fund agrees to repurchase that security from the Fund at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. The Fund may enter into repurchase agreements only with respect to U.S.
Government obligations and other securities that could otherwise be purchased by
the Fund. All repurchase agreements will be fully collateralized at 102% based
on values that are marked to market daily. If the seller defaults and the value
of the underlying securities has declined, the Fund may incur a loss. 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. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security, the Fund's
disposition of the security may be delayed or limited. The Fund will only enter
into repurchase agreements with primary broker/dealers and commercial banks that
meet guidelines established by the Board of Directors and are not affiliated
with the investment adviser. The Fund may participate in pooled repurchase
agreement transactions with other funds advised by Wells Fargo Bank.

------------------------

The Fund's investment objective, as set forth in the first paragraph of the
section describing the Fund's objective and policies, is fundamental; that is,
the investment objective may not be changed without approval by the vote of the
holders of a majority of the Fund's outstanding voting securities, as described
under "Capital Stock" in the SAI. If the Board of Directors determines, however,
that the Fund's investment objective can best be achieved by a substantive
change in a non-fundamental investment policy or strategy, the Company may make
such change without shareholder approval and will disclose any such material
changes in the then current prospectus.

In addition, as matters of fundamental policy, the Fund may: (i) borrow
from banks up to 10% of the current value of its net assets for temporary
purposes only in order to meet redemptions, and these borrowings may be secured
by the pledge of up to 10% of the current value of its net assets (but
investments may not be purchased while any such borrowing exists); (ii) make
loans of portfolio securities; and (iii) invest up to 10% of the current value
of its net assets in repurchase agreements having maturities of more than seven
days, restricted securities and illiquid securities. With respect to fundamental
investment policy (ii), the Fund does not intend to make loans of its portfolio
securities during the coming year.

Additionally, the Fund does not intend to invest in repurchase agreements
having maturities of more than seven days or illiquid securities during the
coming year.

3
<PAGE> 292

ADVISORY, ADMINISTRATION AND DISTRIBUTION ARRANGEMENTS

The Board of Directors, in addition to supervising the actions of the
investment adviser, sponsor, administrator and distributor, as set forth below,
decides upon matters of general policy.

INVESTMENT ADVISER

For its services under the Advisory Contract, Wells Fargo Bank is entitled
to receive a monthly advisory fee at the annual rate of 0.50% of the average
daily net assets of the Fund. From time to time Wells Fargo Bank may waive such
fee in whole or in part. Any waiver would reduce expenses of the Fund involved
and, accordingly, have a favorable impact on the performance of the Fund. For
the year ended December 31, 1995, Wells Fargo Bank was paid 0.43% of the average
daily net assets of the Fund as compensation for its services as investment
adviser.

Mr. Paul Single is responsible for the day-to-day management of the Fund.
Mr. Single has managed taxable bond portfolios for over a decade with specific
expertise in mortgage-backed securities. Prior to joining Wells Fargo Bank in
early 1988, he was a senior portfolio manager for Benham Capital Management
Group. Mr. Single has been portfolio co-manager of the Fund since its inception
in November 1990. Mr. Single received his B.S. degree from Springfield College.

Mr. Scott Smith also is responsible for the day-to-day management of the
Fund. He joined Wells Fargo Bank in 1988 as a taxable money market portfolio
specialist. His experience includes a position with a private money management
firm with mutual fund investment operations. Mr. Smith has been portfolio co-
manager of the Fund since May 1, 1995. Mr. Smith holds a B.A. degree from the
University of San Diego.

4
<PAGE> 293

time to time, the Fund, to the extent consistent with its investment objective,
policies and restrictions, may invest in securities of companies with which
Wells Fargo Bank has a lending relationship.

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR

Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with the Fund under which Stephens acts as administrator for the
Fund. For these administrative services, Stephens is entitled to receive from
the Fund a monthly fee at the annual rate of 0.15% of its average daily net
assets; decreasing to 0.10% of the average daily net assets of the Fund in
excess of $200 million. From time to time Stephens may waive fees from the Fund
in whole or in part. Any such waiver will reduce expenses of the Fund and,
accordingly, have a favorable impact on the performance of the Fund.

The Administration Agreement between Stephens and the Fund states that
Stephens shall provide as administrative services, among other things, (i)
general supervision of the operation of the Fund, including coordination of the
services performed by the Fund's investment adviser, transfer agent, custodian,
independent auditors and legal counsel; (ii) general supervision of regulatory
compliance matters, including the compilation of information for documents such
as reports to, and filings with, the SEC and state securities commissions; and
the preparation of proxy statements and shareholder reports for the Fund; and
(iii) general supervision of the compilation of data required for the
preparation of periodic reports distributed to the Company's officers and Board
of Directors. Stephens also furnishes office space and certain facilities
required for conducting the business of the Fund and pays the compensation of
the Company's Directors, officers and employees who are affiliated with
Stephens.

Stephens, as the principal underwriter of the Fund within the meaning of
the Investment Company Act of 1940 (the "1940 Act"), has also entered into a
Distribution Agreement with the Company pursuant to which Stephens has the
responsibility for distributing Class A Shares and Class D Shares of the Fund.
The Distribution Agreement provides that Stephens shall act as agent for the
Fund for the sale of its Class A Shares and Class D Shares and may enter into
selling agreements with broker/dealers or financial institutions to market and
make available Class A Shares and Class D Shares to their respective customers.

5
<PAGE> 294

under which such agents may receive from Stephens compensation for sales support
services. Such compensation may include, but is not limited to, commissions or
other payments to such agents based on the average daily net assets of Fund
shares attributable to them. Services provided by selling agents in exchange for
commissions and other payments to selling agents are the principal sales support
services provided to the Fund. Stephens may retain any portion of the total
distribution fee payable under the Distribution Agreement to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses. Since the Distribution Agreement provides for
fees that are used by Stephens to pay for distribution services, a plan of
distribution for each class of shares (individually a "Plan," collectively the
"Plans") and the Distribution Agreement are approved and reviewed in accordance
with Rule 12b-1 under the 1940 Act, which regulates the manner in which an
investment company may, directly or indirectly, bear the expense of distributing
its shares. See Prospectus section captioned "Distribution Plans" for a more
complete description of the Plans.

SERVICING AGENTS

The Fund may enter into servicing agreements with one or more servicing
agents on behalf of the Class D Shares of the Fund. Under such agreements,
servicing agents provide shareholder liaison services, which may include
responding to customer inquiries and providing information on their investments,
and provide such other related services as the Fund or a Class D Shareholder may
reasonably request. For these services, a servicing agent receives a fee which
will not exceed, on an annualized basis for the Fund's then current fiscal year,
the lesser of 0.25% of the average daily net assets of the Class D Shares of the
Fund (represented by Class D Shares owned by investors with whom the servicing
agent maintains a servicing relationship), or an amount which equals the maximum
amount payable to the servicing agent under applicable laws, regulations or
rules.

DETERMINATION OF NET ASSET VALUE

The value of assets of the Fund (other than debt obligations maturing in 60
days or less) is determined as of the close of regular trading on the Exchange
(referred to hereafter as "the close of the Exchange"), which is currently 4:00
p.m. New York time. Except for debt instruments with remaining maturities of 60
days or less, which are valued at amortized cost, assets are valued at current
market prices, or if such prices

6
<PAGE> 295

are not readily available, at fair value as determined in good faith by the
Board of Directors. Prices used for such valuations may be provided by
independent pricing services.

PERFORMANCE DATA

The total return of a class of shares of the Fund is calculated by
subtracting (i) the public offering price of the class of shares (which includes
the maximum sales charge for the class of shares) of one share of the class of
shares at the beginning of the period, from (ii) the net asset value of all
shares of the class of shares an investor would own at the end of the period for
the share held at the beginning of the period (assuming reinvestment of all
dividends and capital gain distributions), and dividing by (iii) the public
offering price per share of the class of shares at the beginning of the period.
The resulting percentage indicates the positive or negative rate of return that
an investor would have earned from reinvested dividends and capital gain
distributions and changes in share price during the period for the class of
shares. The Fund may also, at times, calculate total return of a class of shares
based on net asset value per share of a class of shares (rather than the public
offering price), in which case the figures would not reflect the effect of any
sales charges that would have been paid by an investor in the class of shares,
or by assuming that a sales charge other than the maximum sales charge
(reflecting the Volume Discounts set forth below) is assessed, provided that
total return data derived pursuant to the calculation described above are also
presented.

The yield of a class of shares will be computed by dividing its net
investment income per share of the class earned during a specified period by its
public offering price per share (which includes the maximum sales charge) on the
last day of such period and annualizing the result. For purposes of sales
literature, these yields may also, at times, be calculated on the basis of the
net asset value per share of the class (rather than the public offering price),
in which case the figures would not reflect the effect of any sales charges that
would have been paid by an investor in the class of shares, or by assuming that
a sales charge other than the maximum sales charge (reflecting the Volume
Discounts set forth below) is assessed, provided that yield data derived
pursuant to the calculation described above are also presented.

Because of differences in the fees and/or expenses borne by Class D Shares
of the Fund, the net yield on such shares can be expected, at any given time, to
be lower than the net yield on Class A Shares. Performance information
quotations will be computed separately for Class A Shares and Class D Shares.

Additional information about the performance of the Fund is contained in
the Annual Report for the Fund. The Annual Report may be obtained free of charge
by calling the Company at 800-552-9612.

PURCHASE OF SHARES

Shares of the Fund may be purchased on any day the Exchange is open for
trading through Stephens, the Transfer Agent, any authorized broker/dealers or
financial institutions with which Stephens has entered into agreements. Such
broker/dealers or financial institutions are responsible for the prompt
transmission of purchase, exchange or redemption orders, and may independently
establish and charge additional fees to their clients for such services, other
than services related to purchase orders, which would

7
<PAGE> 296

reduce the clients' overall yield or return. The Exchange is closed on New
Year's 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 Saturday, the Exchange usually is closed the preceding Friday, and
when any Holiday falls on a Sunday, the Exchange usually is closed the following
Monday.

In most cases, the minimum initial purchase amount for the Fund is $1,000.
The minimum initial purchase amount is $100 for purchases through the Systematic
Purchase Plan and $250 for an investment by a retirement plan qualified under
the Internal Revenue Code of 1986, as amended (the "Code"). The minimum
subsequent purchase amount is generally $100. The minimum initial or subsequent
purchase amount requirements may be waived or lowered for investments effected
on a group basis by certain entities and their employees, such as pursuant to a
payroll deduction or other accumulation plan. The Company reserves the right to
reject any purchase order. All funds, net of sales loads, will be invested in
full and fractional shares. Checks will be accepted for the purchase of the
Fund's shares subject to collection at full face value in U.S. dollars.
Inquiries concerning purchases may be directed to the Company at (800) 572-7797
or at the address on the front cover of the Prospectus.

------------------------

8
<PAGE> 297

Sales loads relating to the purchase of Class A Shares in the Fund are as
follows:

Class D Shares are not subject to a front-end sales load. However, Class D
Shares which are redeemed within one year from the receipt of a purchase order
will be subject to a contingent deferred sales charge equal to 1% of the dollar
amount equal to the lesser of the net asset value at the time of purchase of the
shares being redeemed or the net asset value of such shares at the time of
redemption.

REDUCED SALES CHARGE -- CLASS A SHARES

The Right of Accumulation allows you to combine the amount being invested
in Class A Shares of the Fund with the total net asset value of Class A Shares
in any of the Load Funds in accordance with the above sales load schedule to
reduce the sales load. For example, if you own Class A Shares of the Company's
other investment portfolios with an aggregate net asset value of $90,000 and
invest an additional $20,000 in Class A Shares of the Fund, the sales load on
the entire additional amount would be 2.00% of the offering price. To obtain
such discount, you must provide sufficient information at the time of purchase
to permit verification that the purchase qualifies for the reduced sales load,
and confirmation of the order is subject to such verification. The Right of
Accumulation may be modified or discontinued at any time with respect to all
Class A Shares purchased thereafter.

A Letter of Intent allows you to purchase Class A Shares of the Fund over a
13-month period at reduced sales loads based on the total amount intended to be
purchased plus the total net asset value of Class A Shares in any of the Load
Funds already owned. Each investment made during the period receives the reduced
sales load applicable to the total amount of the intended investment. If such
amount is not invested within the period, you must pay the difference between
the sales loads applicable to the purchases when made and the charges previously
paid. The reductions in sales loads effected by the Fund's adoption of the
revised sales load schedule shown above are available with respect to
investments made on or after July 15, 1991, even if they are made pursuant to a
Letter of Intent entered into prior to such date.

9
<PAGE> 298

You may Reinvest proceeds from a redemption of Class A Shares of the Fund
in Class A Shares of the Fund or in Class A Shares of another of the Company's
investment portfolios that offers Class A Shares at net asset value, without a
sales load, within 120 days after such redemption. However, if the other
investment portfolio charges a sales load that is higher than the sales load
that you have paid in connection with the Class A Shares you have redeemed, you
pay the difference. In addition, the Class A Shares of the other investment
portfolio to be acquired must be registered for sale in your state of residence.
The amount that may be so reinvested may not exceed the amount of the redemption
proceeds, and a written order for the purchase of the Class A Shares must be
received by the Fund or the Transfer Agent within 120 days after the effective
date of the redemption.

If you realized a gain on your redemption, the reinvestment will not alter
the amount of any federal capital gains tax payable on the gain. If you realized
a loss on your redemption, the reinvestment may cause some or all of such loss
to be disallowed as a tax deduction, depending on the number of Class A Shares
purchased by reinvestment, the period of time that has elapsed after the
redemption and which funds' shares are purchased. Although for federal income
tax purposes, the amount disallowed is added to the cost of the Class A Shares
acquired upon the reinvestment.

Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by Directors, officers
and employees (and their spouses, parents, children and siblings) of the
Company, Stephens, its affiliates and other broker/dealers that have entered
into agreements with Stephens to sell such shares. Class A Shares of the Fund
also may be purchased at a purchase price equal to the net asset value of such
shares, without a sales load, by present and retired Directors, officers and
employees (and their spouses, parents, children and siblings) of Wells Fargo
Bank and its affiliates if Wells Fargo Bank and/or the respective affiliates
agree. Such shares also may be purchased at such price by employee benefit and
thrift plans for such persons and by any investment advisory, trust or other
fiduciary account (other than an individual retirement account) maintained,
managed or advised by Wells Fargo Bank or Stephens or their affiliates.

10
<PAGE> 299

CONTINGENT DEFERRED SALES CHARGE -- CLASS D SHARES

Class D Shares which are redeemed within one year of receipt of a purchase
order for such shares will be subject to a contingent deferred sales charge
equal to 1.00% of an amount equal to the lesser of the net asset value at the
time of purchase for the Class D Shares being redeemed or the net asset value of
such shares at the time of redemption. Accordingly, a contingent deferred sales
charge will not be imposed on amounts representing increases in net asset value
above the net asset value at the time of purchase. In addition a charge will not
be assessed on Class D Shares purchased through reinvestment of dividends or
capital gain distributions. In determining whether a contingent deferred sales
charge is applicable to a redemption, Class D Shares are considered redeemed on
a first-in, first-out basis so that Class D Shares held for a longer period of
time are considered redeemed prior to more recently acquired shares.

Investors who are entitled to purchase Class A Shares of the Fund at net
asset value without a sales load should not purchase Class D Shares. Other
investors, including those who are entitled to purchase Class A shares of the
Fund at a reduced sales load, should compare the fees assessed on Class A Shares
against those assessed on Class D Shares (including potential contingent
deferred sales charges and higher Rule 12b-1 fees) in light of the amount to be
invested and the anticipated time that the shares will be owned.

11
<PAGE> 300

Shares of the Fund may be purchased by any of the methods described below.

INITIAL PURCHASES OF FUND SHARES BY WIRE

2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($1,000 or more) to:

Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express Variable Rate Government Fund (designate
Class A or D)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)

Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082

4. Share purchases are effected at the public offering price, or, in the
case of Class D Shares, at the net asset value, next determined after the
Account Application is received and accepted.

INITIAL PURCHASES OF FUND SHARES BY MAIL

1. Complete an Account Application. Indicate the services to be used.

2. Mail the Account Application and a check for $1,000 or more, payable to
"Overland Express Variable Rate Government Fund (designate Class A or D)" to its
mailing address set forth above.

ADDITIONAL PURCHASES

Additional purchases of $100 or more may be made by instructing the Fund's
Transfer Agent to debit an approved account designated in the Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Overland Express Variable Rate Government Fund (designate Class A or D)" to
the above address. Write the Fund account number on the check and include the
detachable stub from a Statement of Account or a letter providing the account
number.

12
<PAGE> 301

SYSTEMATIC PURCHASE PLAN

The Company's Systematic Purchase Plan provides you with a convenient way
to establish and automatically add to your existing accounts on a monthly basis.
If you elect to participate in this plan, you must specify an amount ($100 or
more) to be withdrawn automatically by the Transfer Agent on a monthly basis
from an approved bank account designated in your Account Application (an
"Approved Bank Account"). The Transfer Agent withdraws and uses this amount to
purchase shares of the Fund on or about the fifth business day of each month.
The Transfer Agent requires a minimum of ten (10) business days to implement
your Systematic Purchase Plan purchases. There are no additional fees charged
for participating in this plan.

PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

EXCHANGE PRIVILEGES

13
<PAGE> 302

of the Money Market Fund. If you exchange Class D Shares for shares of the same
class of another investment portfolio, or for Class A Shares of the Money Market
Fund, the remaining period of time (if any) that the contingent deferred sales
charge is in effect will be computed from the time of the initial purchase of
the previously held shares. Accordingly, if you exchange Class D Shares for
Class A Shares of the Money Market Fund, and redeem the shares of the Money
Market Fund within one year of the receipt of the purchase order for the
exchanged Class D Shares, you will have to pay a deferred sales charge equal to
the contingent deferred sales charge applicable to the previously exchanged
Class D Shares. If you exchange Class D Shares of an investment portfolio for
Class A Shares of the Money Market Fund you may subsequently re-exchange the
acquired Class A Shares only for Class D Shares. If you re-exchange the Class A
Shares of the Money Market Fund for Class D Shares, the remaining period of time
(if any) that the contingent deferred sales charge is in effect will be computed
from the time of your initial purchase of Class D Shares. In addition, shares of
the investment portfolio to be acquired must be registered for sale in your
state of residence. You should obtain, read and retain the Prospectus for the
investment portfolio into which you desire to exchange before submitting an
exchange order.

You may exchange shares by writing the Transfer Agent as indicated below
under "Redemption by Mail," or by calling the Transfer Agent or your authorized
broker/dealer or financial institution or Servicing Agent, unless you have
elected not to authorize telephone exchanges in your Account Application (in
which case you may subsequently authorize such telephone exchanges by completing
a Telephone Exchange Authorization Form and submitting it to the Transfer Agent
in advance of the first such exchange). Shares held in certificated form may not
be exchanged by telephone. The Transfer Agent's telephone number for exchanges
is (800) 572-7797.

Procedures applicable to redemption of the Fund's shares are also
applicable to exchanging shares, except that, with respect to an exchange
transaction between accounts registered in identical names, no signature
guarantee is required unless the amount being exchanged exceeds $25,000. The
Company reserves the right to limit the number of times shares may be exchanged
between Funds, or to reject in whole or in part any exchange request into a fund
when management believes that such action would be in the best interest of the
fund's other shareholders, such as when management believes that such action
would be appropriate to protect such fund against disruptions in portfolio
management resulting from frequent transactions by those seeking to time market
fluctuations. Any such rejection will be made by management on a prospective
basis only, upon notice to the shareholder given not later than 10 days
following such shareholder's most recent exchange. The Company reserves the
right to modify or discontinue exchange privileges at any time. Under SEC rules,
60 days prior notice of any amendments or termination of exchange privileges
will be given to shareholders, except under certain extraordinary circumstances.
A capital gain or loss for federal income tax purposes may be realized upon an
exchange, depending upon the cost or other basis of shares exchanged.

14
<PAGE> 303

be liable for any losses attributable to unauthorized or fraudulent
instructions. Neither the Company nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.

REDEMPTION OF SHARES

Except for any contingent deferred sales charge which may be applicable
upon redemption of Class D Shares, as described under "Purchase of Shares," the
Company does not charge for redemption transactions. However, a broker/dealer or
financial institution that is involved in a redemption transaction may charge
separate account, service or transaction fees. On a day the Fund is open for
business, redemption orders received by an authorized broker/dealer or financial
institution before the close of the Exchange and received by the Transfer Agent
before the close of business on the same day will be executed at the net asset
value per share determined at the close of the Exchange on that day. Redemption
orders received by authorized broker/dealers or financial institutions after the
close of the Exchange, or not received by the Transfer Agent prior to the close
of business, will be executed at the net asset value determined at the close of
the Exchange on the next business day.

Redemption proceeds, net of any contingent deferred sales charge applicable
with respect to Class D Shares, ordinarily will be remitted within seven days
after the order is received in proper form, except proceeds may be remitted over
a longer period to the extent permitted by the SEC under extraordinary
circumstances. If an expedited redemption is requested, redemption proceeds will
be distributed only if the check used for investment is deemed to be cleared for
payment by your bank, currently considered by the Company to be a period of up
to ten (10) days after investment. The proceeds, of course, may be more or less
than cost. Payment of redemption proceeds may be made in securities, subject to
regulation by some state securities commissions.

REDEMPTION BY MAIL

2. Sign the letter in exactly the same way the account is registered. If
there is more than one owner of the shares, all must sign.

4. If shares to be redeemed are held in certificated form, enclose the
certificates with the letter. Do not sign the certificates and for protection
use registered mail.

15
<PAGE> 304

5. Mail the letter to the Transfer Agent at the mailing address set forth
under "Purchase of Shares -- Initial Purchase of Fund Shares by Wire."

SYSTEMATIC WITHDRAWAL PLAN

The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your account and the proceeds, net of any contingent
deferred sales charge applicable to Class D Shares, distributed to you on a
monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of the date of your election to
participate and are not also a participant in the Company's Systematic Purchase
Plan at any time while participating in this plan. To participate in the plan
you must specify an amount ($100 or more) to be distributed by check to your
address of record or deposited in your Approved Bank Account. The Transfer Agent
redeems sufficient shares, net of any contingent deferred sales charge
applicable to Class D Shares, and mails or deposits the proceeds of the
redemption, net of any contingent deferred sales charge applicable with respect
to Class D Shares, as instructed, on or about the fifth business day prior to
the end of each month. There are no additional fees charged for participating in
this plan.

It may take up to ten (10) business days after receipt of your request to
establish your participation in the Systematic Withdrawal Plan. You may change
the withdrawal amount, suspend withdrawals or terminate your participation in
the Systematic Withdrawal Plan at any time by providing written notice to the
Transfer Agent at least five (5) business days prior to a scheduled transaction.
An election will be
terminated automatically if your account balance is insufficient to make a
scheduled withdrawal or if your Fund account or Approved Bank Account is closed.

EXPEDITED REDEMPTIONS BY LETTER AND TELEPHONE

If shares are not held in certificated form, you may request an expedited
redemption of shares by letter or telephone (unless you have elected not to
authorize telephone redemptions on your Account Application or other form that
is on file with the Transfer Agent) on any day the Fund is open for business.
See "Exchange Privileges" for additional information regarding telephone
redemption privileges.

You may request expedited redemption by telephone by calling the Transfer
Agent at (800) 572-7797.

16
<PAGE> 305

expedited redemption request must be made by letter and the signature(s) on the
letter must be guaranteed, regardless of the amount of the redemption. If an
expedited redemption request is received by the Transfer Agent by the close of
business on any day the Fund is open for business, the redemption proceeds will
be transmitted to your bank or predesignated broker/dealer or financial
institution on the next business day (assuming the investment check has cleared
as described above), absent extraordinary circumstances. A check for proceeds of
less than $5,000 will be mailed to your address of record, except that, in the
case of investments in the Company that have been effected through
broker/dealers, banks and other institutions that have entered into special
arrangements with the Company, the full amount of the redemption proceeds may be
transmitted by wire or credited to a designated account.

REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS

------------------------

The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.

DISTRIBUTION PLANS

The Company's Board of Directors has adopted Distribution Plans (the
"Plans") on behalf of each class of shares of the Fund. Under the Plans, the
Fund may defray all or part of the cost of preparing and printing prospectuses
and other promotional materials and of delivering prospectuses and those
materials to prospective shareholders of the Fund, by paying a monthly fee at
the annual rate of up to 0.25% of the average daily net assets of the Class A
Shares of the Fund and a monthly fee at the annual rate of up to 0.50% of the
average daily net assets of the Class D Shares of the Fund. Since the fee
payable to Stephens under the Distribution Agreement is based upon a percentage
of the average daily net assets of a class of shares of the Fund and not upon
the actual expenditures of Stephens, the expenses of Stephens (which may include
overhead expenses) may be more or less than the fees received by it under the
Distribution

17
<PAGE> 306

Agreement. All or a portion of these fees may be paid by Stephens to
broker-dealers or financial institutions who have entered into selling agent
agreements with Stephens, as compensation for sales support services.

SERVICING PLAN

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to declare a daily dividend of substantially all of its
net investment income at the close of each business day to shareholders of
record as of 4:00 p.m. (New York time) on the day of declaration. Shares
purchased in the Fund begin earning dividends on the business day following the
date the purchase order settles and shares redeemed earn dividends through the
date of redemption. Net investment income for a Saturday, Sunday or holiday is
declared payable to shareholders of record as of the prior business day.

Dividends of the Fund declared in, and attributable to, any month generally
are paid on the last business day of the month. Shareholders of the Fund who
redeem shares prior to a dividend payment date are entitled to all dividends
declared but unpaid prior to redemption on such shares on the next dividend
payment date.

Net capital gains of the Fund, if any, will be distributed annually (or
more frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI).

Dividends and/or capital gain distributions paid by the Fund will be
invested in additional shares of the same class of the Fund at net asset value
(without any sales load) and credited to your account on the reinvestment date
or, at your election, paid by check. In addition, you may elect to reinvest Fund
dividends and/or capital gain distributions in shares of another portfolio of
the Company with which you have an established account that has met the
applicable minimum initial investment requirement.

The Fund's net investment income available for distribution to the holders
of Class D Shares will be reduced by the amount of servicing fees payable to
servicing agents under the Servicing Plan and by the incremental distribution
fees payable under the Distribution Plan. There may be certain other differences
in fees (e.g. audit fees, transfer agent fees) between Class A Shares and Class
D Shares that would affect their relative dividends.

18
<PAGE> 307

DIVIDEND AND DISTRIBUTION OPTIONS

When you fill out an Account Application, you can choose from three
dividend and distribution options:

TAXES

The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code, as long as such qualification is in the best interest
of the Fund's shareholders. The Fund will be treated as a separate entity for
tax purposes and thus the provisions of the Code applicable to regulated
investment companies generally will be applied to each Fund, rather than to the
Company as a whole. In addition, net capital gains, net investment income, and
operating expenses will be determined separately for each Fund. By complying
with the applicable provisions of the Code, the Fund will not be subject to
federal income taxes with respect to net investment income and net capital gains
distributed to its shareholders. The Fund intends to pay out substantially all
of its net investment income and net capital gains (if any) for each year.
Dividends from net investment income (which includes net short-term capital
gains, if any) declared and paid by the Fund will be taxable as ordinary income
to the Fund's shareholders. Whether you take such dividend payments and
distributions of capital gain in cash or have them automatically reinvested in
additional shares of any fund, they will be taxable to you. Generally, such
dividends and distributions are taxable to shareholders at the time they are
paid. However, such dividends and distributions declared payable in October,
November and December and made payable to shareholders of record in such a month

19
<PAGE> 308

are treated as paid and are thereby taxable as of December 31, provided that
such dividends and distributions are actually paid no later than January 31 of
the following year. You may be eligible to defer the tax on dividends and
capital gain distributions on shares of the Fund which are held under a
qualified tax-deferred retirement plan. The Fund's dividends will not qualify
for the dividends-received deduction allowed to corporate shareholders.

The Fund will inform you by January 31 of each year of the amount and
nature of Fund dividends and capital gain distributions with respect to the
previous year. You should keep all statements you receive to assist in your
personal record keeping. The Company is required by federal law to withhold,
subject to certain exemptions, at a rate of 31% on dividends, capital gain
distributions, and redemption proceeds (including proceeds from exchanges) paid
or credited to individual shareholders of the Fund, if a shareholder has not
complied with IRS regulations or if a correct taxpayer identification number,
certified when required, is not on file with the Company or the Transfer Agent.
In connection with this withholding requirement, you will be asked to certify on
your Account Application that the social security or taxpayer identification
number you provide is correct and that you are not subject to 31% backup
withholding for previous underreporting to the IRS.

Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes -- Foreign Shareholders" in the SAI.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

20
<PAGE> 309

ORGANIZATION AND CAPITAL STOCK

The Company, an open-end investment company, was incorporated in Maryland
on April 27, 1987. The authorized capital stock of the Company consists of
20,000,000,000 shares having a par value of $.001 per share. The Company
currently offers the following series of shares, each representing an interest
in one of the following funds -- the Asset Allocation, California Tax-Free Bond,
California Tax-Free Money Market, Money Market, Municipal Income, National
Tax-Free Institutional Money Market, Overland Sweep, Short-Term
Government-Corporate Income, Short-Term Municipal Income, Strategic Growth, U.S.
Government Income, U.S. Treasury Money Market and Variable Rate Government
Funds. The Board of Directors may, in the future, authorize the issuance of
other series of capital stock representing shares of additional investment
portfolios or funds. All shares of the Company have equal voting rights and will
be voted in the aggregate, and not by series or class, except where voting by
series or class is required by law or where the matter involved affects only one
series or class. The Company may dispense with the annual meeting of
shareholders in any fiscal year in which it is not required by the 1940 Act to
elect Directors; however, shareholders are entitled to call a meeting of
shareholders for purposes of voting on removal of a Director or Directors. A
more detailed statement of the voting rights of shareholders is contained in the
SAI. All shares of the Company, when issued, will be fully paid and
nonassessable.

OTHER MATTERS

A purported class action lawsuit was filed on March 14, 1995 in the United
States District Court for the Southern District of California by Conrad D.
Schaefer and Diane L. Schaefer, Trustees for the Schaefer Family Trust of 1992
against the Overland Express Family of Funds "Variable Rate Government Fund,"
Wells Fargo Bank and Wells Fargo & Company. Plaintiffs voluntarily withdrew that
complaint and served defendants with a First Amended Complaint, also a putative
class action, on June 2, 1995. In the First Amended Complaint, as in the
original complaint, plaintiffs sought to sue on behalf of persons who bought the
Fund during the period from January 1, 1991 through March 10, 1995, alleging
that defendants violated the Securities Act of 1933, the Securities Exchange Act
of 1934, the Investment Company Act of 1940 and common law by, among other
things, failing to disclose adequately the risks of investing in the Fund. By
Order dated October 30, 1995, the Court granted defendants' motions to dismiss
the First Amended Complaint in its entirety. The Court dismissed certain claims
with prejudice, but gave plaintiffs permission to replead.

On January 11, 1996, plaintiffs served a Second Amended Complaint ("SAC")
that names Stephens Inc. as an additional defendant and changes the alleged
Class to those who purchased, acquired or held shares of the Fund from June 30,
1993 through December 31, 1994. The SAC asserts claims under federal and
California securities laws and common law relating to alleged misstatements and
omissions in the prospectuses, reports and marketing materials pertaining to the
Fund; it alleges that the Class as a whole suffered substantial, but unspecified
damages in connection with the purchase of securities covered by the Fund's
offering documents over the course of the specified period. Plaintiffs have now
moved for certification of a class of purchasers of shares in the Overland
Express Funds, Inc. "Variable Rate Government Fund" from and including March 15,
1992 to March 14, 1995. Management of the Company continues to believe it has
meritorious defenses against the suit and intends to vigorously defend against
the suit.

21
<PAGE> 310

1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / ADDITIONAL INVESTMENT OR CHANGE
TO ACCOUNT #
--------

<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
/ / INDIVIDUAL 1. Individual - -
--------------------------------- -------- -------- -------
USE LINE 1 First Name Initial Last Name Soc. Security
No.

/ / JOINT OWNERS 2. Joint Owner
--------------------------------- (Only one Soc. Security
USE LINES 1 & 2 First Name Initial Last Name No. is
required for Joint Owners)

Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is
indicated:
/ / Tenants in Common

/ / TRANSFER TO 3. Uniform
--------------------------------------------------------------
MINORS Transfer Custodian's Name (only one) Minor's State of Residence

USE LINE 3 to Minors - -
--------------------------------- ------- -------- --------
Minor's Name (only one) Minor's Soc. Security No.

/ / TRUST* 4. Trust Name
------------------------------------------------------------
USE LINE 4 Trustee(s)
------------------------------------------------------------
(If you would like Trustee's name included in
registration.)
Trust ID Number
---------------------------------------------
Please attach title page, the page(s) allowing investment in a mutual fund
("powers page") and signature page, and complete Section 7, "Authorization
for Trusts and Organizations."

/ / ORGANIZATION* 5. Organization Name -
--------------------------------- ------------- --------------
USE LINE 5 *Complete "Authorization for Trusts and Tax I.D. No.
Organizations" (Section 7).

- ----------------------------------------------------------------------------------------------------------------------------------
ADDRESS:

Number and Street Apartment No.
------------------------------------- -------------------------------------

City State Zip Code
------------------------- ------------ ------------------------------------------------

Telephone Numbers: (DAY) - - (EVENING) - -
------------ ---------- ----------- ------------ ----------- -----------
(Area Code) (Area Code)
</TABLE>
(CONTINUED)

OVERLAND EXPRESS FUNDS, INC.

C/O OVERLAND EXPRESS SHAREHOLDER SERVICES, WELLS FARGO BANK, N.A.
POST OFFICE BOX 63084, SAN FRANCISCO, CALIFORNIA 94163
FOR PERSONAL SERVICE PLEASE CALL
YOUR INVESTMENT ADVISOR OR 1-800-572-7797

ACCOUNT APPLICATION PAGE 1 OF 5
VARIABLE RATE GOVERNMENT FUND
<PAGE> 311
2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $1,000.)
- --------------------------------------------------------------------------------
INVESTMENT AMOUNT: $
-------------------

TYPE OF ACCOUNT (CHOOSE ONE ONLY):

/ / Class A Shares, or

/ / Class D Shares (not available for
purchases of $1,000,000 or more)

Note: If no choice is indicated, Class A Shares will be selected.

METHOD OF PAYMENT: / / Debit bank account designated in Section 3.

/ / Check attached (payable to Overland Express
Variable Rate Government Fund (designate Class A
or D))

/ / Funds have been wired to Overland Express

- --------------------------------------------------------------------------------

SETTLEMENT ARRANGEMENTS: (Check only one if applicable)

- --------------------------------------------------------------------------------

SYSTEMATIC PURCHASE PLAN:

Monthly Investment Amount: $ (minimum $100)
----------------
- --------------------------------------------------------------------------------

SYSTEMATIC WITHDRAWAL PLAN:

Monthly Withdrawal Amount: $ (minimum $100)
----------------
/ / Mail check to registration set forth in Section 1.

/ / Distribute funds to bank account designated in Section 3.
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
3. BANK ACCOUNT INFORMATION
</TABLE>

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Bank Name

- --------------------------------------------------------------------------------
Address City State Zip

- --------------------------------------------------------------------------------
Bank Account Number Bank Routing Number
(CONTINUED)

ACCOUNT APPLICATION PAGE 2 OF 5
VARIABLE RATE GOVERNMENT FUND
<PAGE> 312

4. REDUCED SALES CHARGES (If Applicable.)
- --------------------------------------------------------------------------------
LETTER OF INTENT -- CLASS A SHARES

/ / I agree to the Letter of Intent set forth above. It is my intention to
invest over a 13-month period in the Load Funds an aggregate amount equal
to at least:

/ / $100,000 / / $200,000 / / $600,000 / / $1,000,000

Existing accounts must be identified in advance. If the value of currently
owned shares is to be applied towards completion of this Letter of Intent,
please list accounts below.

Account # Account #
------------------ ------------------

RIGHT OF ACCUMULATION -- CLASS A SHARES

Account # Account #
------------------ ------------------

- --------------------------------------------------------------------------------
5. TELEPHONE INSTRUCTIONS (Do NOT check this box if you wish to authorize
telephone instructions.)
- --------------------------------------------------------------------------------

All dividends and capital gain distributions will be automatically reinvested
in shares of the same class of the Fund unless otherwise indicated:

/ / Invest dividends in Account # of Fund
---------------- ---------------

of the Overland Express Funds.

/ / Invest capital gain distributions in Account # of Fund
---------- ----------

of the Overland Express Funds.

/ / Pay dividends by check and/or / / pay capital gain distributions by check

AND MAIL CHECKS TO:

/ / The registration address set forth in Section 1. / / The bank account
designated in Section 3.
- --------------------------------------------------------------------------------
(CONTINUED)

ACCOUNT APPLICATION PAGE 3 OF 5
VARIABLE RATE GOVERNMENT FUND
<PAGE> 313

7. AUTHORIZATION FOR TRUSTS AND ORGANIZATIONS (If Applicable.)
- --------------------------------------------------------------------------------

CORPORATIONS, TRUSTS, PARTNERSHIPS OR OTHER ORGANIZATIONS MUST COMPLETE
THIS SECTION.

<TABLE>
<S> <C> <C> <C> <C>
Registered Owner is a: / / Trust / / Corporation, Incorporated Association

<TABLE>
<S> <C> <C>
Name Title Specimen Signature

---------------------------------- ---------------------------------- ----------------------------------

---------------------------------- ---------------------------------- ----------------------------------
</TABLE>

FOR CORPORATIONS AND INCORPORATED ASSOCIATIONS:
I, , Secretary of the
------------------------------------------
above-named Registered Owner, do hereby certify that at a meeting on
at which a quorum was present throughout, the Board of
-----------------
Directors of the corporation/the officers of the association duly adopted
a resolution, which is in full force and effect and in accordance with the
Registered Owner's charter and by-laws, which resolution: (1) empowered
the above-named Authorized Person(s) to effect securities transactions for
the Registered Owner on the terms described above; (2) authorized the
Secretary to certify, from time to time, the names and titles of the
officers of the Registered Owner and to notify you when changes in the
office occur; and (3) authorized the Secretary to certify that such a
resolution has been duly adopted and will remain in full force and effect
until you receive a duly executed amendment to the Authorization Form.

Witness my hand on behalf of the corporation/association on this
day of ,19
---- ---------------------------------------------- ------

------------------------------------------------
Secretary (Signature Guarantee or
Corporate Seal is Required)

FOR ALL OTHER ORGANIZATIONS: ------------------------------------------------
Certifying Trustee, General Partner, or Other
</TABLE>

(CONTINUED)

ACCOUNT APPLICATION PAGE 4 OF 5
VARIABLE RATE GOVERNMENT FUND
<PAGE> 314

/ / NON-RESIDENT ALIEN (In order to claim this exemption, ALL owners on the account must be non-resident
aliens and sign below.)

I am not a U.S. citizen or resident (nor is this account held by a foreign corporation, partnership,
estate or trust) and my permanent address is:

Country:
------------------------------------------------------------------- --------------------

X SIGNATURE GUARANTEE: NOT REQUIRED WHEN
------------------------------------------------------ ESTABLISHING NEW ACCOUNTS. Required only if
Individual (or Custodian) date establishing privileges in Block 2 on an
existing account. Signature Guarantee may be
X provided by an "eligible guarantor
------------------------------------------------------ institution," which includes a commercial bank,
Joint Owner (if any) date trust company, member firm of a domestic stock
exchange, savings association, or credit union
X that is authorized by its charter to provide a
------------------------------------------------------ signature guarantee.
Corporate Officer or Trustee date
AFFIX SIGNATURE GUARANTEE STAMP
------------------------------------------------------
Title of Corporate Officer or Trustee ----------------------------------------------
Signature Guaranteed By
---------------------------------------------------------------------------------------------------------------
</TABLE>

DEALER INFORMATION

- ----------------------------------------------- --------------------------
Dealer Name Branch ID #

- ----------------------------------------------- -------------------------- -------------------
Representative's Last Name Rep ID # Rep Phone #

X
-----------------------------------------------------------------------------------------------------
Authorized signature of Broker/Dealer Title date
</TABLE>

ACCOUNT APPLICATION PAGE 5 OF 5
VARIABLE RATE GOVERNMENT FUND
<PAGE> 315

SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201

INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND
CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163

LEGAL COUNSEL

Morrison & Foerster LLP

2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111

NOT FDIC INSURED

FOR MORE INFORMATION ABOUT THE FUND,
SIMPLY CALL (800) 552-9612,
OR WRITE:

OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163

[OVERLAND EXPRESS LOGO]

------------------------

PROSPECTUS

------------------------

Variable Rate Government Fund

------------------------

May 1, 1996

------------------------

NOT FDIC INSURED

72P 5/96

<PAGE> 316
OVERLAND EXPRESS FUNDS, INC.

Telephone: 1-800-552-9612

STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996

ASSET ALLOCATION FUND
U.S. GOVERNMENT INCOME FUND
CALIFORNIA TAX-FREE BOND FUND

-----------------------------

Overland Express Funds, Inc. is an open-end series investment
company. This Statement of Additional Information ("SAI") contains information
about three of the Company's investment portfolios -- the ASSET ALLOCATION
FUND, the U.S. GOVERNMENT INCOME FUND and the CALIFORNIA TAX-FREE BOND FUND
(each, a "Fund" and collectively, the "Funds"). Each Fund offers two classes of
shares -- Class A Shares and Class D Shares. This SAI relates to both such
classes of shares of each Fund. The investment objective of each Fund is
described in each Fund's Prospectus under "Investment Objectives and Policies."

This SAI is not a prospectus and should be read in conjunction
with each Fund's Prospectus, dated May 1, 1996, as supplemented from time to
time. All terms used in this SAI that are defined in a Fund's Prospectus will
have the meanings assigned in such Prospectus. A copy of the Prospectus for
each Fund may be obtained without charge by writing Stephens Inc., the
Company's sponsor, administrator and distributor, at 111 Center Street, Little
Rock, Arkansas 72201 or by calling the Transfer Agent at the telephone number
indicated above.

-----------------------------

1
<PAGE> 317
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Permitted Investment Activities . . . . . . . . . . . . . . . . . . . . . 5
Special Factors Affecting the California Tax-Free Bond Fund . . . . . . . . . . . . . 11
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Servicing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Calculation of Yield and Total Return . . . . . . . . . . . . . . . . . . . . . . . 20
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>

2
<PAGE> 318
INVESTMENT RESTRICTIONS

The Funds are subject to the following investment restrictions,
all of which are fundamental policies:

None of the Funds may:

(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 any Fund's investments in that
industry would exceed 25% of the current value of such Fund's total assets,
provided that there is no limitation with respect to investments in (i)
municipal securities (for the purpose of this restriction, private activity
bonds and notes shall not be deemed municipal securities if the payments of
principal and interest on such bonds or notes is the ultimate responsibility of
non-governmental issuers), (ii) obligations of the United States Government,
its agencies or instrumentalities, (iii) in the case of the Asset Allocation
Fund, any industry in which the S&P Index becomes concentrated to the same
degree during the same period, (iv) securities that are exempt from personal
income taxes of the State of California, and (v) the obligations of domestic
banks;

(2) purchase or sell real estate (other than municipal
obligations or other securities secured by real estate or interests therein or
securities issued by companies that invest in real estate or interests
therein), commodities or commodity contracts; except that the U.S. Government
Income Fund may enter into interest rate futures contracts and may write call
options and purchase call and put options on interest rate futures contracts;

(3) purchase securities on margin (except for short-term
credits necessary for the clearance of transactions and except for margin
payments in connection with options, futures and options on futures) or make
short sales of securities;

(4) underwrite securities of other issuers, except to the
extent that the purchase of municipal securities or other permitted investments
directly from the issuer thereof or from an underwriter for an issuer and the
later disposition of such securities in accordance with the Fund's investment
program may be deemed to be an underwriting;

(5) invest more than 10% of the current value of its net assets
in repurchase agreements maturing in more than seven days, restricted
securities, which are securities that must be registered under the Securities
Act of 1933 before they may be offered or sold to the public, and illiquid
securities;

(6) make investments for the purpose of exercising control or
management;

(7) issue senior securities, except that each Fund may borrow
from banks up to 10% of the current value of its net assets for temporary
purposes only in order to meet

3
<PAGE> 319
redemptions, and these borrowings may be secured by the pledge of up to 10% of
the current value of its net assets (but investments may not be purchased while
any such borrowing exists); or

(8) invest more than 10% of the current value of its net assets
in fixed time deposits that are subject to withdrawal penalties and that have
maturities of more than seven days.

In addition, the Asset Allocation Fund may not write, purchase or
sell puts, calls, warrants or options or any combination thereof, except that
such Fund may purchase securities with put rights in order to maintain
liquidity.

None of the Funds may, as to 75% of its total assets, purchase
securities of any issuer (except securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities) if, as a result, more than 5%
of the value of its total assets would be invested in the securities of any one
issuer or, with respect to 100% of its assets, the Fund's ownership would be
more than 10% of the outstanding voting securities of such issuer.

The Funds are subject to the following non-fundamental policies:

(1) None of the Funds will purchase or retain securities of any
issuer if the officers or directors of the Fund or its Investment Adviser
owning beneficially more than one-half of one percent (0.5%) of the securities
of the issuer together owned beneficially more than 5% of such securities.

(2) The Funds may not purchase interests, leases, or limited
partnership interests in oil, gas, or other mineral exploration or development
programs.

(3) None of the Funds will invest in securities of issuers who,
with their predecessors, have been in existence less than three years, unless
the securities are fully guaranteed or insured by the U.S. Government, a state,
commonwealth, possession, territory, the District of Columbia or by an entity
in existence at least three years, or the securities are backed by the assets
and revenues of any of the foregoing if, by reason thereof, the value of its
aggregate investments in such securities will exceed 5% of its total assets.

(4) Each of the Funds may invest in shares of other open-end,
management investment companies, subject to the limitations of Section 12(d)(1)
of the 1940 Act, provided that any such purchases will be limited to temporary
investments in shares of unaffiliated investment companies and the Investment
Adviser will waive its advisory fees for that portion of the Fund's assets so
invested, except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition.

(5) The Asset Allocation Fund will not purchase securities of
unseasoned issuers, including their predecessors, which have been in operation
for less than three years, and equity securities of issuers which are not
readily marketable if by reason thereof the value of such Fund's aggregate
investment in such classes of securities will exceed 5% of its total assets.

4
<PAGE> 320
(6) The U.S. Government Income Fund will not purchase puts,
calls, straddles, spreads or any combination thereof.

(7) The U.S. Government Income Fund will not invest any part of
its total assets in commodities or commodity futures contracts, provided that
such Fund may enter into interest rate futures contracts and may write call
options and purchase call and put options on interest rate futures contracts
that are "covered" (i.e., the Fund maintains segregated liquid assets in an
amount at least equal to the value to the Fund's obligations and marks to
market daily such collateral).

(8) None of the Funds may purchase or sell real estate limited
partnership interests.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

Unrated Investments. Each of the Asset Allocation Fund and the
California Tax-Free Bond Fund may purchase instruments that are not rated if,
in the opinion of Wells Fargo Bank, such obligations are of investment quality
comparable to other rated investments that are permitted to be purchased by
such Fund. After purchase by a Fund, a security may cease to be rated or its
rating may be reduced below the minimum required for purchase by such Fund.
Neither event will require an immediate sale of such security by such Fund. To
the extent the ratings given by Moody's or S&P may change as a result of
changes in such organizations or their rating systems, each Fund will attempt
to use comparable ratings as standards for investments in accordance with the
investment policies contained in such Fund's Prospectus and in this SAI. The
ratings of Moody's and S&P are more fully described in the Appendix to this
SAI.

Letters of Credit. The Asset Allocation Fund and the California
Tax-Free Bond Fund may purchase debt obligations, including municipal
securities, certificates of participation, commercial paper and other
short-term obligations, backed by an irrevocable letter of credit of a bank,
savings and loan association or insurance company which assumes the obligation
for payment of principal and interest in the event of default by the issuer.
Only banks, savings and loan associations and insurance companies which, in the
opinion of Wells Fargo Bank, are of investment quality comparable to other
permitted investments of such Fund may be used for letter of credit-backed
investments.

Pass-Through Obligations. The U.S. Government Income Fund and the
California Tax-Free Bond Fund may invest in pass-through obligations that
represent an ownership interest in a pool of mortgages and the resultant cash
flow from those mortgages. Payments by homeowners on the loans in the pool flow
through to certificate holders in amounts sufficient to repay principal and to
pay interest at the pass-through rate. The stated maturities of pass-through
obligations may be shortened by unscheduled prepayments of principal on the
underlying mortgages. Therefore, it is not possible to predict accurately the
average maturity of a particular pass-through obligation. Variations in the
maturities of pass-through obligations will affect the yield of the U.S.
Government Income Fund and the California Tax- Free Bond Fund. Furthermore, as
with any debt obligation, fluctuations in interest rates will inversely affect
the market value of pass-through obligations. The U.S. Government Income Fund
and the California

5
<PAGE> 321
Tax-Free Bond Fund may invest in pass-through obligations that are supported by
the full faith and credit of the U.S. Government (such as those issued by the
Government National Mortgage Association) or those that are guaranteed by an
agency or instrumentality of the U.S. Government (such as the Federal National
Mortgage Association or the Federal Home Loan Mortgage Corporation) or bonds
collateralized by any of the foregoing.

When-Issued Securities. Each Fund may purchase securities on a
when-issued basis, in which case delivery and payment normally take place
within 45 days after the date of the commitment to purchase. However, none of
the Funds intends to invest more than 5% of its net assets in when-issued
securities during the coming year. The Funds only will make commitments to
purchase securities on a when-issued basis with the intention of actually
acquiring the securities, but may sell them before the settlement date if it is
deemed advisable. When-issued securities are subject to market fluctuation, and
no income accrues to the purchaser during the period prior to issuance. The
purchase price and the interest rate that will be received on debt securities
are fixed at the time the purchaser enters into the commitment. Purchasing a
security on a when-issued basis can involve a risk that the market price at the
time of delivery may be lower than the agreed-upon purchase price, in which
case there could be an unrealized loss at the time of delivery.

Each Fund will establish a segregated account in which it will
maintain cash, U.S. Government obligations and other high-quality debt
instruments in an amount at least equal in value to the Fund's commitments to
purchase when- issued securities. If the value of these assets declines, the
Fund will 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.

Municipal Bonds. The California Tax-Free Bond Fund and the Asset
Allocation Fund may invest in municipal bonds. As discussed in the Prospectus,
the two principal classifications of municipal bonds are "general obligation"
and "revenue" bonds. Municipal bonds are debt obligations issued to obtain
funds for various public purposes, including the construction of a wide range
of public facilities such as bridges, highways, housing, hospitals, mass
transportation, schools, streets, and water and sewer works. Other purposes for
which municipal bonds may be issued include the refunding of outstanding
obligations and obtaining funds for general operating expenses or to loan to
other public institutions and facilities. Industrial development bonds are a
specific type of revenue bond backed by the credit and security of a private
user. Certain types of industrial development bonds are issued by or on behalf
of public authorities to obtain funds to provide privately-operated housing
facilities, sports facilities, convention or trade show facilities, airport,
mass transit, port or parking facilities, air or water pollution control
facilities and certain local facilities for water supply, gas, electricity, or
sewage or solid waste disposal. Assessment bonds, wherein a specially created
district or project area levies a tax (generally on its taxable property) to
pay for an improvement or project may be considered a variant of either
category. There are, of course, other variations in the types of municipal
bonds, both within a particular classification and between classifications,
depending on numerous factors. Some or all of these bonds may be considered
"private activity bonds" for federal income tax purposes.

6
<PAGE> 322
Municipal Notes. The California Tax-Free Bond Fund and the Asset
Allocation Fund may invest in municipal notes. Municipal notes include, but are
not limited to, tax anticipation notes ("TANs"), bond anticipation notes
("BANs"), revenue anticipation notes ("RANs") and construction loan notes.
Notes sold as interim financing in anticipation of collection of taxes, a bond
sale or receipt of other revenues are usually general obligations of the
issuer.

TANs. An uncertainty in a municipal issuer's capacity to raise
taxes as a result of such things as a decline in its tax base or a rise in
delinquencies could adversely affect the issuer's ability to meet its
obligations on outstanding TANs. Furthermore, some municipal issuers mix
various tax proceeds into a general fund that is used to meet obligations other
than those of the outstanding TANs. Use of such a general fund to meet various
obligations could affect the likelihood of making payments on TANs.

BANs. The ability of a municipal issuer to meet its obligations on
its BANs is primarily dependent on the issuer's adequate access to the longer
term municipal bond market and the likelihood that the proceeds of such bond
sales will be used to pay the principal of, and interest on, BANs.

RANs. A decline in the receipt of certain revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal of, and
interest on, RANs.

The values of outstanding municipal securities will vary as a
result of changing market evaluations of the ability of their issuers to meet
the interest and principal payments (i.e., credit risk). Such values will also
change in response to changes in the interest rates payable on new issues of
municipal securities (i.e., market risk). Should such interest rates rise, the
values of outstanding securities, including those held in the Fund's portfolio,
will decline and (if purchased at par value) they would sell at a discount. If
interests rates fall, the values of outstanding securities will generally
increase and (if purchased at par value) they would sell at a premium. Changes
in the value of municipal securities held in the Fund's portfolio arising from
these or other factors will cause changes in the net asset value per share of
the Fund.

The Funds indicated below may engage in the following investment
activities although none has a present intention to do so:

Interest Rate Futures Contracts and Options Thereon. The U.S.
Government Income Fund may use interest rate futures contracts ("futures
contracts") principally as a hedge against the effects of interest rate
changes. A futures contract is an agreement to purchase or sell a specified
amount of designated debt securities for a set price at a specified future
time. At the time it enters into a futures transaction, the U.S. Government
Income Fund is required to make a performance deposit (initial margin) of cash
or liquid securities with its custodian in a segregated account in the name of
the futures broker. Subsequent payments of "variation margin" are then

7
<PAGE> 323
made on a daily basis, depending on the value of the futures position which is
continually "marked to market."

The U.S. Government Income Fund may engage only in interest rate
futures contract transactions involving (i) the sale of the designated debt
securities underlying the futures contract (i.e., short positions) to hedge the
value of securities held by the U.S. Government Income Fund; (ii) the purchase
of the designated debt securities underlying the futures contract when the U.S.
Government Income Funds holds a short position having the same delivery month
(i.e., a long position offsetting a short position); or (iii) activities that
are incidental to the U.S. Government Income Fund's activities in the cash
market in which the U.S. Government Income Fund has determined to invest. If
the market moves favorably after the U.S. Government Income Fund enters into an
interest rate futures contract as a hedge against anticipated adverse market
movements, the benefits from such favorable market movements on the value of
the securities so hedged will be offset in whole or in part, by a loss on the
futures contract.

The U.S. Government Income Fund may engage in a futures contract
sale to maintain the income advantage from continued holding of a long-term
security while endeavoring to avoid part or all of the loss in market value
that would otherwise accompany a decline in long-term security prices. If,
however, securities prices rise, the U.S. Government Income Fund would realize
a loss in closing out its futures contract sales that would offset any
increases in prices of the long-term securities it holds.

An option on a futures contract gives the purchaser the right, but
not the obligation, in return for the premium paid, to assume (in the case of a
call) or sell (in the case of a put) a position in a specified underlying
futures contract (which position may be a long or short position) at a
specified exercise price at any time during the option exercise period. Sellers
of options on future contracts, like buyers and sellers of futures contracts,
make an initial performance deposit and are subject to calls for variation
margin.

Transactions by the U.S. Government Income Fund in futures
contracts and options thereon involve certain risks. One risk in employing
futures contracts and options thereon to protect against cash market price
volatility is the possibility that futures prices will correlate imperfectly
with the behavior of the prices of the securities in the U.S. Government Income
Fund's portfolio (the portfolio securities will not be identical to the debt
instruments underlying the futures contracts). In addition, commodity exchanges
generally limit the amount of fluctuation permitted in futures contract and
option prices during a single trading day, and the existence of such limits may
prevent the prompt liquidation of futures and option positions in certain
cases. Inability to liquidate positions in a timely manner could result in the
U.S. Government Income Fund incurring larger losses than would otherwise be the
case.

The U.S. Government Income Fund will not enter into interest rate
futures contracts and options thereon for which the aggregate initial margin
and premiums exceed 5% of the fair market value of its assets, after taking
into account unrealized profits and unrealized losses on any such contracts it
has entered into; provided, however, that the "in-the-money" amount of an
option that was in-the-money at the time of purchase will be excluded in
computing such 5%.

8
<PAGE> 324
The U.S. Government Income Fund may enter into futures contracts
and may purchase call and put options on futures contracts that are traded on
U.S. commodity exchanges and write call options on such futures contracts.

Investment in Bond Options by the U.S. Government Income Fund. The
U.S. Government Income Fund may purchase put and call options and write covered
put and call options on securities in which such Fund may invest directly and
that are traded on registered domestic securities exchanges or that result from
separate, privately negotiated transactions with primary U.S. Government
securities dealers recognized by the Board of Governors of the Federal Reserve
System (i.e., over-the-counter ("OTC") options). The writer of a call option,
who receives a premium, has the obligation, upon exercise, to deliver the
underlying security against payment of the exercise price during the option
period. The writer of a put, who receives a premium, has the obligation to buy
the underlying security, upon exercise, at the exercise price during the option
period.

The U.S. Government Income Fund may write put and call options on
bonds only if they are "covered," and such options must remain "covered" as
long as the Fund is obligated as a writer. A call option is covered if the U.S.
Government Income Fund owns the underlying security covered by the call or has
an absolute and immediate right to acquire that security without additional
cash consideration (or for additional cash consideration if the underlying
security is held in a segregated account by its custodian) upon conversion or
exchange of other securities held in its portfolio. A put option is covered if
the U.S. Government Income Fund maintains cash, U.S. Treasury bills or other
high grade short-term obligations with a value equal to the exercise price in a
segregated account with its custodian.

The principal reason for writing put and call options is to
attempt to realize, through the receipt of premiums, a greater current return
than would be realized on the underlying securities alone. In return for the
premium received for a call option, the U.S. Government Income Fund foregoes
the opportunity for profit from a price increase in the underlying security
above the exercise price so long as the option remains open, but retains the
risk of loss should the price of the security decline. In return for the
premium received for a put option, the U.S. Government Income Fund assumes the
risk that the price of the underlying security will decline below the exercise
price, in which case the put would be exercised and the Fund would suffer a
loss. The U.S. Government Income Fund may purchase put options in an effort to
protect the value of a security it owns against a possible decline in market
value.

Writing of options involves the risk that there will be no market
in which to effect a closing transaction. An exchange-traded option may be
closed out only on an exchange that provides a secondary market for an option
of the same series. OTC options are not generally terminable at the option of
the writer and may be closed out only by negotiation with the holder. There is
also no assurance that a liquid secondary market on an exchange will exist. In
addition, because OTC options are issued in privately negotiated transactions
exempt from registration under the Securities Act of 1933, there is no
assurance that the U.S. Government Income Fund will succeed in negotiating a
closing out of a particular OTC option at any particular time. If the

9
<PAGE> 325
U.S. Government Income Fund as covered call option writer is unable to effect a
closing purchase transaction in the secondary market or otherwise, it will not
be able to sell the underlying security until the option expires or it delivers
the underlying security upon exercise.

The staff of the Commission has taken the position that purchased
options not traded on registered domestic securities exchanges and the assets
used as cover for written options not traded on such exchanges are generally
illiquid securities. However, the staff has also opined that, to the extent a
mutual fund sells an OTC option to a primary dealer that it considers
creditworthy and contracts with such primary dealer to establish a formula
price at which the fund would have the absolute right to repurchase the option,
the fund would only be required to treat as illiquid the portion of the assets
used to cover such option equal to the formula price minus the amount by which
the option is "in-the-money." Pending resolution of the issue, the U.S.
Government Income Fund will treat such options and, except to the extent
permitted through the procedure described in the preceding sentence, assets as
subject to such Fund's limitation on investments in securities that are not
readily marketable.

Additional Limitations on Interest Rate Futures and Related
Options. In order to comply with undertakings made by the U.S. Government
Income Fund pursuant to Commodity Futures Trading Commission ("CFTC")
Regulation 4.5, the U.S. Government Income Fund will use interest rate futures
and option contracts solely for bona fide hedging purposes within the meaning
and intent of CFTC Reg. 1.3(z)(1); provided, however, that with respect to each
long position in an interest rate futures or option contract that will be used
as part of a portfolio management strategy and that is incidental to the U.S.
Government Income Fund's activities in the underlying cash market but would not
come within the meaning and intent of Reg. 1.3(z)(1), the "underlying commodity
value" (the size of the contract multiplied by its current settlement price) of
each such long position will not at any time exceed the sum of:

(1) The value of short-term United States debt obligations or
other United States dollar-denominated high quality
short-term money market instruments and cash set aside in
an identifiable manner, plus any funds deposited as margin
on such contract;

(2) Unrealized appreciation on the contract held at the broker;
and

(3) Cash proceeds from existing investments due in not more
than 30 days.

Investment in Warrants. The U.S. Government Income Fund and the
California Tax-Free Bond Fund each may invest no more than 5% of its net assets
at the time of purchase in warrants (other than those that have been acquired
in units or attached to other securities), and not more than 2% of its net
assets in warrants which are not listed on the New York or American Stock
Exchange. Warrants represent rights to purchase securities at a specific price
valid for a specific period of time. The prices of warrants do not necessarily
correlate with the prices of the underlying securities. The U.S. Government
Income Fund and the California Tax-Free Bond Fund each may only purchase
warrants on securities in which the Fund may invest directly.

10
<PAGE> 326
SPECIAL FACTORS AFFECTING THE
CALIFORNIA TAX-FREE BOND FUND

Certain debt obligations held by the California Tax-Free Bond Fund
may be obligations of issuers which rely in whole or in substantial part on
California state revenues for the continuance of their operations and the
payment of their obligations. The extent to which the California Legislature
will continue to appropriate a portion of the state's general funds to
counties, cities and their various entities, is not entirely certain. To the
extent local entities do not receive money from the state to pay for their
operations and services, their ability to pay debt service on obligations held
by the Fund may be impaired.

Certain of the municipal securities in which the California
Tax-Free Bond Fund may invest may be obligations of California issuers that
rely in whole or in part, directly or indirectly, on ad valorem real property
taxes as a source of revenue. The California Constitution limits the powers of
municipalities to impose and collect ad valorem taxes on real property, which,
in turn, restricts the ability of municipalities to service their debt
obligations from such taxes.

For example, Article XIIIA of the California Constitution, as
amended, limits ad valorem real property taxes to 1% of the full cash value of
the property, defined as the county tax assessor's valuation as of March 1,
1975, plus adjustments not to exceed 2% per year, adjustments upon purchase,
change of ownership or new construction after that date, and certain other
adjustments. Article XIIIB provides that state and local government
appropriations from certain revenue sources each year may not exceed the
"appropriations limit" related to such revenue sources set forth for the fiscal
year 1978-79, with certain adjustments made for changes in the cost of living
and population and certain limited exemptions. Because of the complex nature of
Articles XIIIA and XIIIB, ambiguities and possible inconsistencies in their
terms, the existence of litigation challenging these provisions and the
impossibility of predicting future appropriations and changes in population and
cost of living, it is not possible to determine the impact of Article XIIIA or
Article XIIIB or any implementing or related legislation on the municipal
obligations in the California Tax-Free Bond Fund or the ability of state or
local government to pay the interest on, or repay the principal of, such
municipal obligations.

Certain debt obligations held by the Fund may be obligations
payable solely from lease payments on real or personal property leased to the
state, cities, counties or their various public entities. California law
provides that a lessor may not be required to make payments during any period
that it is denied use and occupancy of the property in proportion to such loss.
Moreover, the lessor only agrees to appropriate funding for lease payments in
its annual budget for each fiscal year. In case of a default under the lease,
the only remedy available against the lessor is that of reletting the property;
no acceleration of lease payments is permitted. Each of these factors presents
a risk that the lease financing obligations held by the Fund would not be paid
in a timely manner.

Certain debt obligations held by the California Tax-Free Bond Fund
may be obligations which are payable solely from the revenues of health care
institutions. The method of reimbursement for indigent care, California's
selective contracting with health care providers for

11
<PAGE> 327
such care and selective contracting by health insurers for care of its
beneficiaries now in effect under California and federal law may adversely
affect these revenues and, consequently, payment on those debt obligations.

There can be no assurance that general economic difficulties or
the financial circumstances of California or its towns and cities will not
adversely affect the market value of California municipal securities or the
ability of obligors to continue to make payments on such securities.

* * *

The taxable securities market is a broader and more liquid market
with a greater number of investors, issuers and market makers than the market
for municipal securities. The more limited marketability of municipal
securities may make it difficult in certain circumstances to dispose of large
investments advantageously.

MANAGEMENT

The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "The Fund and
Management." The principal occupations during the past five years of the
Directors and principal executive Officer of the Company are listed below. The
address of each, unless otherwise indicated, is 111 Center Street, Little Rock,
Arkansas 72201. Directors deemed to be "interested persons" of the Company for
purposes of the 1940 Act are indicated by an asterisk.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- --------------------- -------- ---------------------
<S> <C> <C>
Jack S. Euphrat, 73 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.

*R. Greg Feltus, 44 Director, Senior Vice President
Chairman and of Stephens; Manager
President of Financial Services
Group; President of
Stephens
Insurance Services
Inc.; Senior Vice
President of Stephens
Sports Management
Inc.; and President of
Investor Brokerage
Insurance Inc.
</TABLE>

12
<PAGE> 328

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- --------------------- -------- ---------------------
<S> <C> <C>
Thomas S. Goho, 53 Director T.B. Rose Faculty
321 Beechcliff Court Fellow-Business,
Winston-Salem, NC 27104 Wake Forest University
Calloway School, of
Business and
Accountancy: Associate Professor of
Finance of the School of Business and
Accounting at Wake Forest University
since 1983.
*Zoe Ann Hines, 46 Director Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource
Management.
*W. Rodney Hughes, 69 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Robert M. Joses, 77 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901

*J. Tucker Morse, 51 Director Private Investor; Real Estate
10 Legrae Street Developer; Chairman
Charleston, SC 29401 of Renaissance
Properties Ltd.;
President of Morse
Investment
Corporation; and Co-
Managing Partner of
Main Street Ventures.
Richard H. Blank, Jr., 39 Chief Associate of
Operating Financial Services
Officer, Group of Stephens;
Secretary and Director of Stephens
Treasurer Sports Management
Inc.; and Director of
Capo Inc.
</TABLE>

13
<PAGE> 329
COMPENSATION TABLE
For the Fiscal Year Ended December 31, 1995

<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE COMPENSATION FROM REGISTRANT
NAME AND POSITION FROM REGISTRANT AND FUND COMPLEX
- ----------------- ----------------- ------------------
<S> <C> <C>
Jack S. Euphrat $10,188 $39,750
Director

*R. Greg Feltus 0 0
Director

Thomas S. Goho 10,188 39,750
Director

*Zoe Ann Hines 0 0
Director

*W. Rodney Hughes 9,438 37,000
Director

Robert M. Joses 9,938 39,000
Director

*J. Tucker Morse 8,313 33,250
Director
</TABLE>

Directors of the Company are compensated annually by the Company
and by all the registrants in the fund complex for their services as indicated
above and also are reimbursed for all out-of-pocket expenses relating to
attendance at board meetings. Each of the Directors and Officers of the Company
serves in the identical capacity as Officers and Directors of Stagecoach Funds,
Inc. and MasterWorks Funds Inc. (formerly, Stagecoach Inc.), and as Trustees
and/or Officers of Stagecoach Trust, Master Investment Portfolio, Life &
Annuity Trust, Master Investment Trust and Managed Series Investment Trust,
each of which is a registered open-end management investment company and each
of which is considered to be in the same "fund complex," as such term is
defined in Form N-1A under the 1940 Act, as the Company. The Directors are
compensated by other Companies and Trusts within the fund complex for their
services as Directors/Trustees to such Companies and Trusts. Currently the
Directors do not receive any retirement benefits or deferred compensation from
the Company or any other member of the fund complex.

As of the date of this SAI, Directors and officers of the Company
as a group beneficially owned less than 1% of the outstanding shares of the
Company.

14
<PAGE> 330
Investment Adviser. Each of the Funds is advised by Wells Fargo
Bank. The Amended Advisory Contract of the Asset Allocation Fund and the
Advisory Contracts of the other Funds (collectively, the "Advisory Contracts")
provide that Wells Fargo Bank shall furnish to the Funds investment guidance
and policy direction in connection with the daily portfolio management of each
Fund. Pursuant to the Advisory Contracts, Wells Fargo Bank furnishes to the
Board of Directors periodic reports on the investment strategy and performance
of each Fund.

Wells Fargo Bank has agreed to provide to the Funds, among other
things, money market security and fixed- income research, analysis and
statistical and economic data and information concerning interest rate and
security market trends, portfolio composition, credit conditions and, in the
case of the U.S. Government Income Fund and the California Tax-Free Bond Fund,
average maturities of the portfolios of each of those Funds.

Each Advisory Contract will continue in effect for more than two
years provided the continuance is approved annually (i) by the holders of a
majority of the respective Fund's outstanding voting securities or by the
Company's Board of Directors and (ii) by a majority of the directors of the
Company who are not parties to the Advisory Contract or "interested persons"
(as defined in the Act) of any such party. Each Advisory Contract may be
terminated on 60 days' written notice by either party and will terminate
automatically if assigned.

For the years ended December 31, 1993, 1994 and 1995, the Funds
paid to Wells Fargo Bank the advisory fees indicated below and Wells Fargo Bank
waived the indicated AMOUNTS:

<TABLE>
<CAPTION>
1993 1994 1995
PAID WAIVED PAID WAIVED PAID WAIVED
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Asset Allocation
Fund $350,046 $305 $424,899 $0 $424,416 $0

U.S. Government
Income Fund $39,319 $201,104 $230,619 $28,872 $175,052 $13,667

California Tax-Free
Bond Fund $1,475,001 $423,693 $896,680 $748,655 $1,165,976 $248,047
</TABLE>

Sub-Investment Adviser. BZW Barclays Global Fund Advisors ("BGFA")
serves as Sub-Investment Adviser to the Asset Allocation Fund pursuant to a
Sub-Advisory Contract (the "Sub-Advisory Contract") between the Fund, Wells
Fargo Bank and BGFA. Subject to the direction of the Company's Board of
Directors and the overall supervision and control of Wells Fargo Bank and the
Company, BGFA makes recommendations regarding the investment and reinvestment
of the Fund's assets. BGFA is responsible for implementing and monitoring the
performance of the asset allocation model employed with respect to the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Fund's Prospectus. BGFA will

15
<PAGE> 331
furnish to Wells Fargo Bank periodic reports on the investment activity and
performance of the Fund and will also furnish such additional reports and
information as Wells Fargo Bank and the Company's Board of Directors and
officers may reasonably request. BGFA was created by the reorganization of
Wells Fargo Nikko Investment Advisors ("WFNIA"), a former affiliate of Wells
Fargo Bank, with and into an affiliate of Wells Fargo Institutional Trust
Company, N.A. ("WFITC"). Prior to January 1, 1996, WFNIA provided sub-advisory
services directly to the Asset Allocation Fund. For the years ended December
31, 1993, 1994 and 1995, Wells Fargo Bank paid to WFNIA the sub-advisory fees
indicated below:

<TABLE>
<CAPTION>
1993 1994 1995
FEES FEES FEES FEES FEES FEES
PAID WAIVED PAID WAIVED PAID WAIVED
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Asset Allocation Fund $350,046 $305 $424,899 $-0- $177,707 $-0-
</TABLE>

Administrator and Distributor. The Company has retained Stephens
as administrator and distributor on behalf of each of its Funds. Stephens, in
connection with the Administration Agreements with the Company, furnishes the
Company with office facilities and ordinary clerical and bookkeeping services
that are not being furnished by Wells Fargo Bank. Stephens also has entered
into Distribution Agreements with the Company pursuant to which it has the
responsibility of distributing Class A Shares and Class D Shares of the Funds.

For the years ended December 31, 1993, 1994 and 1995, the Funds
paid administrative fees to Stephens as follows:

<TABLE>
<CAPTION>
FUND 1993 1994 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Allocation Fund $49,481 $66,524 $60,627

U.S. Government Income Fund $48,438 $51,898 $37,744

California Tax-Free Bond Fund $483,479 $431,734 $384,015
</TABLE>

Shareholder Servicing Agent. As discussed in each Fund's
Prospectus under the heading "Shareholder Servicing Agent," the Funds have
entered into shareholder servicing agreements with Wells Fargo Bank. For the
dollar amount of shareholder servicing fees paid by the Class D Shares of the
Funds, see "Servicing Plan" below.

Custodian and Transfer and Dividend Disbursing Agent. Wells Fargo
Bank has been retained to act as Transfer and Dividend Disbursing Agent for the
Funds and as Custodian for the U.S. Government Income Fund and the California
Tax- Free Bond Fund. BZW Barclays Global Investors, N.A. ("BGI" formerly,
WFITC) acts as Custodian for the Asset Allocation Fund. The

16
<PAGE> 332
Custodian, among other things, maintains a custody account or accounts in the
name of each Fund; receives and delivers all assets for each Fund upon purchase
and upon sale or maturity; collects and receives all income and other payments
and distributions on account of the assets of each Fund and pays all expenses
of each Fund. For its services as Custodian to the U.S. Government Income and
California Tax-Free Bond Funds, Wells Fargo Bank receives an asset-based fee
and transaction charges. However, BGI is not entitled to receive compensation
for its services as Custodian to the Asset Allocation Fund so long as its
subsidiary, BGFA, is entitled to receive fees for providing investment advisory
services to such Fund. For the year ended December 31, 1995, none of the Funds
paid any custody fees.

For its services as transfer and dividend disbursing agent to the
Funds, Wells Fargo Bank receives a base fee and per-account fees. As of
December 31, 1995, the Funds paid transfer and dividend disbursing agency fees
to Wells Fargo Bank, as follows:

<TABLE>
<CAPTION>
FUND 1995
- -------------------------------------------------------
<S> <C>
Asset Allocation $17,563
California Tax-Free Bond $-0-
U.S. Government Income $-0-
</TABLE>

Underwriting Commissions. For the year ended December 31, 1993,
the aggregate dollar amount of underwriting commissions paid to Stephens was
$3,604,377 and Stephens retained $3,457,989 of such commissions. Wells Fargo
Securities Inc. ("WFSI"), an affiliated broker-dealer of the Company, and its
registered representatives received $146,388 of such commissions.

For the year ended December 31, 1994, the aggregate dollar amount
of underwriting commissions paid to Stephens was $1,408,759 and Stephens
retained $1,351,388 of such commissions. WFSI and its registered
representatives received $57,371 of such commissions.

For the year ended December 31, 1995, the aggregate dollar amount
of underwriting commissions paid to Stephens was $1,478,541 and Stephens
retained $1,447,175 of such commissions. WFSI and its registered
representatives received $31,366 of such commissions.

DISTRIBUTION PLANS

As indicated in the Prospectus, each of the Funds, on behalf of
each of its classes of shares, has adopted a Plan under Section 12(b) of the
1940 Act and Rule 12b-1 thereunder (the "Rule"). The Plans for the classes of
shares of the Asset Allocation Fund, the U.S. Government Income Fund and the
California Tax-Free Bond Fund were adopted by the Board of Directors; a
majority of the directors who were not "interested persons" (as defined in the
Act) of the Funds and who had no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan (the "Qualified
Directors") adopted the Plans.

17
<PAGE> 333
Under the Plans for the U.S. Government Income Fund and the
California Tax-Free Bond Fund, each of the classes of shares of these Funds may
defray all or part of the cost of preparing and printing prospectuses and other
promotional materials and of delivering prospectuses and those materials to
prospective shareholders of the Fund by paying on an annual basis up to the
greater of $100,000 or 0.05% of the Fund's average daily net assets. These
Plans provide only for the reimbursement of actual expenses.

Under the Plan for the Asset Allocation Fund, this Fund may pay
the Distributor, as compensation for distribution-related services, a monthly
fee at an annual rate of up 0.75% of the Fund's average daily net assets
attributable to the Class A Shares and up to 0.50% of the Fund's average daily
net assets attributable to the Class D Shares. The actual fee payable to the
Distributor shall, within such limits, be determined from time to time by
mutual agreement between the Company 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 NASD Rules
of Fair Practice. The Distributor may enter into selling agreements with one
or more selling agents under which such agents may receive compensation for
distribution-related services from the Distributor, including, but not limited
to, commissions or other payments to such agents based on the average daily net
assets of Asset Allocation Fund shares attributable to them. The Distributor
may retain any portion of the total distribution fee payable under the Plan to
compensate it for the distribution-related services provided by it or to
reimburse it for other distribution-related expenses.

Each Plan will continue in effect from year to year if such
continuance is approved by a majority vote of both the directors of the Company
and the Qualified Directors. Agreements related to the Plans also must be
approved by such vote of the directors and the Qualified Directors. Such
agreements 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 proper Fund. No Plan may be amended to
increase materially the amounts payable thereunder without the approval of a
majority of the outstanding voting securities of the proper Fund, and no
material amendment to a Plan may be made except by a majority of both the
directors of the Company and the Qualified Directors.

Each Plan requires that the Treasurer of the Fund shall provide to
the directors, and the directors 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 directors who are not
"interested persons" of the Company be made by such disinterested directors.

For the year ended December 31, 1995, the Funds' distributor
received the following amounts of 12b-1 fees for the specified purposes set
forth below under each Fund's Plan.

18
<PAGE> 334

<TABLE>
<CAPTION>
PRINTING & MAILING MARKETING COMPENSATION TO
FUND TOTAL PROSPECTUS BROCHURES UNDERWRITERS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Allocation
Class A $120,417 N/A N/A $120,417
Class D $93,450 N/A N/A $93,450

U.S. Government Income
Class A $10,720 $10,720 $-0- N/A
Class D $16,582 N/A N/A $16,582

California T-F Bond
Class A $8,543 $8,348 $195 N/A
Class D $36,643 N/A N/A $36,643
</TABLE>

For the year ended December 31, 1995, WFSI and its registered
representatives received no compensation under each Fund's Plans.

SERVICING PLAN

As indicated in the Prospectus of each Fund, each of the Funds has
adopted a Servicing Plan (each, a "Servicing Plan" and collectively, the
"Servicing Plans") with respect to its Class D Shares. The Board of Directors
adopted the Servicing Plans on April 29, 1993. The Board of Directors included
a majority of the Directors who were not "interested persons" (as defined in
the 1940 Act) of any of the Funds and who had no direct or indirect financial
interest in the operation of the Servicing Plan or in any agreement related to
the Servicing Plan (the "Servicing Plan Qualified Directors").

Under each Servicing Plan and pursuant to the Servicing
Agreements, the Fund may pay one or more servicing agents, as compensation for
performing certain services, a fee at an annual rate of up to 0.25% of the
average daily net assets of the Fund attributable to its Class D Shares. The
actual fee payable to servicing agents is determined, within such limit, from
time to time by mutual agreement between the Company and each servicing agent
and will not exceed the maximum service fees payable by mutual funds sold by
members of the NASD under the NASD Rules of Fair Practice.

The Servicing Plans will continue in effect from year to year if
such continuance is approved by a majority vote of both the Directors of the
Company and the Servicing Plan Qualified Directors. Any form of Servicing
Agreement related to the Servicing Plans also must be approved by such vote of
the Directors and the Servicing Plan Qualified Directors. Servicing Agreements
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
Class D Shares of each of the Funds. The Servicing Plans may not be amended to
increase materially the amount payable

19
<PAGE> 335
thereunder without the approval of a majority of the outstanding Class D Shares
of each Fund, and no material amendment to the Servicing Plans may be made
except by a majority of both the Directors of the Company and the Qualified
Directors.

The Servicing Plans require that the Treasurer of the Company
shall provide to the Directors, and the Directors shall review, at least
quarterly, a written report of the amounts expended (and purposes therefor)
under each of the Servicing Plans.

For the years ended December 31, 1993, 1994 and 1995 the Funds
paid the following amounts in servicing fees pursuant to the Servicing Plans
for the Class D Shares of the Funds:

<TABLE>
<CAPTION>
1993* 1994 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Allocation Fund $6,483 $28,377 $31,150

U.S. Government Income Fund $4,801 $17,454 $8,291

California Tax-Free Bond Fund $5,691 $20,828 $18,322
</TABLE>

___________________
*The Class D Shares commenced operations on July 3, 1993.

CALCULATION OF YIELD AND TOTAL RETURN

As indicated in the Prospectus, the Funds may advertise certain
total return information for a class of shares computed in the manner described
in the Prospectus. As and to the extent required by the Commission, an average
annual compound rate of return ("T") will be computed by using the value at the
end of a specified period ("ERV") of a hypothetical initial investment in a
class of shares ("P") over a period of years ("n") according to the following
formula: P(1+T)n = ERV. In addition, as indicated in the Prospectus, the Funds
may also, at times, calculate total return for a class of shares based on net
asset value per share (rather than the public offering price), in which case
the figures would not reflect the effect of any sales charges that would have
been paid by an investor, or based on the assumption that a sales charge other
than the maximum sales charge (reflecting a Volume Discount) was assessed,
provided that total return data derived pursuant to the calculation described
above also are presented.

In addition to the above performance information, the Funds
may also advertise the cumulative total return of a Fund for one-month,
three-month, six-month, and year-to-date periods. The cumulative total return
for such periods is based on the overall percentage change in value of a
hypothetical investment in a Fund, assuming all Fund dividends and capital gain
distributions are reinvested, without reflecting the effect of any sales charge
that would be paid by an investor, and is not annualized.

20
<PAGE> 336

The average annual total return on the Class A Shares of the Asset
Allocation Fund for the period since inception (April 7, 1988) to December 31,
1995, assuming the maximum 4.50% sales load and no sales load, was 11.36% and
12.02%, respectively. The average annual total return for the five-year period
ended December 31, 1995, assuming a 4.50% sales load and no sales load, was
13.27% and 14.32%, respectively. The average annual total return for the year
ended December 31, 1995, assuming a 4.50% sales load and no sales load, was
28.68% and 34.71%, respectively.

The average annual total return on the Class D Shares of the Asset
Allocation Fund for the period since inception (July 1, 1993) to December 31,
1995, was 13.71%. The average annual total return on the Class D Shares for the
year ended December 31, 1995, assuming payment of the 1% CDSC was 32.80% and no
CDSC, was 33.72%.

The average annual total return on the Class A Shares of the U.S.
Government Income Fund for the period since inception of the predecessor fund
(April 7, 1988) to December 31, 1995, assuming a 4.50% sales load, was 9.12%
and no sales load, was 9.77%. The average annual total return for the five-year
period ended December 31, 1995, assuming a 4.50% sales load, was 8.53%, and no
sales load, was 9.54%. The average annual total return for the one year ended
December 31, 1995, assuming a 4.50% sales load, was 13.89%, and no sales load,
was 19.32%.

The average annual total return on the Class D Shares of the U.S.
Government Income Fund since inception (July 1, 1993) to December 31, 1995, was
5.60%. The average annual total return on the Class D Shares for the year ended
December 31, 1995, was 17.54%, assuming payment of the 1% CDSC, and 18.54%,
assuming no CDSC.

The average annual total return on the Class A Shares of the
California Tax-Free Bond Fund for the period since inception (October 6, 1988)
to December 31, 1995, assuming a 4.50% sales load, was 8.16%, and no sales
load, was 8.85%. The average annual total return for the five-year period ended
December 31, 1995, assuming a 4.50% sales load, was 7.90%, and no sales load,
was 8.89%. The average annual total return for the one year ended December 31,
1995, assuming a 4.50% sales load, was 11.15%, and no sales load, was 16.38%.

The average annual total return on Class D Shares of the
California Tax-Free Bond Fund since inception (July 1, 1993) to December 31,
1995, assuming no CDSC, was 5.42%. The average annual total return on the Class
D Shares for the one year ended December 31, 1995, was 14.60%, assuming payment
of the 1% CDSC, and 15.58%, assuming no CDSC.

The Funds may advertise the cumulative total return on their
respective shares. Cumulative total return of shares is computed on a per share
basis and assumes the reinvestment of dividends and distributions. Cumulative
total return of shares generally is expressed as a percentage rate which is
calculated by combining the income and principal charges for a specified period
and dividing by the net asset value per share at the beginning of the period.
Advertisements may include the percentage rate of total return of shares or may
include the

21
<PAGE> 337
value of a hypothetical investment in shares at the end of the period which
assumes the application of the percentage rate of total return.

The cumulative total return on the Class A Shares of the Asset
Allocation Fund for the period from inception (April 7, 1988) to December 31,
1995, assuming the maximum 4.50% sales load and no sales load, was 130.21% and
141.03%, respectively. The cumulative total return on such shares for the
five-year period ended December 31, 1995, assuming the maximum 4.50% sales load
and no sales load, was 86.47% and 95.22%, respectively. The cumulative total
return on the Class D Shares of the Asset Allocation Fund for the period from
inception (July 1, 1993) to December 31, 1995 was 37.89%.

The cumulative total return on the Class A Shares of the U.S.
Government Income Fund for the period from inception of the predecessor Fund
(April 7, 1988) to December 31, 1995, assuming the maximum 4.50% sales load was
96.73%, and no sales load, was 105.98%. The cumulative total return on such
shares for the five-year period ended December 31, 1995, assuming the maximum
4.50% sales load was 50.55%, and no sales load, was 57.71%. The cumulative
total return on the Class D Shares of the U.S. Government Income Fund for the
period from inception (July 1, 1993) to December 31, 1995, was 14.59%.

The cumulative total return on the Class A Shares of the
California Tax-Free Bond Fund for the period from inception (October 8, 1988)
to December 31, 1995, assuming the maximum 4.50% sales load was 76.57%, and no
sales load, was 84.87%. The cumulative total return on such shares for the
five-year period ended December 31, 1995, assuming the maximum 4.50% sales load
was 46.24%, and no sales load, was 53.08%. The cumulative total return on the
Class D Shares of the California Tax-Free Bond Fund for the period from
inception (July 1, 1993) to December 31, 1995, was 14.10%.

As indicated in the Prospectus, the U.S. Government Income Fund
and the California Tax-Free Bond Fund may advertise certain yield information
for a class of shares. As and to the extent required by the Commission, yield
for a class of shares will be calculated based on a 30-day (or one month)
period, computed by dividing the net investment income per share of a class of
shares earned during the period by the maximum offering price per share of a
class of shares on the last day of the period, according to the following
formula: YIELD = 2[((a-b:-cd)+1)6-1], where a = dividends and interest earned
during the period; b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares of a class of shares outstanding during
the period that were entitled to receive dividends; and d = the maximum
offering price per share of a class of shares on the last day of the period.
The net investment income of a class of shares of either Fund includes actual
interest income, plus or minus amortized purchase discount (which may include
original issue discount) or premium, less accrued expenses. Realized and
unrealized gains and losses on portfolio securities are not included in net
investment income. For purposes of sales literature, yield also may be
calculated on the basis of the net asset value per share rather than the public
offering price, provided that the yield data derived pursuant to the
calculation described above also are presented.

22
<PAGE> 338

The yields on the Class A Shares of the U.S. Government Income
Fund and the California Tax-Free Bond Fund for the 30-day period ended December
31, 1995, assuming a 4.50% sales load, were 5.19% and 4.60%, respectively. The
yields for the same period, assuming no sales load, were 5.44% and 4.82%,
respectively. The yields on the Class D Shares of the U.S. Government Income
Fund and the California Tax-Free Bond Fund for the 30-day period ended December
31, 1995, assuming payment of the 1.0% CDSC, were 4.69% and 4.04%,
respectively.

The tax-equivalent yield for a class of shares of the California
Tax-Free Bond Fund also will be computed by dividing that portion of the yield
for a class of shares which is tax-exempt by one minus a stated income tax rate
and adding the product to that portion, if any, of the yield of such class that
is not tax-exempt. The tax equivalent yield on the Class A Shares of the
California Tax-Free Bond Fund for the 30-day period ended December 31, 1995
(assuming a 4.50% sales load and a 42.40% assumed federal and state tax rate)
was 7.99%. Assuming no sales load (and a 42.40% assumed federal and state tax
rate), the tax-equivalent yield of the Class A Shares for the 30-day period
ended December 31, 1995 was 8.37%. The tax-equivalent yield on the Class D
Shares for the 30-day period ended December 31, 1995 (assuming a 42.40% assumed
federal and state tax rate and the maximum 1.0% CDSC) was 7.01%.

The yields for the classes of shares of the U.S. Government Income
Fund and the California Tax-Free Bond Fund will fluctuate from time to time,
unlike bank deposits or other investments that pay a fixed yield for a stated
period of time, and do not provide a basis for determining future yields since
they are based on historical data. Yield is a function of portfolio quality,
composition, maturity and market conditions as well as the expenses allocated
to a particular class of shares.

In addition, investors should recognize that changes in the net
asset values of shares of the U.S. Government Income Fund and the California
Tax-Free Bond Fund will affect the yield of the respective class of shares for
any specified period, and such changes should be considered together with such
class' yield in ascertaining such class' total return to shareholders for the
period. Yield information for a class of shares may be useful in reviewing the
performance of the Fund and for providing a basis for comparison with
investment alternatives. The yield of a class of shares, however, may not be
comparable to the yields from investment alternatives because of differences in
the foregoing variables and differences in the methods used to value portfolio
securities, compute expenses and calculate yield.

The Company may disclose in sales literature, information and
statements, the distribution rate of the California Tax-Free Bond Fund shares.
Distribution rate, which may be annualized, is the amount determined by
dividing the dollar amount per share of the most recent dividend by the most
recent NAV or maximum offering price per share as of a date specified in the
sales literature. Distribution rate will be accompanied by the standard 30-day
yield as required by the SEC.

23
<PAGE> 339
dollar weighted average basis based on ratings assigned each issue or issuer,
as the case may be, by S&P and/or Moody's. In the event one rating agency does
not rate the issue or issuer, as the case may be, in the same tier as the other
agency, the highest rating is used in the calculation.

From time to time and only to the extent the comparison is
appropriate for a class of shares of a Fund, the Company may quote the
performance or price-earning ratio of a class of shares of a Fund in
advertising and other types of literature as compared to the performance of the
1-Year Treasury Bill Rate, S&P Index, the Dow Jones Industrial Average, the
Lehman Brothers 20+ Treasury Index, the Lehman Brothers 5-7 Year Treasury
Index, Donoghue's Money Fund Averages, Real Estate Investment Averages (as
reported by the National Association of Real Estate Investment Trusts), Gold
Investment Averages (provided by the World Gold Council), Bank Averages (which
is calculated from figures supplied by the U.S. League of Savings Institutions
based on effective annual rates of interest on both passbook and certificate
accounts), average annualized certificate of deposit rates (from the Federal
Reserve G-13 Statistical Releases or the Bank Rate Monitor), the Salomon One
Year Treasury Benchmark Index, the Consumer Price Index (as published by the
U.S. Bureau of Labor Statistics), Ten Year U.S. Government Bond Average, S&P's
Corporate Bond Yield Averages, Schabacter Investment Management Indices,
Salomon Brothers High Grade Bond Index, Lehman Brothers Long-Term High Quality
Government/Corporate Bond Index, other managed or unmanaged indices or
performance data of bonds, stocks or government securities (including data
provided by Ibbotson Associates), or by other services, companies, publications
or persons who monitor mutual funds on overall performance or other criteria.
The S&P Index and the Dow Jones Industrial Average are unmanaged indices of
selected common stock prices. The performance of a class of shares of a Fund
also may be compared to those of other mutual funds having similar objectives.
This comparative performance could be expressed as a ranking prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc., Bloomberg
Financial Markets or Morningstar, Inc., independent services which monitor the
performance of mutual funds. The performance of a class of shares of a Fund
will be calculated by relating net asset value per share at the beginning of a
stated period to the net asset value of the investment, assuming reinvestment
of all gains distributions and dividends paid, at the end of the period. Any
such comparisons may be useful to investors who wish to compare the class' past
performance with that of its competitors. Of course, past performance cannot be
a guarantee of future results. The Company also may include, from time to time,
a reference to certain marketing approaches of the Distributor, including, for
example, a reference to a potential shareholder being contacted by a selected
broker or dealer. General mutual fund statistics provided by the Investment
Company Institute may also be used.

In addition, the Company 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
Company also may include in advertising and other types of literature
information and other data from reports and studies prepared by the Tax
Foundation, including information regarding federal and state tax levels and
the related "Tax Freedom Day."

24
<PAGE> 340
The Company also may use the following information in
advertisements and other types of literature, only to the extent the
information is appropriate for a 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
a class of shares of a Fund; (ii) other government statistics, including, but
not limited to, The Survey of Current Business, may be used to illustrate
investment attributes of a class of shares of a Fund or the general economic,
business, investment, or financial environment in which a Fund operates; (iii)
the effect of tax-deferred compounding on the investment returns of a 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 a class of shares of a Fund (or returns
in general) on a tax-deferred basis (assuming reinvestment of capital gains and
dividends and assuming one or more tax rates) with the return on a taxable
basis; and (iv) the sectors or industries in which a Fund invests may be
compared to relevant indices of stocks or surveys (e.g., S&P Industry Surveys)
to evaluate the historical performance or current or potential value of a class
of shares of a Fund with respect to the particular industry or sector.

In addition, performance information for a class of shares of the
Asset Allocation Fund may be compared, in reports and promotional literature,
to the S&P 500 Index, the Wilshire 5000 Equity Index, the Lehman Brothers 20+
Treasury Index, Donoghue's Money Fund Averages, the Lehman Brothers 5-7 Year
Treasury Index, or other appropriate managed or unmanaged indices of the
performance of various types of investments, so that investors may compare the
results of a class of shares of the Fund with those of indices widely regarded
by investors as representative of the security markets in general. Unmanaged
indices may assume the reinvestment of dividends, but generally do not reflect
deductions for administrative and management costs and expenses. Managed
indices generally do reflect such deductions.

From time to time, the Company also may include in advertisements
or other marketing materials a discussion of certain of the objectives of the
Asset Allocation Fund's investment strategy and a comparison of this strategy
with other investment strategies. In particular, the responsiveness of the Fund
to changing market conditions may be discussed. For example, the Company may
describe the benefits derived by having Wells Fargo Bank, as Investment
Adviser, monitor and reallocate investments among the three asset categories
described above and in the Prospectus. The Company's advertising or other
marketing materials also might set forth illustrations depicting examples of
recommended allocations in different market conditions. It may state, for
example, that when the model indicates that stocks represent a better value
than bonds or money market instruments, the Asset Allocation Fund might consist
of 70% stocks, 25% bonds and 5% money market instruments and that when the
model indicates that bonds represent a better value than stocks or money market
instruments, the balance of assets might shift to 60% bonds, 20% stocks and 20%
money market instruments.

The Company also may include, from time to time, a reference to
certain marketing approaches of the Distributor, including, for example, a
reference to a potential shareholder being contacted by a selected broker or
dealer.

The Company also may discuss in advertising and other types of
literature that one of the Funds has been assigned a rating by a nationally
recognized statistical rating organization

25
<PAGE> 341
("NRSRO"), such as Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's Corporation ("S&P"). Such rating would assess the creditworthiness of
the investments held by the Fund. The assigned rating would not be a
recommendation to purchase, sell or hold the Fund's shares since the rating
would not comment on the market price of the Fund's shares or the suitability
of the Fund for a particular investor. In addition, the assigned rating would
be subject to change, suspension or withdrawal as a result of changes in, or
unavailability of, information relating to the Fund or its investments. The
Company may compare the performance of a class of shares of a Fund with other
investments which are assigned ratings by NRSROs. Any such comparisons may be
useful to investors who wish to compare a class' past performance with other
rated investments.

The Company also may disclose in advertising and other types of
literature, information and statements that the Company's investment adviser,
Wells Fargo Bank, is listed in Nelson Publications' ("Nelson's") "Top 20"
performance rankings as published in the 1994 edition of "America's Best Money
Managers." The Nelson survey ranks the performance of money managers in over 30
asset/style categories and is based on analysis of performance composites and
surveys of institutional money managers. The Company may also disclose in
advertising and other types of sales literature the assets and other categories
of assets under management by the Company's investment adviser and the total
amount of assets under management by Wells Fargo Investment Management Group
("IMG"). As of December 31, 1995, IMG had $30.1 billion in assets under
management.

The Company may also disclose in advertising, statements and other
literature the amount of assets and mutual fund assets managed by Wells Fargo
Bank. As of April 1, 1996 Wells Fargo Bank and its affiliates provided
investment advisory services for approximately $56 billion of assets of
individuals, trusts, estates and institutions and $17 billion of mutual fund
assets.

DETERMINATION OF NET ASSET VALUE

Net asset value per share for each class of a Fund is determined
by Wells Fargo Bank on each day the Exchange is open for trading.

Securities of the Funds for which market quotations are available
are valued at latest prices. Securities of the Asset Allocation Fund for which
the primary market is a national securities exchange or the National
Association of Securities Dealers Automated Quotations National Market System
are valued at last sale prices. In the absence of any sale of such securities
on the valuation date and in the case of other securities, including U.S.
Government securities but excluding money market instruments maturing in 60
days or less, the valuations are based on latest quoted bid prices. Money
market instruments maturing in 60 days or less are valued at amortized cost.
The assets of the U.S. Government Income Fund and the California Tax-Free Bond
Fund, other than debt securities maturing in 60 days or less, are valued at
latest quoted bid prices. Futures contracts and options listed on a national
exchange are valued at the last sale price on the exchange on which they are
traded at the close of the Exchange, or, in the absence of any sale on the
valuation date, at latest quoted bid prices. Options not listed on a

26
<PAGE> 342
national exchange are valued at latest quoted bid prices. Debt securities
maturing in 60 days or less are valued at amortized cost. In all cases, bid
prices will be furnished by a reputable independent pricing service approved by
the Board of Directors. Prices provided by an independent pricing service may
be determined without exclusive reliance on quoted prices and may take into
account appropriate factors such as institutional-size trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics and other market data. All other securities and other
assets of the Funds for which current market quotations are not readily
available are valued at fair value as determined in good faith by the Company's
Directors and in accordance with procedures adopted by the Directors.

PORTFOLIO TRANSACTIONS

The Company has no obligation to deal with any dealer or group of
dealers in the execution of transactions in portfolio securities. Subject to
policies established by the Company's Board of Directors, Wells Fargo Bank is
responsible for each Fund's portfolio decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Company to obtain the
best results taking into account the dealer's general execution and operational
facilities, the type of transaction involved and other factors such as the
dealer's risk in positioning the securities involved. While Wells Fargo Bank
generally seeks reasonably competitive spreads or commissions, the Funds will
not necessarily be paying the lowest spread or commission available.

Except in the case of equity securities purchased by the Asset
Allocation Fund, purchases and sales of securities usually will be principal
transactions. Portfolio securities normally will be purchased or sold from or
to dealers serving as market makers for the securities at a net price. Each of
the Funds also will purchase portfolio securities in underwritten offerings and
may purchase securities directly from the issuer. Generally, municipal
obligations and taxable money market securities are traded on a net basis and
do not involve brokerage commissions. The cost of executing a Fund's portfolio
securities transactions will consist primarily of dealer spreads and
underwriting commissions. Under the Act, persons affiliated with the Company
are prohibited from dealing with the Company as a principal in the purchase and
sale of securities unless an exemptive order allowing such transactions is
obtained from the Commission or an exemption is otherwise available. The Fund
may purchase securities from underwriting syndicates of which Stephens or Wells
Fargo Bank is a member under certain conditions in accordance with the
provisions of a rule adopted under the Act and in compliance with procedures
adopted by the Board of Directors.

Wells Fargo Bank, as the Investment Adviser of each of the Funds,
may, in circumstances in which two or more dealers are in a position to offer
comparable results for a Fund portfolio transaction, give preference to a
dealer that has provided statistical or other research services to Wells Fargo
Bank. By allocating transactions in this manner, Wells Fargo Bank is able to
supplement its research and analysis with the views and information of
securities firms. Information so received will be in addition to, and not in
lieu of, the services required to be performed by Wells Fargo Bank under the
Advisory Contracts, and the expenses of Wells Fargo Bank will not necessarily
be reduced as a result of the receipt of this supplemental research

27
<PAGE> 343
information. Furthermore, research services furnished by dealers through which
Wells Fargo Bank places securities transactions for a Fund may be used by Wells
Fargo Bank in servicing its other accounts, and not all of these services may
be used by Wells Fargo Bank in connection with advising the Funds.

Asset Allocation Fund. Purchases and sales of equity securities on
a securities exchange are effected through brokers who charge a negotiated
commission for their services. Orders may be directed to any broker including,
to the extent and in the manner permitted by applicable law, Stephens or Wells
Fargo Securities Inc. In the over-the- counter market, securities are generally
traded on a "net" basis with dealers acting as principal for their own accounts
without a stated commission, although the price of the security usually
includes a profit to the dealer. In underwritten offerings, securities are
purchased at a fixed price that includes an amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
The Asset Allocation Fund will not deal with Stephens, Wells Fargo Bank or
their affiliates in any transaction in which any of them acts as principal
without an exemptive order from the Commission.

In placing orders for portfolio securities of the Asset Allocation
Fund, Wells Fargo Bank is required to give primary consideration to obtaining
the most favorable price and efficient execution. This means that Wells Fargo
Bank will seek to execute each transaction at a price and commission, if any,
that provide the most favorable total cost or proceeds reasonably attainable in
the circumstances. While Wells Fargo Bank will generally seek reasonably
competitive spreads or commissions, the Asset Allocation Fund will not
necessarily be paying the lowest spread or commission available. Commission
rates are established pursuant to negotiations with the broker based on the
quality and quantity of execution services provided by the broker in the light
of generally prevailing rates. The allocation of orders among brokers and the
commission rates paid are reviewed periodically by the Board of Directors.

Brokerage Commissions. For the year ended December 31, 1995, the
Asset Allocation Fund paid brokerage commissions in the amount of $ 5,919. The
other Funds did not pay brokerage commissions for the year ended December 31,
1995.

Securities of Regular Broker Dealers. On December 31, 1995, the
U.S. Government Income Fund owned securities of its "regular brokers or
dealers," as defined in the 1940 Act, or their parents as follows: $ 303,000 of
pooled repurchase agreements of Goldman Sachs & Co. The other Funds did not own
securities of their "regular brokers or dealers" on December 31, 1995.

Portfolio Turnover. The portfolio turnover rate is not a limiting
factor when Wells Fargo Bank deems portfolio changes appropriate.

FEDERAL INCOME TAXES

The Prospectus describes generally the tax treatment of
distributions by the Funds. This section of the SAI includes additional
information concerning federal income taxes.

28
<PAGE> 344

Qualification as a "regulated investment company" under the
Internal Revenue Code requires, among other things, that (a) at least 90% of
each Fund's annual gross income be derived from interest, payments with respect
to securities loans, dividends and gains from the sale or other disposition of
securities or options thereon; (b) each Fund derives less than 30% of its gross
income from gains from the sale or other disposition of securities or options
thereon held for less than three months; and (c) each Fund diversifies its
holdings so that, at the end of each quarter of the taxable year, (i) at least
50% of the market value of the Fund's assets is represented by cash, government
securities and other securities limited in respect of any one issuer to an
amount not greater than 5% of the Fund's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of
its assets is invested in the securities of any one issuer (other than U.S.
Government securities and the securities of other regulated investment
companies), or of two or more issuers which the Fund controls and which are
determined to be engaged in the same or similar trades or businesses or related
trades or businesses. As a regulated investment company, each Fund will not be
subject to federal income tax on its net investment income and net capital
gains distributed to its shareholders, provided that it distributes to its
shareholders at least 90% of its net investment income and net tax-exempt
income earned in each year.

A 4% nondeductible excise tax will be imposed on the Fund (other
than to the extent of the Fund's tax- exempt income) to the extent it does not
meet certain minimum distribution requirements by the end of each calendar
year. Each Fund will either actually or be deemed to distribute substantially
all of its net investment income and net capital gains by the end of each
calendar year and, thus, expects not to be subject to the excise tax.

Income and dividends received by a Fund from sources within
foreign countries may be subject to withholding and other taxes (generally at
rates from 10% to 40%) imposed by such countries. Tax conventions between
certain countries and the United States may reduce or eliminate such taxes.
Because not more than 50% of the value of the total assets of any Fund is
expected to consist of securities of foreign issuers, no Fund will be eligible
to elect to "pass through" foreign tax credits to shareholders.

Gains or losses on sales of portfolio securities by a Fund
generally will be long-term capital gains or losses if the securities have been
held by it for more than one year, except in certain cases including where a
Fund acquires a put or grants a call thereon. Other gains or losses on the sale
of securities will be short-term capital gains or losses. To the extent that a
Fund recognizes long-term capital gains, such gains will be distributed at
least annually. Such distributions will be taxable to shareholders as long-term
capital gains, regardless of how long a shareholder has held Fund shares. Such
distributions will be designated as capital gain distributions in a written
notice mailed by the Fund to shareholders not later than 60 days after the
close of the Fund's taxable year.

If a shareholder receives a designated capital gain distribution
(to be treated by the shareholder as a long-term capital gain) with respect to
any Fund share and such Fund share is held for six months or less, then (unless
otherwise disallowed) any loss on the sale or exchange of

29
<PAGE> 345

that Fund share will be treated as a long-term capital loss to the extent of
the designated capital gain distribution. In addition, any loss realized by a
shareholder upon the sale or redemption of Fund shares held less than six
months is disallowed to the extent of any tax-exempt interest dividends
received by the shareholder thereon. These rules shall not apply, however, to
losses incurred under a periodic redemption plan.

As of the printing of this SAI, the maximum individual tax rate
applicable to ordinary income is 39.60%; (marginal rates may be higher for some
individuals due to phase out of exemptions and elimination of deductions), the
maximum individual rate applicable to net realized capital gains is 28.00% and
the maximum corporate tax rate applicable to ordinary income and net realized
capital gains is 35.00% (however, to eliminate the benefit of lower marginal
corporate income tax rates, corporations which have taxable income in excess of
$100,000 for a taxable year will be required to pay an additional amount of
income in excess of to $11,750 and corporations which have taxable income tax
of up to $15,000,000 for a taxable year will be required to pay an additional
amount of tax of up to $100,000).

If a shareholder exchanges or otherwise disposes of shares of a
Fund within 90 days of having acquired such shares, and if, as a result of
having acquired those shares, the shareholder subsequently pays a reduced sales
charge for shares of the Fund, or of a different fund, the sales charge
previously incurred acquiring the Fund's shares shall not be taken into account
(to the extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares.

Also, any loss realized on a redemption or exchange of shares of a
Fund will be disallowed to the extent that substantially identical shares are
reacquired within the 61-day period beginning 30 days before and ending 30 days
after the shares are disposed of.

If an option granted by a Fund lapses or is terminated through a
closing transaction, such as a repurchase by the Fund of the option from its
holder, the Fund will realize a short-term capital gain or loss, depending on
whether the premium income is greater or less than the amount paid by the Fund
in the closing transaction. Some realized capital losses may be deferred if
they result from a position that is part of a tax "straddle," discussed below.

If securities are sold by a Fund pursuant to the exercise of a
call option granted by it, such Fund will add the premium received to the sale
price of the securities delivered in determining the amount of gain or loss on
the sale. If securities are purchased by the Fund pursuant to the exercise of a
put option granted by it, such Fund will subtract the premium received from its
cost basis in the securities purchased. The requirement that each Fund derive
less than 30% of its gross income from gains from the sale of securities held
for less than three months may limit a Fund's ability to grant options.

The amount of any gain or loss realized by a Fund on closing out a
futures contract will generally result in a realized capital gain or loss for
tax purposes. Futures contracts held at the end of each fiscal year will be
required to be "marked to market" for federal income tax

30
<PAGE> 346

purposes. In this regard, they will be deemed to have been sold at market
value, pursuant to Section 1256 of the Code. Sixty percent (60%) of any net
gain or loss recognized on these deemed sales and sixty percent (60%) of any
net realized gain or loss from any actual sales, will be treated as long-term
capital gain or loss, and the remainder will be treated as short-term capital
gain or loss. Transactions that qualify as designated hedges are excepted from
the mark to market rule and the "60%/40%" rule.

Offsetting positions held by a regulated investment company
involving certain financial forward, futures or option contracts may be
considered, for tax purposes, to constitute "straddles." Straddles are defined
to include "offsetting positions" in actively traded personal property. The tax
treatment of straddles is governed by Section 1092 of the Code which, in
certain circumstances, overrides or modifies the provisions of Section 1256,
discussed above. If a regulated investment company were treated as entering
into straddles by reason of its engaging in certain financial forward, futures
or option contracts, such straddles could be characterized as "mixed straddles"
if the futures, forwards, or options comprising a part of such straddles were
governed by Section 1256 of the Code. The regulated investment company may make
one or more elections with respect to "mixed straddles." Depending upon which
election is made, if any, the results with respect to the regulated investment
company may differ. Generally, to the extent the straddle rules apply to
positions established by the regulated investment company, losses realized by
the regulated investment company may be deferred to the extent of unrealized
gain in any offsetting positions. Moreover, as a result of the straddle rules,
short-term capital loss on straddle positions may be recharacterized as
long-term capital loss, and long-term capital gain may be characterized as
short-term capital gain or ordinary income.

If, in the opinion of a Fund, ownership of its shares has or may
become concentrated to an extent that could cause the Fund to be deemed a
personal holding company within the meaning of the Code, the Fund may require
the redemption of shares or reject any order for the purchase of shares in an
effort to prevent such concentration.

Dividends will be declared daily with respect to the U.S.
Government Income Fund and the California Tax Free Bond Fund based on these
Funds' respective daily earnings. However, for federal income tax purposes,
each Fund's respective earnings and profits will be determined at the end of
each taxable year and will be allocated pro rata over the entire year. For
federal income tax purposes, only amounts paid out of earnings and profits will
qualify as dividends. Thus, if during a taxable year each Fund's respective
declared dividends (as declared daily throughout the year) exceed the Fund's
net income (as determined at the end of the year), only that portion of the
year's distributions which equals the year's earnings and profits will be
deemed to have constituted a dividend. It is expected that each Fund's net
income, on an annual basis, will equal the dividends declared during the year.

Foreign Shareholders. Under the Code, distributions of net
investment income by a Fund to a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation, or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or a lower treaty rate). Withholding will not apply if a
dividend paid by a Fund to a foreign shareholder is "effectively connected"
with a U.S. trade or business, in which

31
<PAGE> 347

case the reporting and withholding requirements applicable to U.S. citizens,
U.S. residents or domestic corporations will apply. Distributions of net
long-term capital gains are not subject to tax withholding, but in the case of
a foreign shareholder who is a nonresident alien individual, such distributions
ordinarily will be subject to U.S. withholding tax at a rate of 30% if the
individual is physically present in the U.S. for more than 182 days during the
taxable year.

Other Matters. Investors should be aware that the investments to
be made by the Funds may involve sophisticated tax rules such as the original
issue discount, marked to market and real estate mortgage investment conduit
("REMIC") rules that would result in income or gain recognition by the Funds
without corresponding current cash receipts. Although the Funds will seek to
avoid significant noncash income, such noncash income could be recognized by
the Funds, in which case a Fund may distribute cash derived from other sources
in order to meet the minimum distribution requirements described above.

Special Tax Considerations for the California Tax-Free Bond Fund.

Federal -- The portion of total dividends paid by the California
Tax-Free Bond Fund with respect to any taxable year that qualifies for
exclusion from gross income ("exempt-interest dividends") will be the same for
all shareholders receiving dividends during such year. In order for the
California Tax-Free Bond Fund to pay exempt-interest dividends during any
taxable year, at the close of each fiscal quarter at least 50% of the aggregate
value of the California Tax-Free Bond Fund assets must consist of tax-exempt
securities. Not later than 60 days after the close of its taxable year, the
California Tax-Free Bond Fund will notify each shareholder of the portion of
the dividends paid with respect to such taxable year which constitutes
exempt-interest dividends. The aggregate amount of dividends so designated
cannot exceed the excess of the amount of interest excludable from gross income
under Section 103 of the Code received by such Fund during the taxable year
over any amounts disallowed as deductions under Sections 265 and 171(a)(2) of
the Code. Finally, interest on indebtedness incurred by a shareholder to
purchase or carry California Tax-Free Bond Fund shares is not deductible for
federal income tax purposes to the extent the shareholder receives
exempt-interest dividends during his or her taxable year. Exempt-interest
dividends will be tax exempt for purposes of federal income tax.

32
<PAGE> 348

permitted to deduct any of their share of Fund expenses in computing
alternative minimum taxable income. With respect to corporate shareholders of
such Funds, exempt-interest dividends paid by a Fund are included in the
corporate shareholder's "adjusted current earnings" as part of its AMT
calculation, and may also affect its federal "environmental tax" liability. As
of the printing of this SAI, individuals are subject to an AMT at a maximum
rate of 28.00% and corporations at a maximum rate of 20.00% Shareholders with
questions or concerns about AMT should consult their tax advisors.

California -- Moreover, if at the close of each quarter of the
California Tax-Free Bond Fund's taxable year, at least 50% of the value of its
total assets consists of obligations the interest on which, if such obligations
were held by an individual, would be exempt from California personal income tax
(under either the laws of California or of the United States), the Fund will be
entitled to pay dividends to its shareholders which will be exempt from
California personal income tax (hereinafter referred to as "California
exempt-interest dividends"). Under normal market conditions, the California
Tax-Free Bond Fund will invest primarily in municipal securities of the State
of California, its cities, municipalities and other political authorities. The
California Tax-Free Bond Fund intends to qualify under the above requirements
so that it can pay California exempt-interest dividends.

Not later than 60 days after the close of its taxable year, the
California Tax-Free Bond Fund will notify each shareholder of the portion of
the dividends paid which constitutes California exempt-interest dividends with
respect to such taxable year. The total amount of California exempt-interest
dividends paid by the California Tax-Free Bond Fund to all of its shareholders
with respect to any taxable year cannot exceed the amount of interest received
by the Fund during such year on California municipal securities and other
obligations the interest on which is tax exempt, less any expenses allocable to
such tax exempt income. Dividends paid by the California Tax-Free Bond Fund in
excess of this limitation will be treated as ordinary dividends subject to
California personal income tax at ordinary rates.

Long-term and/or short-term capital gain distributions will not
constitute California exempt-interest dividends and will be taxed as capital
gain distributions or ordinary income dividends, respectively, for California
personal income tax purposes. Moreover, interest on indebtedness incurred by a
shareholder to purchase or carry California Tax-Free Bond Fund shares is not
deductible for California personal income tax purposes to the extent the
shareholder receives California exempt-interest dividends during his or her
taxable year. California exempt-interest dividends will be tax exempt for
purposes of the California personal income tax. For corporate shareholders,
dividends will be subject to the corporate franchise taxes in California.

Other Matters. Shares of the California Tax-Free Bond Fund would
not be suitable for tax-exempt institutions and may not be suitable for
retirement plans qualified under Section 401 of the Code, H.R. 10 plans and
IRAs since such plans and accounts are generally tax-exempt and, therefore,
would not benefit from the exempt status of dividends from the Fund. Such
dividends would be ultimately taxable to the beneficiaries when distributed to
them.

33
<PAGE> 349
CAPITAL STOCK

Each of the Funds is comprised of two classes of shares, Class A
Shares and Class D Shares. With respect to matters that affect one class but
not another, the shareholders vote as a class; for example, the approval of a
Plan. Subject to the foregoing, on any matter submitted to a vote of
shareholders, all shares then entitled to vote will be voted separately by Fund
or portfolio unless otherwise required by the Act, in which case all shares
will be voted in the aggregate. For example, a change in a Fund's fundamental
investment policies would be voted upon only by shareholders of the Fund
involved. Additionally, approval of the advisory contract is a matter to be
determined separately by Fund or portfolio. Approval by the shareholders of one
Fund or portfolio is effective as to that Fund or portfolio whether or not
sufficient votes are received from the shareholders of the other Funds or
portfolios to approve the proposal as to those Funds or portfolios. As used in
the Prospectus and in this SAI, the term "majority," when referring to
approvals to be obtained from shareholders of a class of shares of a Fund means
the vote of the lesser of (i) 67% of the shares of a class of shares
represented at a meeting if the holders of more than 50% of the outstanding
shares of such class are present in person or by proxy, or (ii) more than 50%
of the outstanding class of shares. The term "majority," when referring to the
approvals to be obtained from shareholders of the Company as a whole means the
vote of the lesser of (i) 67% of the Company's shares represented at a meeting
if the holders of more than 50% of the Company's outstanding shares are present
in person or by proxy, or (ii) more than 50% of the Company's outstanding
shares. Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held. The Company may dispense with
annual meetings of shareholders in any year in which it is not required to
elect directors under the Act.

Each share of a class of a Fund or portfolio represents an equal
proportional interest in that Fund or portfolio with each other share of the
same class and is entitled to such dividends and distributions out of the
income earned on the assets belonging to that Fund or portfolio as are declared
in the discretion of the Directors. In the event of the liquidation or
dissolution of the Company, shareholders of a Fund or portfolio are entitled to
receive the assets attributable to that Fund or portfolio 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 Directors in their sole discretion may
determine.

Shareholders are not entitled to any preemptive rights. All
shares, when issued, will be fully paid and non-assessable by the Company.

34
<PAGE> 350

As of February 29, 1996, the shareholders identified below were
known by the Company to own the percentage indicated below of outstanding
shares of the Funds in the following capacity:

<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE
NAME OF FUND OF SHAREHOLDER OF CLASS CAPACITY
------------ ---------------- ---------- --------
<S> <C> <C> <C>
Asset Allocation Fund
Class A Shares Stephens Inc. 7.19% Record
For Exclusive Benefit
of Customers
P.O. Box 34127
Little Rock, AR 72203

Asset Allocation Fund
Class D Shares Merrill Lynch Pierce 26.71% Record
Fenner & Smith Inc.
Trade House Account
Attn: Book Entry
P. O. Box 30561
New Brunswick, NJ 08989

U.S. Gov't Income
Class A Shares Stephens Inc. 6.40% Record
For Exclusive Benefit
of Customers
P. O. Box 34127
Little Rock, AR 72203

U.S. Government
Income Fund
Class D Shares Merrill Lynch Pierce 19.56% Record
Fenner & Smith Inc.
Trade House Account
Attn: Book Entry
P. O. Box 30561
New Brunswick, NJ 08989

Sisters of St. Francis 9.14% Record
Attn: Sis. Virginia Spiegel
609 South Convert Road
Aston, PA 19014
</TABLE>

35
<PAGE> 351

<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE
NAME OF FUND OF SHAREHOLDER OF CLASS CAPACITY
------------ ---------------- ---------- --------
<S> <C> <C> <C>

Rocky Mountain Lions Eye 10.29% Record
Institute Foundation, Inc.
c/o Harold Hein
7087 Parfet Street
Arvada, CO 80004

Southwest Securities Inc. FBO 5.74% Record
Attn: Vonnie Wade
Acct 83374422
1201 Elm Street - Suite 4300
Dallas, TX 75270

California Tax-Free
Bond Fund
Class D Shares Merrill Lynch Pierce 39.07% Record
Fenner & Smith Inc.
Trade House Account
Attn: Book Entry
P. O. Box 30561
New Brunswick, NJ 08989

Stephens Inc. 28.27% Record
For Exclusive Benefit
of Customers
P. O. Box 34127
Little Rock, AR 72203
</TABLE>

OTHER

The Registration Statement, including the Prospectus, the SAI and
the exhibits filed therewith, may be examined at the office of the Commission
in Washington, D.C. Statements contained in the Prospectus or the SAI as to the
contents of any contract or other document referred to herein or in the
Prospectus are not necessarily complete, and, in each instance, reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.

36
<PAGE> 352
INDEPENDENT AUDITORS

KPMG Peat Marwick LLP has been selected as the independent
auditors for the Company. KPMG Peat Marwick LLP provides audit services, tax
return preparation and assistance and consultation in connection with review of
certain Securities and Exchange Commission filings. The address of KPMG Peat
Marwick LLP is Three Embarcadero Center, San Francisco, California 94111.

FINANCIAL INFORMATION

The audited portfolio of investments, financial statements and
independent auditors' reports for each Fund for the year ended December 31,
1995, are incorporated into this SAI by reference to Amendment No. 8 to the
Registration Statement on Form N-1A of Master Investment Trust (SEC File No.
811-6415) as filed with the SEC on March 21, 1996. The portfolio of
investments, audited financial statements and independent auditors' reports are
attached to all SAIs delivered to shareholders or prospective shareholders.

37
<PAGE> 353
APPENDIX

The following is a description of the ratings given by Moody's and
S&P to corporate and municipal bonds, corporate and municipal commercial paper
and municipal notes.

Corporate and Municipal Bonds

Moody's: The four highest ratings for corporate and municipal
bonds are "Aaa," "Aa," "A" and "Baa." Bonds rated "Aaa" are judged to be of the
"best quality" and carry the smallest amount of investment risk. Bonds rated
"Aa" are of "high quality by all standards," but margins of protection or other
elements make long-term risks appear somewhat greater than "Aaa" rated bonds.
Bonds rated "A" possess many favorable investment attributes and are considered
to be upper medium grade obligations. Bonds rated "Baa" are considered to be
medium grade obligations; interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time. Such bonds have
speculative characteristics as well. Moody's applies numerical modifiers: 1, 2
and 3 in each rating category from "Aa" through "Baa" in its rating system.
The modifier 1 indicates that the security ranks in the higher end of its
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end.

S&P: The four highest ratings for corporate and municipal bonds
are "AAA," "AA," "A" and "BBB." Bonds rated "AAA" have the highest ratings
assigned by S&P and have an extremely strong capacity to pay interest and repay
principal. Bonds rated "AA" have a "very strong capacity to pay interest and
repay principal" and differ "from the highest rated issued only in small
degree." Bonds rated "A" have a "strong capacity" to pay interest and repay
principal, but are "somewhat more susceptible" to adverse effects of changes in
economic conditions or other circumstances than bonds in higher rated
categories. Bonds rated "BBB" are regarded as having an "adequate capacity" to
pay interest and repay principal, but changes in economic conditions or other
circumstances are more likely to lead to a "weakened capacity" to make such
repayments. The ratings from "AA" to "BBB" may be modified by the addition of a
plus or minus sign to show relative standing within the category.

Corporate and Municipal Commercial Paper

Moody's: The highest rating for corporate and municipal commercial
paper is "P-1" (Prime-1). Issuers rated "P-1" have a "superior capacity for
repayment of short-term promissory obligations." Issuers rated "P-2" (Prime-2)
"have a strong capacity for repayment of short-term promissory obligations,"
but earnings trends, while sound, will be subject to more variation.

S&P: The "A-1" rating for corporate and municipal commercial paper
indicates that the "degree of safety regarding timely payment is either
overwhelming or very strong." Commercial paper with "overwhelming safety
characteristics" will be rated "A-1+." Commercial paper with a strong capacity
for timely payments on issues will be rated "A-2."

A-1
<PAGE> 354
Municipal Notes

Moody's: The highest ratings for state and municipal short-term
obligations are "MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG
3" in the case of an issue having a variable rate demand feature). Notes rated
"MIG 1" or "VMIG 1" are judged to be of the "best quality." Notes rated "MIG 2"
or "VMIG 2" are of "high quality," with margins of protections "ample although
not as large as in the preceding group." Notes rated "MIG 3" or "VMIG 3" are of
"favorable quality," with all security elements accounted for, but lacking the
strength of the preceding grades.

S&P: The "SP-1" rating reflects a "very strong or strong capacity
to pay principal and interest." Notes issued with "overwhelming safety
characteristics" will be rated "SP-1+." The "SP-2" rating reflects a
"satisfactory capacity" to pay principal and interest.

A-2
<PAGE> 355
OVERLAND EXPRESS FUNDS, INC.
Telephone: (800) 552-9612

STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996

CALIFORNIA TAX-FREE MONEY MARKET FUND
MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND

-------------------------------

Overland Express Funds, Inc. (the "Company") is an open-end series
investment company. This Statement of Additional Information ("SAI") contains
information about three of the Company's series or investment portfolios -- the
California Tax-Free Money Market Fund, the Money Market Fund and the U.S.
Treasury Money Market Fund (each, a "Fund" and collectively, the "Funds"). The
Money Market Fund and the U.S. Treasury Money Market Fund offer two classes of
shares -- Class A Shares and Institutional Shares. This SAI relates to both
such classes of shares of each Fund. The California Tax-Free Money Market Fund
only offers a single class of shares. The investment objectives of the
respective Funds are described in the Prospectus under "Investment Objectives,
Policies and Activities."

This SAI is not a prospectus and should be read in conjunction
with the Funds' Prospectus dated May 1, 1996. All terms used in this SAI that
are defined in the Prospectus will have the meanings assigned in the
Prospectus. A copy of the Prospectus may be obtained without charge by writing
Stephens Inc., the Company's sponsor, administrator and distributor, at 111
Center Street, Little Rock, Arkansas 72201 or calling the Transfer Agent at the
telephone number indicated above.

-------------------------------

1
<PAGE> 356
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Permitted Investment Activities . . . . . . . . . . . . . . . . . . 5
Special Factors Affecting the California
Tax-Free Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Calculation of Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . 18
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>

2
<PAGE> 357
INVESTMENT RESTRICTIONS

The Funds are subject to the following investment restrictions,
all of which are fundamental policies:

(1) None of the Funds may purchase the securities of issuers
conducting their principal business activity in the same industry if,
immediately after the purchase and as a result thereof, the value of the Fund's
investments in that industry would exceed 25% of the current value of such
Fund's total assets, provided that there is no limitation with respect to
investments in (i) obligations of the United States Government, its agencies or
instrumentalities, (ii) the obligations of domestic banks (for purposes of this
restriction, domestic bank obligations do not include obligations of U.S.
branches of foreign banks or obligations of foreign branches of U.S. banks);
and (iii) with respect to the California Tax-Free Money Market Fund, municipal
securities (for the purpose of this restriction, private activity bonds shall
not be deemed municipal securities if the payments of principal and interest on
such bonds is the ultimate responsibility of non-governmental users) or
securities that are exempt from personal income taxes of the State of
California.

(2) None of the Funds may purchase or sell real estate (other
than municipal obligations, Money Market Instruments or other securities
secured by real estate or interests therein or securities issued by companies
that invest in real estate or interests therein), commodities or commodity
contracts.

(3) None of the Funds may purchase securities on margin (except
for short-term credits necessary for the clearance of transactions and, with
respect to the California Tax-Free Money Market Fund, except for margin
payments in connection with options, futures and options on futures) or make
short sales of securities.

(4) None of the Funds may underwrite securities of other
issuers, except to the extent that the purchase of municipal securities or
other permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with each Fund's investment program may be deemed to be an
underwriting.

(5) The California Tax-Free Money Market Fund may not invest
more than 10% of the current value of its net assets in repurchase agreements
maturing in more than seven days, restricted securities, which are securities
that must be registered under the Securities Act of 1933 before they may be
offered or sold to the public, and illiquid securities, and the Money Market
Fund may not invest more than 10% of the current value of its net assets in
repurchase agreements maturing in more than seven days and illiquid securities.

(6) None of the Funds may make investments for the purpose of
exercising control or management.

(7) None of the Funds may issue senior securities, except that
each Fund may borrow from banks up to 10% of the current value of its net
assets for temporary purposes only in

3
<PAGE> 358
order to meet redemptions, and these borrowings may be secured by the pledge of
up to 10% of the current value of its net assets (but investments may not be
purchased by the California Tax-Free Money Market Fund or the Money Market Fund
while any such outstanding borrowing exists and investments may not be
purchased by the U.S. Treasury Money Market Fund while any such outstanding
borrowing in excess of 5% of its net assets exists).

(8) None of the Funds may invest more than 10% of the current
value of its net assets in fixed time deposits that are subject to withdrawal
penalties and that have maturities of more than seven days.

(9) The California Tax-Free Money Market Fund may not lend its
portfolio securities having a value that exceeds 50% of the current value of
its total assets. The Money Market Fund and the U.S. Treasury Money Market Fund
may not make loans of portfolio securities or other assets. However, for
purposes of this restriction, loans will not include the purchase of fixed time
deposits, repurchase agreements, commercial paper and other types of debt
instruments commonly sold in a public or private offering.

With respect to fundamental investment restriction (9) above, the
California Tax-Free Money Market Fund does not intend to lend its portfolio
securities during the coming year.

In addition, none of the Funds may write, purchase or sell puts,
calls, warrants or options or any combination thereof, except that the Funds
may purchase securities with put rights in order to maintain liquidity.

The Funds are subject to the following non-fundamental policies:

(1) None of the Funds may purchase or retain securities of any
issuer if the officers or Directors of the Fund or its Investment Adviser
owning beneficially more than one-half of one percent (0.5%) of the securities
of the issuer together own beneficially more than 5% of such securities.

(2) None of the Funds may purchase interests, leases, or
limited partnership interests in oil, gas, or other mineral exploration or
development programs.

(3) None of the Funds may invest in securities of issuers who,
with their predecessors, have been in existence less than three years, unless
the securities are fully guaranteed or insured by the U.S. Government, a state,
commonwealth, possession, territory, the District of Columbia or by an entity
in existence at least three years, or the securities are backed by the assets
and revenues of any of the foregoing if, by reason thereof, the value of its
aggregate investments in such securities will exceed 5% of its total assets.

(4) None of the Funds may purchase or sell real estate limited
partnership interests.

(5) The California Tax-Free Money Market Fund may not purchase
securities of unseasoned issuers, including their predecessors, which have been
in operation for less than three

4
<PAGE> 359
years, and equity securities of issuers which are not readily marketable if by
reason thereof the value of the Fund's aggregate investment in such classes of
securities will exceed 5% of its total assets.

(6) The U.S. Treasury Money Market Fund may not invest more
than 10% of the current value of its net assets in repurchase securities
maturing in more than seven days, fixed time deposits that are subject to
withdrawal penalties and that have maturities of more than seven days and
illiquid securities although this Fund does not intend to invest in any of
these investments.

(7) As provided in Rule 2a-7 under the 1940 Act, the Money
Market Fund and the U.S. Treasury Money Market Fund each may only purchase
"Eligible Securities" (as defined in Rule 2a-7) and only if, immediately after
such purchase, the Fund would have no more than 5% of its total assets in
"First Tier Securities" (as defined in Rule 2a-7) of any one issuer, excluding
government securities and except as otherwise permitted for temporary purposes
and for certain guarantees and unconditional puts; the Fund would own no more
than 10% of the voting securities of any one issuer; the Fund would have no
more than 5% of its total assets in "Second Tier Securities" (as defined in
Rule 2a-7); and the Fund would have no more than the greater of $1 million or
1% of its total assets in Second Tier Securities of any one issuer.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

Municipal Bonds. As discussed in the Prospectus, the two principal
classifications of municipal bonds in which the California Tax-Free Money
Market Fund may invest are "general obligation" and "revenue" bonds. Municipal
bonds are debt obligations issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
bridges, highways, housing, hospitals, mass transportation, schools, streets,
and water and sewer works. Other purposes for which municipal bonds may be
issued include the refunding of outstanding obligations and obtaining funds for
general operating expenses or to loan to other public institutions and
facilities. Industrial development bonds are a specific type of revenue bond
backed by the credit and security of a private user. Certain types of
industrial development bonds are issued by or on behalf of public authorities
to obtain funds to provide privately- operated housing facilities, sports
facilities, convention or trade show facilities, airport, mass transit, port or
parking facilities, air or water pollution control facilities and certain local
facilities for water supply, gas, electricity, or sewage or solid waste
disposal. Assessment bonds, wherein a specially created district or project
area levies a tax (generally on its taxable property) to pay for an improvement
or project may be considered a variant of either category. There are, of
course, other variations in the types of municipal bonds, both within a
particular classification and between classifications, depending on numerous
factors. Some or all of these bonds may be considered "private activity bonds"
for federal income tax purposes.

Municipal Notes. The California Tax-Free Money Market Fund may
invest in municipal notes. Municipal notes include, but are not limited to, tax
anticipation notes ("TANs"), bond anticipation notes ("BANs"), revenue
anticipation notes ("RANs") and construction loan

5
<PAGE> 360
notes. Notes sold as interim financing in anticipation of collection of taxes,
a bond sale or receipt of other revenues are usually general obligations of the
issuer.

The values of outstanding municipal securities (as well as Money
Market Instruments) will vary as a result of changing market evaluations of the
ability of their issuers to meet the interest and principal payments (i.e.,
credit risk). Such values also will change in response to changes in market
interest rates, including the interest rates payable on new issues of municipal
securities (i.e., market risk). Should such interest rates rise, the values of
outstanding securities such as those held in a Fund's portfolio, will decline
and (if purchased at par value) they would sell at a discount. If such interest
rates fall, the values of outstanding securities will generally increase and
(if purchased at par value) they would sell at a premium. Since each Fund
values its assets at amortized cost and seeks to hold its portfolio securities
until their maturity, changes in the value of municipal or other securities
held in each Fund's portfolio arising from these or other factors are not
expected to cause changes in the net asset value per share of any of the Funds.

Unrated Investments. Each Fund may purchase instruments that are
not rated if, in the opinion of Wells Fargo Bank as Investment Adviser, such
obligations are Eligible Securities of comparable quality to other rated
investments that are permitted by such Fund, if they are purchased in
accordance with the Fund's procedures adopted by the Company's Board of
Directors in accordance with Rule 2a-7 under the 1940 Act. With respect to the
Money Market Fund and the U.S. Treasury Money Market Fund, the Company's Board
of Directors are required by Rule 2a-7 under the 1940 Act to pre-approve or
ratify purchases of unrated securities.

After purchase by any of the Funds, a security may cease to be
rated or its rating may be reduced below the minimum required for purchase by
such Fund. Neither event will require a sale of such security by such Fund
provided that, when a security ceases to be rated, the Company's Board of
Directors determines that such security presents minimal credit risk and,

6
<PAGE> 361
provided further that, when a security rating is downgraded below the eligible
quality for investment or no longer presents minimal credit risks, the Board
finds that the sale of such security would not be in the Fund's best interest.
To the extent the ratings given by Moody's or S&P may change as a result of
changes in such organizations or their rating systems, the Funds will attempt
to use comparable ratings as standards for investments in accordance with the
investment policies contained in the Prospectus and in this SAI. The ratings of
Moody's and S&P are more fully described in the Appendix to this SAI.

Letters of Credit. The California Tax-Free Money Market Fund and
the Money Market Fund may purchase debt obligations, including municipal
securities (in the case of the California Tax-Free Money Market Fund),
certificates of participation, commercial paper and other short-term
obligations, that are backed by an irrevocable letter of credit of a bank,
savings and loan association or insurance company which assumes the obligation
for payment of principal and interest in the event of default by the issuer.
Only banks, savings and loan associations and insurance companies which, in the
opinion of Wells Fargo Bank as Investment Adviser, are of investment quality
comparable to other permitted investments of such Funds may be used for letter
of credit-backed investments.

The California Tax-Free Money Market Fund may engage in the
following investment activity although it has no present intention to do so:

When-Issued Securities. The California Tax-Free Money Market Fund
may purchase securities on a when-issued basis, in which case delivery and
payment normally take place within 45 days after the date of the commitment to
purchase. However, this Fund does not intend to invest more than 5% of its net
assets in when-issued securities. This Fund only will make commitments to
purchase securities on a when-issued basis with the intention of actually
acquiring the securities, but may sell them before the settlement date if it is
deemed advisable. When-issued securities are subject to market fluctuation, and
no income accrues to the purchaser during the period prior to issuance. The
purchase price and the interest rate that will be received on debt securities
are fixed at the time the purchaser enters into the commitment. Purchasing a
security on a when-issued basis can involve a risk that the market price at the
time of delivery may be lower than the agreed upon purchase price, in which
case there could be an unrealized loss at the time of delivery.

The California Tax-Free Money Market Fund will establish a
segregated account in which it will maintain cash, U.S. Government obligations
or other high-quality debt instruments in an amount at least equal in value to
its commitments to purchase when-issued securities. If the value of these
assets declines, the 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.

7
<PAGE> 362
SPECIAL FACTORS AFFECTING THE CALIFORNIA
TAX-FREE MONEY MARKET FUND

Certain of the municipal securities in which the California
Tax-Free Money Market Fund may invest may be bonds or other types of
obligations of California issuers that rely in whole or in part, directly or
indirectly, on ad valorem real property taxes as a source of revenue. The
California Constitution limits the powers of municipalities to impose and
collect ad valorem taxes on real property, which, in turn, restricts the
ability of municipalities to service their debt or lease obligations from such
taxes.

For example, Article XIIIA of the California Constitution, as
amended, limits ad valorem real property taxes to 1% of the full cash value of
the property, defined as the county tax assessor's valuation as of March 1,
1975, plus adjustments not to exceed 2% per year, adjustments upon purchase,
change of ownership or new construction after that date, and certain other
adjustments. Article XIIIB provides that state and local government
appropriations from certain revenue sources each year may not exceed the
"appropriations limit" related to such revenue sources set forth for the fiscal
year 1978-79, with certain adjustments made for changes in the cost of living
and population and certain limited exemptions. Because of the complex nature of
Articles XIIIA and XIIIB, the ambiguities and possible inconsistencies in their
respective terms, the existence of litigation challenging these provisions and
the impossibility of predicting future appropriations and changes in population
and cost of living, it is not possible to determine the impact of Article XIIIA
or Article XIIIB or any implementing or related legislation on the municipal
obligations in the California Tax-Free Money Market Fund or the ability of
state or local governments to pay the interest on, or repay the principal of,
such municipal obligations.

* * *

MANAGEMENT

8
<PAGE> 363

Little Rock, Arkansas 72201. Directors deemed to be "interested persons" of the
Company for purposes of the 1940 Act are indicated by an asterisk.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- ---------------------- -------- --------------------
<S> <C> <C>
Jack S. Euphrat, 73 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.

*R. Greg Feltus, 44 Director, Senior Vice President
Chairman and of Stephens ; Manager
President of Financial Services
Group; President of
Stephens
Insurance Services
Inc.; Senior Vice
President of Stephens
Sports Management
Inc.; and President of
Investor Brokerage
Insurance Inc.

Thomas S. Goho, 53 Director T.B. Rose Faculty
321 Beechcliff Court Fellow-Business,
Winston-Salem, NC 27104 Wake Forest University
Calloway School, of
Business and
Accountancy; Associate Professor of
Finance of the School of Business and
Accounting at Wake Forest University
since 1983.

*Zoe Ann Hines, 46 Director Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource
Management.
</TABLE>

9
<PAGE> 364

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- ---------------------- -------- --------------------
<S> <C> <C>
*W. Rodney Hughes, 69 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901

Robert M. Joses, 77 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901

Richard H. Blank, Jr., 39 Chief Associate of
Operating Financial Services
Officer, Group of Stephens;
Secretary and Director of Stephens
Treasurer Sports Management
Inc.; and Director of
Capo Inc.
</TABLE>

COMPENSATION TABLE
For the Fiscal Year Ended December 31, 1995

*R. Greg Feltus 0 0
Director

Thomas S. Goho 10,188 39,750
Director
</TABLE>

10
<PAGE> 365

*W. Rodney Hughes 9,438 37,000
Director

Robert M. Joses 9,938 39,000
Director

*J. Tucker Morse 8,313 33,250
Director
</TABLE>

Directors of the Company are compensated annually by the Company
and by all the registrants in the fund complex for their services as indicated
above and also are reimbursed for all out-of-pocket expenses relating to
attendance at board meetings. Each of the Directors and Officers of the Company
serves in the identical capacity as Officers and Directors of Stagecoach Funds,
Inc. and MasterWorks Funds Inc. (formerly, Stagecoach Inc.), and as Trustees
and/or Officer of Stagecoach Trust, Master Investment Portfolio, Life & Annuity
Trust, Master Investment Trust and Managed Series Investment Trust, each of
which is a registered open-end management investment company and each of which
is considered to be in the same "fund complex," as such term is defined in Form
N-1A under the 1940 Act, as the Company. The Directors are compensated by
other Companies and Trusts within the fund complex for their services as
Directors/Trustees to such Companies and Trusts. Currently the Directors do not
receive any retirement benefits or deferred compensation from the Company or
any other member of the fund complex.

As of the date of this SAI, Directors and officers of the Company
as a group beneficially owned less than 1% of the outstanding shares of the
Company.

Investment Adviser. Each of the Funds is advised by Wells Fargo
Bank. The Advisory Contracts provide that Wells Fargo Bank shall furnish to the
Funds investment guidance and policy direction in connection with the daily
portfolio management of the Funds. Pursuant to the Advisory Contracts, Wells
Fargo Bank furnishes to the Board of Directors periodic reports on the
investment strategy and performance of each Fund.

Wells Fargo Bank has agreed to provide to the Funds, among other
things, money market security and fixed- income research, analysis and
statistical and economic data and information concerning interest rate and
security market trends, portfolio composition, credit conditions and average
maturities of the portfolios of the Funds.

11
<PAGE> 366
Each of the Advisory Contracts will continue in effect for more
than two years from their 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 Company's Board of Directors and (ii) by a majority
of the Directors of the Company who are not parties to the Advisory Contract or
"interested persons" (as defined in the 1940 Act) of any such party. Each of
the Advisory Contracts may be terminated on 60 days' written notice by either
party and will terminate automatically if assigned.

The chart below illustrates the amounts paid by the California
Tax-Free Money Market Fund, Money Market Fund and U.S. Treasury Money Market
Fund, respectively, to Wells Fargo Bank in investment advisory fees and the
amount Wells Fargo Bank waived of such fees.

<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
PAID WAIVED PAID WAIVED PAID WAIVED
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California Tax-Free
Money Market Fund $1,330,839 $0 $1,493,881 $0 $1,718,530 $0

Money Market Fund $1,230,778 $0 $777,719 $0 $646,313 $1,936

U.S. Treasury Money
Market Fund $562,253 $13,004 $258,021 $92,959 $99,317 $207,008
</TABLE>

Administrator and Distributor. The Company has retained Stephens
as administrator and distributor on behalf of the Funds. Under the
Administration Agreements with the Company, Stephens, in connection therewith,
furnishes the Company with office facilities, together with those ordinary
clerical and bookkeeping services that are not being furnished by Wells Fargo
Bank. Stephens also has entered into a Distribution Agreement with the Company
pursuant to which it has the responsibility of distributing Class A Shares and
Institutional Shares of the Money Market Fund and U.S. Treasury Money Market
Fund, and the single class of the California Tax-Free Money Market Fund.

The chart below lists the administrative fees paid by the
California Tax-Free Money Market Fund, the Money Market Fund and the U.S.
Treasury Money Market Fund for the years ended December 31, 1995, 1994, and
1993.

12
<PAGE> 367

<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California Tax-Free Money
Market Fund $297,191 $334,128 $383,605

Money Market Fund $492,311 $311,088 $259,628

U.S. Treasury Money Market $230,103 $141,170 $122,781
Fund
</TABLE>

Custodian and Transfer and Dividend Disbursing Agent. Wells Fargo
Bank has been retained to act as Custodian and Transfer and Dividend Disbursing
Agent for each Fund. The Custodian, among other things, maintains a custody
account or accounts in the name of each Fund; receives and delivers all assets
for each Fund upon purchase and upon sale or maturity; collects and receives
all income and other payments and distributions on account of the assets of
each Fund and pays all expenses of each Fund. For its services as Custodian,
Wells Fargo Bank receives an asset-based fee and transaction charges from each
Fund; and for its services as transfer and dividend disbursing agent, it
receives a base fee and per-account fees from each Fund. For the year ended
December 31, 1995, the California Tax-Free Money Market Fund paid $33,127 in
custody fees to Wells Fargo Bank, and the other Funds did not pay any custody
fees.

For the years ended December 31, 1995, the Funds paid transfer and
dividend disbursing agency fees to Wells Fargo Bank as follows:

<TABLE>
<CAPTION>
FUND 1995
- ---- ----
<S> <C>
California Tax-Free Money Market $41,752
Money Market $48,139
U.S. Treasury Money Market $-0-
</TABLE>

For the year ended December 31, 1995, the aggregate dollar amount
of underwriting commissions paid to Stephens on sales/redemptions of the
Registrant's shares

13
<PAGE> 368

was $1,478,541 and Stephens retained $1,447,175 of such commissions. WFSI and
its registered representatives received $31,366 of such commissions.

DISTRIBUTION PLANS

As indicated in the Prospectus, the Funds have adopted
Distribution Plans ("Plans") under Section 12(b) of the 1940 Act and Rule 12b-1
thereunder. The Plans for the shares of the California Tax-Free Money Market
Fund, and the Class A Shares of the Money Market Fund and the U.S. Treasury
Money Market Fund were adopted on March 31, 1988, July 27, 1989 and April 23,
1992, respectively, by the Board of Directors, including a majority of the
Directors who were not "interested persons" (as defined in the 1940 Act) of any
of the Funds and who had no direct or indirect financial interest in the
operation of the Plans or in any agreement related to the Plans (the "Qualified
Directors"). Under the California Tax-Free Money Market Fund's Plan, the Fund
may defray all or part of the cost of preparing and printing prospectuses and
other promotional materials and of delivering prospectuses and those materials
to prospective shareholders of such Fund by paying on an annual basis up to the
greater of $100,000 or 0.05% of the Fund's average daily net assets. The Plan
provides only for the reimbursement of actual expenses.

Under their Plans and pursuant to the Distribution Agreement, the
Class A Shares of the Money Market Fund and the U.S. Treasury Money Market Fund
may pay the Distributor, as compensation for distribution-related services, a
monthly fee at an annual rate of up to 0.25% of the Fund's average daily net
assets attributable to such class of the Funds. The actual fee payable to the
Distributor is determined, within such limit, from time to time by mutual
agreement between the Company 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 NASD Rules of Fair
Practice. The Distributor may enter into selling agreements with one or more
selling agents under which such agents may receive compensation for
distribution-related services from the Distributor, including, but not limited
to, commissions or other payments to such agents based on the average daily net
assets of Money Market Fund and/or U.S. Treasury Money Market Fund shares
attributable to them. 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.

Each of the Plans will continue in effect from year to year
thereafter if such continuance is approved by a majority vote of both the
Directors of the Company and the Qualified Directors. Any Distribution
Agreement related to the Plans also must be approved by such vote of the
Directors and the Qualified Directors. Distribution Agreements 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 Fund involved. The Plans may not be amended to increase materially the
amounts payable thereunder without the approval of a majority of the
outstanding voting securities of the Fund involved, and no material amendment
to any of the Plans may be made except by a majority of both the Directors of
the Company and the Qualified Directors.

14
<PAGE> 369

Each of the Plans requires that the Treasurer of the Company shall
provide to the Directors, and the Directors shall review, at least quarterly, a
written report of the amounts expended (and purposes therefor) under each of
the Plans. Rule 12b-1 also requires that the selection and nomination of
Directors who are not "interested persons" of the Company be made by such
disinterested Directors.

For the year ended December 31, 1995, the Funds' distributor received the
following amounts of 12b-1 fees for the specified purposes set forth below
under each Fund's Plan.

PRINTING & MAILING MARKETING COMPENSATION TO
FUND TOTAL PROSPECTUS BROCHURES UNDERWRITERS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California Tax-Free Money
Market $1,870 $1,870 -0- -0-

Money Market
Class A $866,432 -0- -0- $866,432
Inst. Class -0- -0- -0- -0-

U.S. Treasury Money Market
Class A $492,571 -0- -0- $492,571
Inst. Class -0- -0- -0- -0-
</TABLE>

For the year ended December 31, 1995, WFSI and its registered
representatives received no compensation under each Fund's Plans.

CALCULATION OF YIELD

As indicated in the Prospectuses, the Funds may advertise certain
yield information for a class of shares. Current yield for a class of shares
of the Funds will be calculated based on the net changes, exclusive of capital
changes, over a seven-day period, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting yield figure
carried to at least the nearest hundredth of one percent. Current
tax-equivalent yield for each class of shares of the California Tax-Free Money
Market Fund will be computed by dividing that portion of the yield of the class
of shares of the Fund which is tax- exempt by one minus a stated income tax
rate and adding the product to that portion, if any, of the yield of the class
of shares of the Fund that is not tax-exempt.

15
<PAGE> 370

The current yield and current tax-equivalent yield on the shares
of the California Tax-Free Money Market Fund for the seven-day period ended
December 31, 1995, were 5.04%, and (based on a 42.4% assumed federal and state
tax rate) 8.75%, respectively. The current yield on the Class A Shares of the
Money Market Fund for the seven-day period ended December 31, 1995, was 5.06%.
The current yield on the Class A Shares of the U.S. Treasury Money Market Fund
for the seven-day period ended December 31, 1995, was 4.77%. The current yield
on the Institutional Shares of the Money Market Fund and the U.S. Treasury
Money Market Fund for the seven-day period ended December 31, 1995, was 5.31%
and 5.02%, respectively.

Effective yield for the classes of shares of the Funds and
effective tax-equivalent yield for classes of shares of the California Tax-Free
Money Market Fund will be calculated by determining the net change, or
tax-equivalent assumed net change, exclusive of capital changes, in the value
of a hypothetical pre-existing account having a balance of one share at the
beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return, and then compounding the base period return by adding one, raising the
sum to a power equal to 365 divided by seven, and subtracting one from the
result.

The effective yield and effective tax-equivalent yield on shares
of the California Tax-Free Money Market Fund for the seven-day period ended
December 31, 1995, were 5.16%, and (based on a 42.4% assumed federal and state
tax rate) 8.96%, respectively. The effective yield on the Class A Shares of the
Money Market Fund for the seven-day period ended December 31, 1995, was 5.19%.
The effective yield on the Class A Shares of the U.S. Treasury Money Market
Fund for the seven-day period ended December 31, 1995, was 4.89%. The effective
yield on the Institutional Shares of the Money Market Fund and the U.S.
Treasury Money Market Fund for the seven-day period ended December 31, 1995,
was 5.45% and 5.15%, respectively.

The yield of each class of a Fund will fluctuate from time to
time, unlike bank deposits or other investments that pay a fixed yield for a
stated period of time, and do not provide a basis for determining future yields
since they are based on historical data. Yield is a function of portfolio
quality, composition, maturity and market conditions as well as the expenses
allocated to a particular class of shares.

In addition to the above performance information, the Funds may
advertise average annual total return information. Average annual total return
refers to the average annual compounded rates of return over one-, five-, and
ten-year periods (or the life of Fund, which periods are stated in the
advertisement), and is measured by comparing the value of an investment in a
Fund at the beginning of the relevant period to the redemption value at the end
of the period and annualizing the result, assuming that Fund dividends and
capital gain distributions are reinvested.

Yield information for each class of the Funds may be useful in
reviewing the performance of the Funds and for providing a basis for comparison
with investment alternatives.

16
<PAGE> 371
The yields of each class of the Funds, however, may not be comparable to the
yields from investment alternatives because of differences in the foregoing
variables and differences in the methods used to value portfolio securities,
compute expenses and calculate yield.

From time to time and only to the extent the comparison is
appropriate for a Fund, the Company may quote the performance or price-earning
ratio of a class of shares of a Fund in advertising and other types of
literature as compared to the performance of the Lehman Brothers Municipal Bond
Index, 1-Year Treasury Bill Rate, S&P Index, the Dow Jones Industrial Average,
the Lehman Brothers 20+ Treasury Index, the Lehman Brothers 5-7 Year Treasury
Index, Donoghue's Money Fund Averages, Real Estate Investment Averages (as
reported by the National Association of Real Estate Investment Trusts), Gold
Investment Averages (provided by the World Gold Council), Bank Averages (which
is calculated from figures supplied by the U.S. League of Savings Institutions
based on effective annual rates of interest on both passbook and certificate
accounts), average annualized certificate of deposit rates (from the Federal
Reserve G-13 Statistical Releases or the Bank Rate Monitor), the Salomon One
Year Treasury Benchmark Index, the Consumer Price Index (as published by the
U.S. Bureau of Labor Statistics), Ten Year U.S. Government Bond Average, S&P's
Corporate Bond Yield Averages, Schabacter Investment Management Indices,
Salomon Brothers High Grade Bond Index, Lehman Brothers Long-Term High Quality
Government/Corporate Bond Index, other managed or unmanaged indices or
performance data of bonds, stocks or government securities (including data
provided by Ibbotson Associates), or by other services, companies, publications
or persons who monitor mutual funds on overall performance or other criteria.
The S&P Index and the Dow Jones Industrial Average are unmanaged indices of
selected common stock prices. The performance of a class of shares of a Fund
also may be compared to those of other mutual funds having similar objectives.
This comparative performance could be expressed as a ranking prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc., Bloomberg
Financial Markets or Morningstar, Inc., independent services which monitor the
performance of mutual funds. The performance of a class of shares of a Fund
will be calculated by relating net asset value per share at the beginning of a
stated period to the net asset value of the investment, assuming reinvestment
of all gains distributions and dividends paid, at the end of the period. Any
such comparisons may be useful to investors who wish to compare the past
performance of a class of a Fund with that of its competitors. Of course, past
performance cannot be a guarantee of future results. The Company also may
include, from time to time, a reference to certain marketing approaches of the
Distributor, including, for example, a reference to a potential shareholder
being contacted by a selected broker or dealer. General mutual fund statistics
provided by the Investment Company Institute may also be used.

17
<PAGE> 372
The Company also may use the following information in
advertisements and other types of literature, only to the extent the
information is appropriate for a 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
a class of shares of a Fund; (ii) other government statistics, including, but
not limited to, The Survey of Current Business, may be used to illustrate
investment attributes of a class of shares of a Fund or the general economic,
business, investment, or financial environment in which Fund operates; (iii)
the effect of tax-deferred compounding on the investment returns of a 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 a class of shares of a Fund (or returns
in general) on a tax-deferred basis (assuming reinvestment of capital gains and
dividends and assuming one or more tax rates) with the return on a taxable
basis; and (iv) the sectors or industries in which a Fund invests may be
compared to relevant indices of stocks or surveys (e.g., S&P Industry Surveys)
to evaluate a Fund's historical performance or current or potential value with
respect to the particular industry or sector.

The Company also may discuss in advertising and other types of
literature that one or more of the Funds has been assigned a rating by a
nationally recognized statistical rating organization ("NRSRO"), such as S&P or
Moody's. Such rating would assess the creditworthiness of the investments held
by such Fund. The assigned rating would not be a recommendation to purchase,
sell or hold the Fund's shares since the rating would not comment on the market
price of the Fund's shares or the suitability of the Fund for a particular
investor. In addition, the assigned rating would be subject to change,
suspension or withdrawal as a result of changes in, or unavailability of,
information relating to the Fund or its investments. The Company may compare
the performance of a class of shares of a Fund with other investments which are
assigned ratings by NRSROs. Any such comparisons may be useful to investors who
wish to compare a class' past performance with other rated investments.

The Company also may disclose in advertising and other types of
literature, information and statements that the Company's investment adviser,
Wells Fargo Bank, is listed in Nelson Publications' ("Nelson's") "Top 20"
performance rankings as published in the 1994 edition of "America's Best Money
Managers." The Nelson survey ranks the performance of money managers in over 30
asset/style categories and is based on analysis of performance composites and
surveys of institutional money managers. The Company may also disclose in
advertising and other types of sales literature the assets and categories of
assets under management by the Company's investment adviser.

The Company may disclose in advertising, statements and other
literature the amount of assets and mutual fund assets managed by Wells Fargo
Bank. As of April 1, 1996, Wells Fargo Bank and its affiliates and its provided
investment advisory services for approximately $56 billion of assets of
individuals, trusts, estates and institutions and $17 billion of mutual fund
assets.

18
<PAGE> 373

DETERMINATION OF NET ASSET VALUE

Net asset value per share for each class of a Fund is determined
by the custodian of the Funds on each day the Exchange is open for trading.

As indicated under "Determination of Net Asset Value" in the
Prospectus, the Funds use the amortized cost method to determine the value of
their portfolio securities pursuant to Rule 2a-7 under the 1940 Act. The
amortized cost method involves valuing a security at its cost and amortizing
any discount or premium over the period until maturity, regardless of the
impact of fluctuating interest rates on the market value of the security. While
this method provides certainty in valuation, it may result in periods during
which the value, as determined by amortized cost, is higher or lower than the
price that the Funds would receive if the security were sold. During these
periods, the yield to a shareholder may differ somewhat from that which could
be obtained from a similar fund that uses a method of valuation based upon
market prices. Thus, during periods of declining interest rates, if the use of
the amortized cost method resulted in a lower value of a Fund's portfolio on a
particular day, a prospective investor in the Fund would be able to obtain a
somewhat higher yield than would result from investment in a fund using solely
market values, and existing Fund shareholders would receive correspondingly
less income. The converse would apply during periods of rising interest rates.

Rule 2a-7 provides that in order to value its portfolio using the
amortized cost method, each Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase securities having remaining
maturities (as defined in Rule 2a-7) of thirteen months or less and invest only
in Eligible Securities determined by the Board of Directors to present minimal
credit risks. The maturity of an instrument is generally deemed to be the
period remaining until the date when the principal amount thereof is due or the
date on which the instrument is to be redeemed. However, Rule 2a-7 provides
that the maturity of an instrument may be deemed shorter in the case of certain
instruments, including certain variable and floating rate instruments subject
to demand features. Pursuant to the Rule, the Board is required to establish
procedures designed to stabilize, to the extent reasonably possible, each
Fund's price per share as computed for the purpose of sales and redemptions at
$1.00. Such procedures include review of the Funds' portfolio holdings by the
Board of Directors, at such intervals as it may deem appropriate, to determine
whether the Funds' net asset values calculated by using available market
quotations deviates from $1.00 per share based on amortized cost. The extent of
any deviation will be examined by the Board of Directors. If such deviation
exceeds 1/2 of 1%, the Board will promptly consider what action, if any, will
be initiated. In the event the Board determines that a deviation exists that
may result in material dilution or other unfair results to investors or
existing shareholders, the Board will take such corrective action as it regards
as necessary and appropriate, including the sale of portfolio instruments prior
to maturity to realize capital gains or losses or to shorten average portfolio
maturity, withholding dividends or establishing a net asset value per share by
using available market quotations.

19
<PAGE> 374

PORTFOLIO TRANSACTIONS

The Company has no obligation to deal with any dealer or group of
dealers in the execution of transactions in portfolio securities. Subject to
policies established by the Company's Board of Directors, Wells Fargo Bank is
responsible for the Funds' portfolio decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Company to obtain the
best results taking into account the dealer's general execution and operational
facilities, the type of transaction involved and other factors such as the
dealer's risk in positioning the securities involved. While Wells Fargo
generally seeks reasonably competitive spreads or commissions, the Funds will
not necessarily be paying the lowest spread or commission available.

Purchases and sales of securities will usually be principal
transactions. Portfolio securities normally will be purchased or sold from or
to dealers serving as market makers for the securities at a net price. The
Funds also will purchase portfolio securities in underwritten offerings and may
purchase securities directly from the issuer. Generally, U.S. Government
Obligations, municipal obligations and taxable money market securities are
traded on a net basis and do not involve brokerage commissions. The cost of
executing the Funds' portfolio securities transactions will consist primarily
of dealer spreads and underwriting commissions. Under the 1940 Act, persons
affiliated with the Company are prohibited from dealing with the Company as a
principal in the purchase and sale of securities unless an exemptive order
allowing such transactions is obtained from the SEC or an exemption is
otherwise available. The Funds may purchase municipal or other obligations from
underwriting syndicates of which Stephens or Wells Fargo Bank is a member under
certain conditions in accordance with the provisions of a rule adopted under
the 1940 Act and in compliance with procedures adopted by the Board of
Directors.

Wells Fargo Bank, as the Investment Adviser of each Fund, may, in
circumstances in which two or more dealers are in a position to offer
comparable results for any of the Funds, give preference to a dealer that has
provided statistical or other research services to Wells Fargo Bank. By
allocating transactions in this manner, Wells Fargo Bank is able to supplement
its research and analysis with the views and information of securities firms.
Information so received will be in addition to, and not in lieu of, the
services required to be performed by Wells Fargo Bank under the Advisory
Contracts, and the expenses of Wells Fargo Bank will not necessarily be reduced
as a result of the receipt of this supplemental research information.
Furthermore, research services furnished by dealers through which Wells Fargo
Bank places securities transactions for the Funds may be used by Wells Fargo
Bank in servicing its other accounts, and not all of these services may be used
by Wells Fargo Bank in connection with advising the Funds.

Brokerage Commissions. For the year ended December 31, 1995, the
Funds did not pay any Brokerage Commissions.

Securities of Regular Broker Dealers. On December 31, 1995, the
Money Market Fund held debt securities of its "regular brokers or dealers," as
defined in the 1940 Act, or their parents, as follows: $23,731,000 of Goldman
Sachs & Co., $29,643,000 of J.P. Morgan and $10,005,000 of First Chicago.

20
<PAGE> 375

On December 31, 1995, the U.S. Treasury Money Market Fund and the
California Tax-Free Money Market Fund did not hold any debt securities of their
"regular brokers or dealers," as defined in the 1940 Act, or their parents.

Portfolio Turnover. Because the portfolios of the Funds consists
of securities with relatively short-term maturities, the Funds can expect to
experience high portfolio turnover rates. A high portfolio turnover rate should
not adversely affect any of the Funds, however, because portfolio transactions
ordinarily will be made directly with principals on a net basis and,
consequently, the Funds usually will not incur brokerage expenses.

FEDERAL INCOME TAXES

The Prospectus describes generally the tax treatment of
distributions by the Funds. This section of the SAI includes additional
information concerning federal income taxes.

Qualification as a "regulated investment company" under the Code
requires, among other things, that (a) at least 90% of each Fund's annual gross
income be derived from interest, payments with respect to securities loans,
dividends and gains from the sale or other disposition of securities or options
thereon; (b) each Fund derives less than 30% of its gross income from gains
from the sale or other disposition of securities or options thereon held for
less than three months; and (c) each Fund diversifies its holdings so that, at
the end of each quarter of the taxable year, (i) at least 50% of the market
value of the Fund's assets is represented by cash, government securities and
other securities limited in respect of any one issuer to an amount not greater
than 5% of the Fund's assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its assets is invested
in the securities of any one issuer (other than U.S. Government securities and
the securities of other regulated investment companies), or of two or more
issuers which the Fund controls and which are determined to be engaged in the
same or similar trades or businesses or related trades or businesses. As a
regulated investment company, none of the Funds will be subject to federal
income tax on its net investment income and net capital gains distributed to
its shareholders, provided that it distributes to its shareholders at least 90%
of its net investment income (and net tax-exempt income ) earned in each year.

In addition, the California Tax-Free Money Market Fund intends
that at least 50% of the value of its total assets at the close of each quarter
of its taxable year will consist of obligations the interest on which is exempt
from federal income tax, so that it will qualify under the Code to pay
"exempt-interest dividends." The portion of total dividends paid by the Fund
with respect to any taxable year that constitutes exempt-interest dividends
will be the same for all shareholders receiving dividends during such year. The
exemption of interest income derived from investments in tax-exempt obligations
for federal income tax purposes may not result in a similar exemption under the
laws of a particular state or local taxing authority. However, see "California"
below. Not later than 60 days after the close of its taxable year, the Fund
will notify its shareholders of the portion of the dividends paid with respect
to such taxable year which constitutes exempt-interest dividends. The aggregate
amount of dividends

21
<PAGE> 376

so designated cannot exceed the excess of the amount of interest excludable
from gross income under Section 103 of the Code received by such Fund during
the taxable year over any amounts disallowed as deductions under Sections 265
and 171(a)(2) of the Code. Finally, interest on indebtedness incurred to
purchase or carry shares of the California Tax-Free Money Market Fund will not
be deductible to the extent that the Fund's distributions are exempt from
federal and California income tax.

A 4% nondeductible excise tax will be imposed on each Fund (other
than to the extent of a Fund's tax-exempt income) to the extent it does not
meet certain minimum distribution requirements by the end of each calendar
year. Each Fund will either actually or be deemed to distribute all of its net
investment income and net capital gains by the end of each calendar year and,
thus, expects not to be subject to the excise tax.

Gains or losses on sales of portfolio securities by each Fund
generally will be long-term capital gains or losses if the securities have been
held by it for more than one year, except in certain cases including where one
of the Funds acquires a put or grants a call thereon. Other gains or losses on
the sale of securities will be short- term capital gains or losses. To the
extent that a Fund recognizes long-term capital gains, such gains will be
distributed at least annually. Such distributions will be taxable to
shareholders as long-term capital gains, regardless of how long a shareholder
has held Fund shares. Such distributions will be designated as capital gain
distributions in a written notice mailed by the Fund to shareholders not later
than 60 days after the close of the Fund's taxable year.

If a shareholder receives such a designated capital gain
distribution (to be treated by the shareholder as a long-term capital gain)
with respect to any Fund share and such Fund share is held for six months or
less, then (unless otherwise disallowed) any loss on the sale or exchange of
that Fund share will be treated as a long-term capital loss to the extent of
the designated capital gain distribution. In addition, any loss realized by a
shareholder upon the sale or redemption of Fund shares held less than six
months is disallowed to the extent of any tax-exempt interest dividends
received by the shareholder thereon. These rules shall not apply, however, to
losses incurred under a periodic redemption plan.

22
<PAGE> 377

marginal corporate income tax rates, corporations which have taxable income in
excess of $100,000 for a taxable year will be required to pay an additional
amount of income tax of up to $11,750 and corporations which have taxable
income in excess of $15,000,000 for a taxable year will be required to pay an
additional amount of tax of up to $100,000).

In addition, the IRS has devised federal alternative minimum tax
("AMT") rules to ensure that at least a minimum amount of tax is paid by
taxpayers who obtain significant benefit from certain tax deductions and
exemptions. Some of these deductions and exemptions have been designated "tax
preference items" which must be added back to taxable income for purposes of
calculating AMT. Among the tax preference items is tax-exempt interest from
"private activity bonds" issued after August 7, 1986. To the extent that the
California Tax-Free Money Market Fund invests in private activity bonds,
shareholders of the Fund who pay AMT will be required to report that portion of
Fund dividends attributable to income from the bonds as a tax preference item
in determining their AMT. Shareholders will be notified of the tax status of
distributions made by the Fund. Persons who may be "substantial users" (or
"related persons" of substantial users) of facilities financed by private
activity bonds should consult their tax advisors before purchasing shares in
the California Tax-Free Money Market Fund. In this connection, the rules
regarding the possible unavailability of exempt dividend treatment to
substantial users are similar for federal and California income tax purposes.
Furthermore, shareholders will not be permitted to deduct any of their share of
Fund expenses in computing their AMT. With respect to corporate shareholders
of such Funds, exempt-interest dividends paid by a Fund are included in the
corporate shareholder's "adjusted current earnings" as part of its AMT
calculation, and may also affect its federal "environmental tax" liability. As
of the printing of this SAI, individuals are subject to an AMT at a maximum
rate of 28.00% and corporations at a maximum rate of 20.00%. Shareholders with
questions or concerns about AMT should consult their tax advisors.

Any loss realized on a redemption or exchange of shares of a Fund
will be disallowed to the extent that substantially identical shares are
reacquired within the 61-day period beginning 30 days before and ending 30 days
after the shares are disposed of. If a shareholder exchanges or otherwise
disposes of shares of any of the Funds within 90 days of having acquired such
shares, and if, as a result of having acquired those shares, the shareholder
subsequently pays a reduced sales charge for shares of the Fund, or of a
different fund, the sales charge previously incurred acquiring the Fund's
shares shall not be taken into account (to the extent such previous sales
charges do not exceed the reduction in sales charges) for the purpose of
determining the amount of gain or loss on the exchange, but will be treated as
having been incurred in the acquisition of such other shares.

23
<PAGE> 378

Although dividends will be declared daily based on each Fund's
daily earnings, for federal income tax purposes, the Fund's earnings and
profits will be determined at the end of each taxable year and will be
allocated pro rata over the entire year. For federal income tax purposes, only
amounts paid out of earnings and profits will qualify as dividends. Thus, if
during a taxable year the Fund's declared dividends (as declared daily
throughout the year) exceed the Fund's net income (as determined at the end of
the year), only that portion of the year's distributions which equals the
year's earnings and profits will be deemed to have constituted a dividend. It
is expected that each Fund's net income, on an annual basis, will equal the
dividends declared during the year.

California -- If, at the close of each fiscal quarter, at least
50% of the value of the total assets of the California Tax-Free Money Market
Fund consists of securities the interest on which would be exempt from
California personal income tax if received directly by an individual (primarily
"California municipal securities"), the California Tax-Free Money Market Fund
may pay dividends exempt from California personal income tax to its
shareholders (hereinafter referred to as "California exempt-interest
dividends"). The California Tax-Free Money Market Fund intends to qualify under
the above requirements so that it can pay California exempt-interest dividends.

Not later than 60 days after the close of its taxable year, the
California Tax-Free Money Market Fund will notify each shareholder of the
portion of the dividends paid which constitutes California exempt-interest
dividends with respect to such taxable year. The total amount of California
exempt-interest dividends paid by the California Tax-Free Money Market Fund to
all of its shareholders with respect to any taxable year cannot exceed the
amount of interest received by the Fund during such year, less any expenses
allocable to such tax-exempt income, which would be exempt from California
personal income tax if it were received directly by an individual. Dividends
paid by the California Tax-Free Money Market Fund in excess of this limitation
will be treated as ordinary dividends subject to California personal income tax
at ordinary rates.

Long-term and/or short-term capital gain distributions will not
constitute California exempt-interest dividends and will be taxed as capital
gain or ordinary income dividends, respectively. Moreover, interest on
indebtedness incurred by a shareholder to purchase or carry California Tax-Free
Money Market Fund shares is not deductible for California corporate or personal
income tax purposes to the extent the shareholder receives California
exempt-interest dividends during his or her taxable year. Exempt-interest
dividends will be tax-exempt for purposes of the California personal income
tax. For corporate shareholders, dividends will be subject to the corporate
franchise taxes in California.

Foreign Shareholders. Under the Code, distributions of net
investment income by any of the Funds to a nonresident alien individual,
nonresident alien fiduciary of a trust or estate, foreign corporation, or
foreign partnership (a "foreign shareholder") will be subject to U.S.
withholding tax (at a rate of 30% or a lower treaty rate). Withholding will
not apply if a dividend paid by one of the Funds to a foreign shareholder is
"effectively connected" with a U.S. trade or business, in which case the
reporting and withholding requirements applicable to U.S. citizens,

24
<PAGE> 379

U.S. residents or domestic corporations will apply. Distributions of net
long-term capital gains are not subject to tax withholding, but in the case of
a foreign shareholder who is a nonresident alien individual, such distributions
ordinarily will be subject to U.S. withholding tax at a rate of 30% if the
individual is physically present in the U.S. for more than 182 days during the
taxable year.

Other Matters. Shares of the California Tax-Free Money Market Fund
may not be suitable for tax-exempt institutions and may not be suitable for
retirement plans qualified under Section 401 of the Code, H.R. 10 plans and
IRAs since such institutions, plans and accounts are generally tax-exempt and,
therefore, would not benefit from the exempt status of dividends from such
Fund. Such dividends would be ultimately taxable to the beneficiaries when
distributed to them.

CAPITAL STOCK

The Money Market Fund and the U.S. Treasury Money Market Fund are
comprised of two classes of shares, Class A Shares and Institutional Shares.
With respect to matters that affect one class, but not another, the
shareholders vote as a class; for example, the approval of a Plan with respect
to Class A Shares. Subject to the foregoing, on any matter submitted to a vote
of shareholders, all shares then entitled to vote will be voted by each Fund
unless otherwise required by the 1940 Act, in which case all shares will be
voted in the aggregate. For example, a change in one of the Funds' fundamental
investment policies would be voted upon only by shareholders of such Fund.
Additionally, approval of each advisory contract is a matter to be determined
separately by each Fund. Approval by the shareholders of one of the Funds is
effective whether or not sufficient votes are received from the shareholders of
any of the other Funds or other investment portfolios of the Company to approve
the proposal as to those Funds or investment portfolios. As used in the
Prospectus and in this SAI, the term "majority," when referring to approvals to
be obtained from shareholders of a class of shares of a Fund means the vote of
the lesser of (i) 67% of the shares of a class of shares represented at a
meeting if the holders of more than 50% of the outstanding shares of such class
are present in person or by proxy, or (ii) more than 50% of the outstanding
class of shares. The term "majority," when referring to the approvals to be
obtained from shareholders of the Company as a whole means the vote of the
lesser of (i) 67% of the Company's shares represented at a meeting if the
holders of more than 50% of the Company's outstanding shares are present in
person or by proxy, or (ii) more than 50% of the Company's outstanding shares.
Shareholders are entitled to one vote for each full share held and fractional
votes for fractional shares held. The Company may dispense with annual
meetings 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 and is entitled to such dividends
and distributions out of the income earned on the assets belonging to the Fund
as are declared in the discretion of the Directors. In the event of the
liquidation or dissolution of the Company, shareholders of a Fund are entitled
to receive the assets attributable to the Fund that are available for
distribution, and a distribution of any general

25
<PAGE> 380
assets not attributable to a particular Fund or investment portfolio that are
available for distribution in such manner and on such basis as the Directors in
their sole discretion may determine.

Shareholders are not entitled to any preemptive rights. All
shares, when issued, will be fully paid and non-assessable by the Company.

As of February, 29, 1996, the shareholders identified below were
known by the Company to own the indicated percentage of the respective Fund's
outstanding shares in the following capacities:

<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE
NAME OF FUND OF SHAREHOLDER OF FUND CAPACITY
- ------------ ---------------- --------- --------
<S> <C> <C> <C>
California
Tax-Free Money Omnibus Account #2 21.73% Record
Market Fund Stephens Inc.
Center Street
Little Rock, AR 72201

Money Market Fund
Class A Shares Omnibus Account #2 31.45% Record
Stephens Inc.
111 Center Street
Little Rock, AR 72201

Omnibus Account # 3 12.18% Record
c/o Stephens Inc.
P.O. Box 3507
Little Rock, AR 72203

Money Market Fund Wells Fargo Bank Agent 5.92% Record
Institutional Class for Advanced Medical
201 Third Street
11th Floor
San Francisco, CA 94163

Learning Tree Int'l Inc. 6.60% Record
</TABLE>

26
<PAGE> 381

<TABLE>
<S> <C> <C> <C>
6053 W. Contury Boulevard
Suite 200
Los Angeles, CA 90045

U.S. Treasury Omnibus Account 38.10% Record
Money Market Fund Stephens Inc.
Class A Shares 111 Center Street
Little Rock, AR 72201

Wells Fargo Bank FBO 6.14% Record
Hanna Boys Center
201 3rd Street, 11th Floor
** 5 San Francisco, CA 94163
</TABLE>

27
<PAGE> 382

<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE
NAME OF FUND OF SHAREHOLDER OF FUND CAPACITY
- ------------ ---------------- --------- --------
<S> <C> <C> <C>
U.S. Treasury Wells Fargo Bank Agent 10.89% Record
Money Market Fund for Brittingahm
Institutional Class 201 Third Street
11th Floor
San Francisco, CA 94163

Development Specialists, Inc. 6.39% Record
as Consummation Agent for
Columbia Western Inc.
333 So. Grand Avenue
Suite 2010
Los Angeles, CA 90071-1524

Wells Fargo Bank Agent for 7.85% Record
Lavezzi
201 Third Street
11th Floor
San Francisco, CA 94163
</TABLE>

OTHER

The Registration Statement, including the Prospectus, the SAI and
the exhibits filed therewith, may be examined at the office of the SEC in
Washington, D.C. Statements contained in the Prospectus or the SAI as to the
contents of any contract or other document referred to herein or in the
Prospectus are not necessarily complete, and, in each instance, reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Annual Reports will be sent free of charge to any
shareholder who requests the SAI.

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP has been selected as the independent
auditors for the Company. KPMG Peat Marwick LLP provides audit services, tax
return preparation and assistance and consultation in connection with review of
certain SEC filings. KPMG Peat Marwick LLP's address is Three Embarcadero
Center, San Francisco, California 94111.

28
<PAGE> 383
FINANCIAL INFORMATION

The audited financial statements and portfolio of investments
contained in the Company's Annual Report for the year ended December 31, 1995,
as filed with the SEC on March 8, 1996, are hereby incorporated by reference in
this SAI. The portfolio of investments, audited financial statements and
independent auditors' report for the Funds are attached to all SAIs delivered
to shareholders or prospective shareholders.

29
<PAGE> 384
APPENDIX

The following is a description of the ratings given by Moody's and
S&P to corporate and municipal bonds, notes and commercial paper.

Bonds

Moody's: The two highest ratings for corporate, state and
municipal bonds are "Aaa" and "Aa." Bonds rated "Aaa" are judged to be of the
"best quality" and carry the smallest amount of investment risk. Bonds rated
"Aa" are of "high quality by all standards," but margins of protection or other
elements make long-term risks appear somewhat greater than "Aaa" rated bonds.
Moody's applies numerical modifiers: 1, 2 and 3 in the "AA" category in its
rating system. The modifier 1 indicates that the security ranks in the higher
end of its category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end.

S&P: The two highest ratings for corporate, state and municipal
bonds are "AAA" and "AA." Bonds rated "AAA" have the highest ratings assigned
by S&P and have an "extremely strong capacity to pay interest and repay
principal." Bonds rated "AA" have a "very strong capacity to pay interest and
repay principal" and differ "from the highest rated issued only in small
degree." The ratings in the "AA" category may be modified by the addition of a
plus or minus sign to show relative standing within the category.

Notes

Moody's: The two highest ratings for state and municipal
short-term obligations are "MIG 1" and "MIG 2" (or "VMIG 1" and "VMIG 2" in the
case of an issue having a variable rate demand feature). Notes rated "MIG 1" or
"VMIG 1" are judged to be of the "best quality." Notes rated "MIG 2" or "VMIG
2" are of "high quality," with margins of protections "ample although not as
large as in the preceding group."

S&P: The two highest ratings for corporate, state and municipal
notes are "SP-1" and "SP-2." The "SP-1" rating reflects a "very strong or
strong capacity to pay principal and interest." Notes issued with "overwhelming
safety characteristics" will be rated "SP-1+." The "SP-2" rating reflects a
"satisfactory capacity" to pay principal and interest.

Commercial Paper

Moody's: The highest rating for corporate, state and municipal
commercial paper is "P-1" (Prime-1). Issuers rated "P-1" have a "superior
capacity for repayment of short-term promissory obligations."

30
<PAGE> 385
S&P: The "A-1" rating for corporate, state and municipal
commercial paper indicates that the "degree of safety regarding timely payment
is either overwhelming or very strong." Commercial paper with "overwhelming
safety characteristics" will be rated "A-1+."

31
<PAGE> 386
OVERLAND EXPRESS FUNDS, INC.

Telephone: (800) 552-9612

STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996

MUNICIPAL INCOME FUND

---------------------

Overland Express Funds, Inc. (the "Company") is an open-end series
investment company. This Statement of Additional Information ("SAI") contains
information about one of the Company's investment portfolios -- the Municipal
Income Fund (the "Fund"). The Fund offers two classes of shares -- Class A
Shares and Class D Shares. This SAI relates to both such classes of shares. The
investment objective of the Fund is described in the Prospectus under
"Investment Objective and Policies."

This SAI is not a prospectus and should be read in conjunction
with the Fund's Prospectus, dated May 1, 1996. All terms used in this SAI that
are defined in the Prospectus will have the meanings assigned in the
Prospectus. A copy of the Prospectus may be obtained without charge by writing
Stephens Inc., the Company's sponsor, administrator and distributor, at 111
Center Street, Little Rock, Arkansas 72201 or calling the Transfer Agent at the
telephone number indicated above.

---------------------

1
<PAGE> 387
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Permitted Investment Activities . . . . . . . . . . . . . . . . . . 5
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Servicing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Calculation of Yield and Total Return . . . . . . . . . . . . . . . . . . . . 13
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . 17
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>

2
<PAGE> 388
INVESTMENT RESTRICTIONS

The Fund is subject to the following investment restrictions, all
of which are fundamental policies:

The Fund 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 the Fund's investments in that
industry would exceed 25% of the current value of the Fund's total assets,
provided that there is no limitation with respect to investments in (i)
municipal securities (for the purpose of this restriction, private activity
bonds and notes shall not be deemed municipal securities if the payment of
principal and interest on such bonds or notes is the ultimate responsibility of
non-governmental issuers), and (ii) securities issued or guaranteed by the
United States Government, its agencies or instrumentalities;

(2) purchase or sell real estate limited partnership interests
or real estate (other than securities secured by real estate or interests
therein or securities issued by companies that invest in real estate or
interests therein), commodities or commodity contracts or interests, leases or
limited partnership interests in oil, gas, or other mineral exploration or
development programs;

(3) purchase securities on margin (except for short-term
credits necessary for the clearance of transactions) or make short sales of
securities;

(4) underwrite securities of other issuers, except to the
extent that the purchase of permitted investments directly from the issuer
thereof or from an underwriter for an issuer and the later disposition of such
securities in accordance with the Fund's investment program may be deemed to be
an underwriting;

(5) make investments for the purpose of exercising control or
management;

(6) purchase puts, calls, straddles, spreads, or any
combination thereof if by reason thereof the value of the aggregate investment
of such classes of securities will exceed 5% of the Fund's total assets;

(7) issue senior securities, except that the Fund may borrow
from banks up to 10% of the current value of its net assets for temporary
purposes only in order to meet redemptions, and these borrowings may be secured
by the pledge of up to 10% of the current value of its net assets (but
investments may not be purchased while any such outstanding borrowing in excess
of 5% of the Fund's net assets exists);

(8) make loans of portfolio securities or other assets, except
that loans for purposes of this restriction will not include the purchase of
fixed time deposits, repurchase agreements, commercial paper and other
short-term obligations, and other types of debt instruments commonly sold in a
public or private offering; or

3
<PAGE> 389
(9) invest more than 25% of its assets in municipal securities
of any single state, possession, commonwealth or territory or in the District
of Columbia.

The Fund may not purchase securities of any issuer (except
securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities) if, as a result, with respect to 75% of its total assets,
more than 5% of the value of its total assets would be invested in the
securities of any one issuer or, with respect to 100% of its total assets, the
Fund's ownership would be more than 10% of the outstanding voting securities of
such issuer. For purposes of this policy, each state, possession, commonwealth,
territory and the District of Columbia, and each political subdivision,
authority, agency and instrumentality and multi-state agency or authority
thereof is a separate issuer provided that the securities are backed only by
the assets and revenues of the particular issuer. In addition, for these
purposes, a guarantee of a security shall not deemed to be a security issued by
the guarantor, provided that the Fund shall not invest more than 10% of its
total assets in all securities issued or guaranteed by that guarantor.

The Fund is subject to the following non-fundamental policies:

(1) The Fund may not invest more than 5% of its net assets at
the time of purchase in warrants, and not more than 2% of its net assets in
warrants which are not listed on the New York or American Stock Exchange.

(2) The Fund will not purchase or retain securities of any
issuer if the officers or directors of the Fund or its investment adviser
owning beneficially more than one-half of one percent (0.5%) of the securities
of the issuer together own beneficially more than 5% of such securities.

(3) The Fund will not invest in securities of issuers who, with
their predecessors, have been in existence less than three years, unless the
securities are fully guaranteed, insured or issued by the U.S. Government, a
state, commonwealth, possession, territory, the District of Columbia, or their
political subdivisions, authorities, agencies or instrumentalities, or by an
entity in existence at least three years, or the securities are backed by the
assets and revenues of any of the foregoing, if by reason thereof, the value of
its aggregate investment in such securities will exceed 5% of its total assets.

(4) The Fund may not invest more than 10% of the current value
of its net assets in repurchase agreements maturing in more than seven days,
fixed time deposits that are subject to withdrawal penalties and that have
maturities of more than seven days, restricted securities which must be
registered under the Securities Act of 1933 before they may be offered or sold
to the public, and illiquid securities.

With respect to fixed time deposits, repurchase agreements, and
the investments described in fundamental restriction (7) and non-fundamental
restriction (1), the Fund does not currently intend to engage in these
activities.

4
<PAGE> 390
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

When-Issued Securities. The purchase price and the interest rate
that will be received on when-issued debt securities are fixed at the time the
purchaser enters into the commitment. Purchasing a security on a when-issued
basis can involve a risk that the market price at the time of delivery is lower
than the agreed-upon purchase price, in which case there could be an unrealized
loss at the time of delivery.

The Fund will establish a segregated account in which it will
maintain liquid assets in an amount at least equal in value to the Fund's
commitment to purchase when-issued securities. If the value of these assets
declines, the 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.

Municipal Bonds. As discussed in the Prospectus, the two principal
classifications of municipal bonds are "general obligation" and "revenue"
bonds. Municipal bonds are debt obligations issued to obtain funds for various
public purposes, including the construction of a wide range of public
facilities such as bridges, highways, housing, hospitals, mass transportation,
schools, streets and water and sewer works. Other public purposes for which
municipal bonds may be issued include the refunding of outstanding obligations
and obtaining funds for general operating expenses or to loan to other public
institutions and facilities. Industrial development bonds are a specific type
of revenue bond backed by the credit and security of a private user. Certain
types of industrial development bonds are issued by or on behalf of public
authorities to obtain funds to provide privately-operated housing facilities,
sports facilities, convention or trade show facilities, airport, mass transit,
port or parking facilities, air or water pollution control facilities and
certain local facilities for water supply, gas, electricity, or sewage or solid
waste disposal. Assessment bonds, wherein a specially created district or
project area levies a tax (generally on its taxable property) to pay for an
improvement or project may be considered a variant of either category. There
are, of course, other variations in the types of municipal bonds, both within a
particular classification and between classifications, depending on numerous
factors. Subject to its investment objective and policies, the Fund is not
limited with respect to which category of municipal bond it may acquire. Some
or all of these bonds may be considered "private activity bonds" for federal
income tax purposes.

Municipal Notes. The Fund may invest in municipal notes. Municipal
notes include, but are not limited to, tax anticipation notes ("TANs"), bond
anticipation notes ("BANs"), revenue anticipation notes ("RANs") and
construction loan notes. Notes sold as interim financing in anticipation of
collection of taxes, a bond sale or receipt of other revenues are usually
general obligations of the issuer.

5
<PAGE> 391
outstanding TANs. Use of such a general fund to meet various obligations could
affect the likelihood of making payments on TANs.

The values of outstanding municipal securities will vary as a
result of changing market evaluations of the ability of their issuers to meet
the interest and principal payments (i.e., credit risk). Such values will also
change in response to changes in the interest rates payable on new issues of
municipal securities (i.e., market risk). Should such interest rates rise, the
values of outstanding securities, including those held in the Fund's portfolio,
will decline and (if purchased at par value) they would sell at a discount. If
interest rates fall, the values of outstanding securities will generally
increase and (if purchased at par value) they would sell at a premium. Changes
in the value of municipal securities held in the Fund's portfolio arising from
these or other factors will cause changes in the net asset value per share of
the Fund.

MANAGEMENT

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- ---------------------- -------- ---------------------
<S> <C> <C>
Jack S. Euphrat, 73 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.
</TABLE>

6
<PAGE> 392

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- --------------------- -------- ---------------------
<S> <C> <C>
*R. Greg Feltus, 44 Director, Senior Vice President
Chairman and of Stephens ; Manager
President of Financial Services
Group; President of
Stephens
Insurance Services
Inc.; Senior Vice
President of Stephens
Sports Management
Inc.; and President of
Investor Brokerage
Insurance Inc.

Thomas S. Goho, 53 Director T.B. Rose Faculty
321 Beechcliff Court Fellow-Business,
Winston-Salem, NC 27104 Wake Forest University
Calloway School, of
Business and Accountancy; Associate
Professor of Finance of the School of
Business and Accounting at Wake
Forest University since 1983.

*Zoe Ann Hines, 46 Director Senior Vice President
of Stephens and
Director of Brokerage
Accounting;and

Secretary of Stephens
Resource
Management.

*W. Rodney Hughes, 69 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901

Robert M. Joses, 77 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
</TABLE>

7
<PAGE> 393

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- --------------------- -------- --------------------
<S> <C> <C>
*J. Tucker Morse, 51 Director Private Investor; Real Estate
10 Legrae Street Developer; Chairman
Charleston, SC 29401 of Renaissance
Properties Ltd.;
President of Morse
Investment
Corporation; and Co-
Managing Partner of
Main Street Ventures.

COMPENSATION TABLE
For the Fiscal Year Ended December 31, 1995

*R. Greg Feltus 0 0
Director

Thomas S. Goho 10,188 39,750
Director

*Zoe Ann Hines 0 0
Director

*W. Rodney Hughes 9,438 37,000
Director

Robert M. Joses 9,938 39,000
Director
</TABLE>

8
<PAGE> 394

<TABLE>
<S> <C> <C>
*J. Tucker Morse 8,313 33,250
Director
</TABLE>

9
<PAGE> 395

Directors of the Company are compensated annually by the Company
and by all the registrants in the fund complex for their services as indicated
above and also are reimbursed for all out-of-pocket expenses relating to
attendance at board meetings. Each of the Directors and Officers of the Company
serves in the identical capacity as Officers and Directors of Stagecoach Funds,
Inc. and MasterWorks Funds Inc. (formerly, Stagecoach Inc.), and as Trustees
and/or Officer of Stagecoach Trust, Master Investment Portfolio, Life & Annuity
Trust, Master Investment Trust and Managed Series Investment Trust, each of
which is a registered open-end management investment company and each of which
is considered to be in the same "fund complex," as such term is defined in Form
N-1A under the 1940 Act, as the Company. The Directors are compensated by
other Companies and Trusts within the fund complex for their services as
Directors/Trustees to such Companies and Trusts. Currently the Directors do not
receive any retirement benefits or deferred compensation from the Company or
any other member of the fund complex.

As of the date of this SAI, Directors and officers of the Company
as a group beneficially owned less than 1% of the outstanding shares of the
Company.

Investment Adviser. The Fund is advised by Wells Fargo Bank. The
Advisory Contract provides that Wells Fargo Bank shall furnish to the Fund
investment guidance and policy direction in connection with the daily portfolio
management of the Fund. Pursuant to the Advisory Contract, Wells Fargo Bank
furnishes to the Board of Directors periodic reports on the investment strategy
and performance of the Fund.

Wells Fargo Bank has agreed to provide to the Fund, among other
things, money market security and fixed- income research, analysis and
statistical and economic data and information concerning interest rate and
security market trends, portfolio composition, credit conditions and average
maturities of the Fund.

The Advisory Contract will continue in effect for more than two
years provided the continuance is approved annually (i) by the holders of a
majority of the Fund's outstanding voting securities or by the Company's Board
of Directors and (ii) by a majority of the directors of the Company who are not
parties to the Advisory Contract or "interested persons" (as defined in the
Act) of any such party. The Advisory Contract may be terminated on 60 days'
written notice by either party and will terminate automatically if assigned.

10
<PAGE> 396

For the years ended December 31, 1993, 1994 and 1995, the Fund
paid the advisory fees indicated below and Wells Fargo Bank waived the
indicated amounts:

<TABLE>
<CAPTION>
1993 1994 1995
PAID WAIVED PAID WAIVED PAID WAIVED
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$427,743 $207,309 $334,766 $224,053 $184,199
</TABLE>

Administrator and Distributor. The Company has retained Stephens
as administrator and distributor on behalf of the Fund. Under the
Administration Agreement with the Company, Stephens, in connection therewith,
furnishes the Company with office facilities, together with those ordinary
clerical and bookkeeping services that are not being furnished by Wells Fargo
Bank. Stephens also has entered into a Distribution Agreement with the Company
pursuant to which it has the responsibility of distributing shares of the Fund.

The chart below lists the administrative fees paid by the Fund for the
years ended December 31, 1993, 1994, and 1995.

Shareholder Servicing Agent. As discussed in the Fund's Prospectus
under the heading "Shareholder Servicing Agent," the Fund has entered into a
shareholder servicing agreement with Wells Fargo Bank. For the dollar amount of
shareholder servicing fees paid by the Class D Shares of the Fund, see
"Servicing Plan" below.

Custodian and Transfer and Dividend Disbursing Agent. Wells Fargo
Bank has been retained to act as Custodian and Transfer and Dividend Disbursing
Agent for the Fund. The Custodian, among other things, maintains a custody
account or accounts in the name of the Fund; receives and delivers all assets
for the Fund upon purchase and upon sale or maturity; collects and receives all
income and other payments and distributions on account of the assets of the
Fund; and pays all expenses of the Fund. For its services as Custodian, Wells
Fargo Bank receives an asset-based fee and transaction charges; and for its
services as Transfer and Dividend Disbursing Agent, it receives a base fee and
per- account fees. For the year ended December 31, 1995, the Fund did not pay
any custody or transfer and dividend disbursing agency fees.

Underwriting Commission. For the year ended December 31, 1993, the
aggregate dollar amount of underwriting commissions paid to Stephens was
$3,604,377 and Stephens retained $3,457,989 of such commissions. Wells Fargo
Securities Inc. ("WFSI"),

11
<PAGE> 397

an affiliated broker-dealer of the Company, and its registered representatives
received $146,388 of such commissions.

For the year ended December 31, 1995, the aggregate dollar amount
of underwriting commissions paid to Stephens on sales/redemptions of the
Registrant's shares was $1,478,541 and Stephens retained $1,447,175 of such
commissions. WFSI and its registered representatives received $31,366 of such
commissions.

DISTRIBUTION PLANS

As indicated in the Prospectus, the Fund, on behalf of each of its
classes of shares, has adopted a Plan under Section 12(b) of the 1940 Act and
Rule 12b-1 thereunder (the "Rule"). The Plan for the Class A Shares of the Fund
was adopted on January 23, 1991 and amended on April 29, 1993, and the Plan for
the Class D Shares of the Fund was adopted on April 29, 1993, by the Board of
Directors, including a majority of the directors who were not "interested
persons" (as defined in the 1940 Act) of the Fund and who had no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan (the "Qualified Directors").

Under the Plan and pursuant to the Distribution Agreement, the
Fund may pay the Distributor, as compensation for distribution-related
services, a monthly fee at an annual rate of up to 0.25% of the average daily
net assets attributable to the Class A Shares of the Fund, and up to 0.50% of
the average daily net assets attributable to the Class D Shares of the Funds.
The actual fee payable to the Distributor is determined, within such limit,
from time to time by mutual agreement between the Company 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 NASD Rules of Fair Practice. In this regard, the Company and the
Distributor have agreed to limit the expenses payable under the Distribution
Agreement and relating to the Class A Shares to not more than 0.15% of the
Fund's average daily net assets attributable to Class A Shares. The Distributor
may enter into selling agreements with one or more selling agents under which
such agents may receive compensation for distribution-related services from the
Distributor, including, but not limited to, commissions or other payments to
such agents based on the average daily net assets of Fund shares attributable
to them. The Distributor 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.

The Plan will continue in effect from year to year if such
continuance is approved by a majority vote of both the directors of the Company
and the Qualified Directors. Agreements related to the Plan must also be
approved by such vote of the directors and the Qualified

12
<PAGE> 398
Directors. Such agreements 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 Fund. The Plan may not be amended
to increase materially the maximum amounts payable thereunder without the
approval of a majority of the outstanding voting securities of the Fund, and no
material amendment to the Plan may be made except by a majority of both the
directors of the Company and the Qualified Directors.

The Plan requires that the Treasurer of the Fund shall provide to
the directors, and the directors 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 directors who are not
"interested persons" of the Company be made by such disinterested directors.

For the year ended December 31, 1995, the Funds' distributor
received the following amounts of 12b-1 fees for the specified purposes set
forth below under each Fund's Plan.

PRINTING & MAILING MARKETING COMPENSATION TO
FUND TOTAL PROSPECTUS BROCHURES UNDERWRITERS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Income
Class A $103,479 -0- -0- $103,479
Class D $67,939 N/A N/A $67,939
</TABLE>

For the year ended December 31, 1995, WFSI and its registered
representatives received no compensation under each Fund's Plans.

SERVICING PLAN

As indicated in the Prospectus of the Fund, the Fund has adopted a
Servicing Plan ("Servicing Plan") with respect to its Class D Shares. The
Servicing Plan was adopted on April 29, 1993 by the Board of Directors,
including a majority of the Directors who were not "interested persons" (as
defined in the Act) of the Fund and who had no direct or indirect financial
interest in the operation of the Servicing Plan or in any agreement related to
the Servicing Plan (the "Servicing Plan Qualified Directors").

Under the Servicing Plan and pursuant to the Servicing Agreement,
the Fund may pay one or more servicing agents, as compensation for performing
certain services, a fee at an annual rate of up to 0.25% of the average daily
net assets of the Fund attributable to its Class D Shares. The actual fee
payable to servicing agents is determined, within such limit, from time to time
by mutual agreement between the Company and each servicing agent and will not
exceed the maximum service fees payable by mutual funds sold by members of the
NASD under the NASD Rules of Fair Practice.

13
<PAGE> 399
The Servicing Plan will continue in effect from year to year if
such continuance is approved by a majority vote of both Directors of the
Company and the Servicing Plan Qualified Directors. Any form of Servicing
Agreement related to the Servicing Plan also must be approved by such vote of
the Directors and the Servicing Plan Qualified Directors. Servicing Agreements
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
Class D Shares of the Fund. The Servicing Plan may not be amended to increase
materially the amount payable thereunder without the approval of a majority of
the outstanding Class D Shares of the Fund, and no material amendment to the
Servicing Plan may be made except by a majority of both the Directors of the
Company and the Qualified Directors.

The Servicing Plan requires that the Treasurer of the Company
shall provide to the Directors, and the Directors shall review, at least
quarterly, a written report of the amounts expended (and purposes therefor)
under the Servicing Plan.

For the years ended December 31, 1993, 1994 and 1995, the Fund
paid the following amounts in servicing fees pursuant to the Servicing Plans
for its Class D Shares:

*The Class D Shares commenced operations on July 1, 1993.

CALCULATION OF YIELD AND TOTAL RETURN

As indicated in the Prospectus, the Fund may advertise certain
total return information for a class of shares computed in the manner described
in the Prospectus. As and to the extent required by the Commission, an average
annual compound rate of return ("T") will be computed by using the value at the
end of a specified period ("ERV") of a hypothetical initial investment in a
class of shares ("P") over a period of years ("n") according to the following
formula: P(1+T)n = ERV. In addition, as indicated in the Prospectus, the Fund
may also, at times, calculate total return for a class of shares based on net
asset value per share (rather than the public offering price), in which case
the figures would not reflect the effect of any sales charges that would have
been paid by an investor, or based on the assumption that a sales charge other
than the maximum sales charge (reflecting a Volume Discount) was assessed,
provided that total return data derived pursuant to the calculation described
above are also presented.

In addition to the above performance information, the Fund may
also advertise cumulative total return for one-month, three-month, six-month,
and year-to-date periods. The cumulative total return for such periods is based
on the overall percentage change in value of a hypothetical investment in the
Fund, assuming all Fund dividends and capital

14
<PAGE> 400

gain distributions are reinvested, without reflecting the effect of any sales
charge that would be paid by an investor, and is not annualized.

The average annual total return on the Class A Shares of the Fund
from inception (July 17, 1991) to December 31, 1995, assuming a 3.00% sales
load and no sales load, was 7.58% and 8.32%, respectively. The total return on
the Class A Shares of the Fund for the year ended December 31, 1995, assuming a
3.00% sales load and no sales load, was 12.92% and 16.45%, respectively.

The average annual return on the Class D Shares of the Fund for
the period from inception (July 1, 1993) to December 31, 1995, was 4.53%. The
total return on the Class D Shares of the Fund for the year ended December 31,
1995, assuming the maximum CDSC, was 14.75% and no CDSC, was 15.75%.

The Fund may advertise the cumulative total return on its shares.
Cumulative total return of shares is computed on a per share basis and assumes
the reinvestment of dividends and distributions. Cumulative total return of
shares generally is expressed as a percentage rate which is calculated by
combining the income and principal charges for a specified period and dividing
by the net asset value per share at the beginning of the period. Advertisements
may include the percentage rate of total return of shares or may include the
value of a hypothetical investment in shares at the end of the period which
assumes the application of the percentage rate of total return.

The cumulative total return on the Class A Shares of the Fund for
the period from inception (July 17, 1991) to December 31, 1995, assuming a
3.00% sales charge, was 38.49%. The cumulative total return for the same
period, assuming no sales charge, was 42.78%.

The cumulative total return on the Class D Shares of the Fund for
the period from inception (July 1, 1993) to December 31, 1995, assuming no
CDSC, was 11.70%.

As indicated in the Prospectus, the Fund may advertise certain
yield information for a class of shares. As and to the extent required by the
Commission, yield for a class of shares will be calculated based on a 30-day
(or one month) period, computed by dividing the net investment income per share
of a class of shares earned during the period by the maximum offering price per
share of a class of shares on the last day of the period, according to the
following formula: YIELD = 2[((a-b:-cd)+1)6-1], where a = dividends and
interest earned during the period; b = expenses accrued for the period (net of
reimbursements); c = the average daily number of shares of a class of shares
outstanding during the period that were entitled to receive dividends; and d =
the maximum offering price per share of a class of shares on the last day of
the period. The net investment income of a class of shares includes actual
interest income, plus or minus amortized purchase discount (which may include
original issue discount) or premium, less accrued expenses. Realized and
unrealized gains and losses on portfolio securities are not included in the net
investment income. For purposes of sales literature, yield may also be
calculated on the basis of the net asset value per share rather than the public
offering price, or based on the assumption

15
<PAGE> 401
that a sales charge other than the maximum sales charge (reflecting a Volume
Discount) was assessed, provided that the yield data derived pursuant to the
calculation described above are also presented.

The yield on the Class A Shares of the Fund for the thirty-day
period ended December 31, 1995, assuming a 3.00% sales load and no sales load
was 5.16% and 5.00%, respectively. The yield on the Class D Shares of the Fund
for the thirty-day period ended December 31, 1995, assuming the maximum CDSC,
was 4.10%, and no CDSC, was 4.56%.

The tax-equivalent yield for the Fund will be computed by dividing
that portion of the yield of a class of shares which is tax-exempt by one minus
a stated income tax rate and adding the product to that portion, if any, of the
yield of the Fund that is not tax-exempt. This yield figure may not reflect the
applicability of the alternative minimum tax. The yield for a class of shares
will fluctuate from time to time, unlike bank deposits or other investments
that pay a fixed yield for a stated period of time, and does not provide a
basis for determining future yields since it is based on historical data. Yield
is a function of portfolio quality, composition, maturity and market conditions
as well as the expenses allocated to the Fund.

The tax-equivalent yield for the thirty-day period ended December
31, 1995 on the Class A Shares of the Fund, assuming a 3.00% sales load and no
load, was 8.68% and 8.96%, respectively, based on a 42.40% assumed federal
income tax rate. The tax-equivalent yield for the thirty-day period ended
December 31, 1995 on the Class D Shares of the Fund, assuming the maximum CDSC,
was 7.92%, based on a 42.40% assumed federal income tax rate.

In addition, investors should recognize that changes in the net
asset values of a class of shares of the Fund will affect the yield of the
class of shares for any specified period, and such changes should be considered
together with such class's yield in ascertaining such class's total return to
shareholders for the period. Yield information for a class of shares may be
useful in reviewing the performance of the Fund and for providing a basis for
comparison with investment alternatives. The yield of a class of shares,
however, may not be comparable to the yields from investment alternatives
because of differences in the foregoing variables and differences in the
methods used to value portfolio securities, compute expenses and calculate
yield.

The Company may disclose in sales literature, information and
statements, the distribution rate of Fund shares. Distribution rate, which may
be annualized, is the amount determined by dividing the dollar amount per share
of the most recent dividend by the most recent NAV or maximum offering price per
share as of a date specified in the sales literature. Distribution rate will be
accompanied by the standard 30-day yield as required by the SEC.

The Company also may disclose in advertising and other types of
literature, information and statements, the average credit quality of the Fund's
portfolio or categories of investments therein, as of a specified date or
period. Average credit quality is calculated on a dollar weighted average basis
based on ratings assigned each issue or issuer, as the case may be, by S&P
and/or Moody's. In the event one rating agency does not rate the issue or

16
<PAGE> 402

issuer, as the case may be, in the same tier as the other agency, the highest
rating is used in the calculation.

From time to time and only to the extent the comparison is
applicable to a class of shares of the Fund, the Company may quote the
performance or price-earning ratio of a class of shares of the Fund in
advertising and other types of literature as compared to the performance of
unmanaged indices of municipal securities, or to performance of the Lehman
Brothers Municipal Bond Index, 1-Year Treasury Bill Rate, S&P Index, the Dow
Jones Industrial Average, the Lehman Brothers 20+ Treasury Index, the Lehman
Brothers 5-7 Year Treasury Index, Donoghue's Money Fund Averages, Real Estate
Investment Averages (as reported by the National Association of Real Estate
Investment Trusts), Gold Investment Averages (provided by the World Gold
Council), Bank Averages (which is calculated from figures supplied by the U.S.
League of Savings Institutions based on effective annual rates of interest on
both passbook and certificate accounts), average annualized certificate of
deposit rates (from the Federal Reserve G-13 Statistical Releases or the Bank
Rate Monitor), the Salomon One Year Treasury Benchmark Index, the Consumer
Price Index (as published by the U.S. Bureau of Labor Statistics), Ten Year
U.S. Government Bond Average, S&P's Corporate Bond Yield Averages, Schabacter
Investment Management Indices, Salomon Brothers High Grade Bond Index, Lehman
Brothers Long-Term High Quality Government/Corporate Bond Index, other managed
or unmanaged indices or performance data of bonds, stocks or government
securities (including data provided by Ibbotson Associates), or by other
services, companies, publications or persons who monitor mutual funds on
overall performance or other criteria. The S&P Index and the Dow Jones
Industrial Average are unmanaged indices of selected common stock prices. The
performance of a class of shares of the Fund also may be compared to those of
other mutual funds having similar objectives. This comparative performance
could be expressed as a ranking prepared by Lipper Analytical Services, Inc.,
CDA Investment Technologies, Inc., Bloomberg Financial Markets or Morningstar,
Inc., independent services which monitor the performance of mutual funds. The
performance of a class of shares of the Fund will be calculated by relating net
asset value per share at the beginning of a stated period to the net asset
value of the investment, assuming reinvestment of all gains distributions and
dividends paid, at the end of the period. Any such comparisons may be useful to
investors who wish to compare the class' past performance with that of its
competitors. Of course, past performance cannot be a guarantee of future
results. The Company also may include, from time to time, a reference to
certain marketing approaches of the Distributor, including, for example, a
reference to a potential shareholder being contacted by a selected broker or
dealer. General mutual fund statistics provided by the Investment Company
Institute may also be used.

17
<PAGE> 403
The Company also may use the following information in
advertisements and other types of literature, only to the extent the
information is appropriate for a class of shares of the Fund: (i) the Consumer
Price Index may be used to assess the real rate of return from an investment in
a class of shares of the Fund; (ii) other government statistics, including, but
not limited to, The Survey of Current Business, may be used to illustrate
investment attributes of a class of shares of the Fund or the general economic,
business, investment, or financial environment in which the Fund operates;
(iii) the effect of tax-deferred compounding on the investment returns of a
class of shares of the Fund, or on returns in general, may be illustrated by
graphs, charts, etc., where such graphs or charts would compare, at various
points in time, the return from an investment in a class of shares of the Fund
(or returns in general) on a tax-deferred basis (assuming reinvestment of
capital gains and dividends and assuming one or more tax rates) with the return
on a taxable basis; and (iv) the sectors or industries in which the Fund
invests may be compared to relevant indices of stocks or surveys (e.g., S&P
Industry Surveys) to evaluate the historical performance or current or
potential value of a class of shares of the Fund with respect to the particular
industry or sector.

The Company also may discuss in advertising and other types of
literature that the Fund has been assigned a rating by a nationally recognized
statistical rating organization ("NRSRO"), such as Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"). Such rating
would assess the creditworthiness of the investments held by the Fund. The
assigned rating would not be a recommendation to purchase, sell or hold the
Fund's shares since the rating would not comment on the market price of the
Fund's shares or the suitability of the Fund for a particular investor. In
addition, the assigned rating would be subject to change, suspension or
withdrawal as a result of changes in, or unavailability of, information
relating to the Fund or its investments. The Company may compare the
performance of a class of shares of the Fund with other investments which are
assigned ratings by NRSROs. Any such comparisons may be useful to investors who
wish to compare the class's past performance with other rated investments.

The Company also may disclose in advertising and other types of
literature, information and statements that the Company's investment adviser,
Wells Fargo Bank, is listed in Nelson Publications' ("Nelson's") "Top 20"
performance rankings as published in the 1994 edition of "America's Best Money
Managers." The Nelson survey ranks the performance of money managers in over 30
asset/style categories and is based on analysis of performance composites and
surveys of institutional money managers. The Company may also disclose in
advertising and other types of sales literature the assets and categories of
assets under management by the Company's investment adviser.

The Company may disclose in advertising, statements and other
literature the amount of assets and mutual fund assets managed by Wells Fargo
Bank. As of April 1, 1996, Wells Fargo Bank and its affiliates provided
investment advisory services for approximately $56 billion of assets of
individuals, trusts, estates and institutions and $17 billion of mutual fund
assets.

18
<PAGE> 404
DETERMINATION OF NET ASSET VALUE

Net asset value per share for each class of the Fund is determined
by the custodian of the Fund on each day the Exchange is open for trading.

Securities of the Fund for which market quotations are available
are valued at latest prices. In the absence of any sale of such securities on
the valuation date and in the case of other securities, including U.S.
Government securities but excluding money market instruments maturing in 60
days or less, the valuations are based on latest quoted bid prices. Money
market instruments maturing in 60 days or less are valued at amortized cost.
The assets of the Fund other than money market instruments maturing in 60 days
or less are valued at latest quoted bid prices. In all cases, bid prices will
be furnished by a reputable independent pricing service approved by the Board
of Directors. Prices provided by an independent pricing service may be
determined without exclusive reliance on quoted prices and may take into
account appropriate factors such as institutional-size trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics and other market data. All other securities and other
assets of the Fund for which current market quotations are not readily
available are valued at fair value as determined in good faith by the Company's
directors and in accordance with procedures adopted by the directors.

PORTFOLIO TRANSACTIONS

The Company has no obligation to deal with any dealer or group of
dealers in the execution of transactions in portfolio securities. Subject to
policies established by the Company's Board of Directors, Wells Fargo Bank is
responsible for the Fund's portfolio decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Company to obtain the
best results taking into account the dealer's general execution and operational
facilities, the type of transaction involved and other factors such as the
dealer's risk in positioning the securities involved. While Wells Fargo Bank
generally seeks reasonably competitive spreads or commissions, the Fund will
not necessarily be paying the lowest spread or commission available.

Purchases and sales of securities will usually be principal
transactions. Portfolio securities normally will be purchased or sold from or
to dealers serving as market makers for the securities at a net price. The Fund
will also purchase portfolio securities in underwritten offerings and may
purchase securities directly from the issuer. The cost of executing the Fund's
portfolio securities transactions will consist primarily of dealer spreads and
underwriting commissions. Under the Act, persons affiliated with the Company
are prohibited from dealing with the Company as a principal in the purchase and
sale of securities unless an exemptive order allowing such transactions is
obtained from the Commission or an exemption is otherwise available. The Fund
may purchase securities from underwriting syndicates of which Stephens or Wells
Fargo Bank is a member under certain conditions in accordance with the
provisions of a rule adopted under the Act and in compliance with procedures
adopted by the Board of Directors.

19
<PAGE> 405
Wells Fargo Bank, as the Investment Adviser of the Fund, may, in
circumstances in which two or more brokers are in a position to offer
comparable results for a Fund portfolio transaction, give preference to a
broker that has provided statistical or other research services to Wells Fargo
Bank. By allocating transactions in this manner, Wells Fargo Bank is able to
supplement its research and analysis with the views and information of
securities firms. Information so received will be in addition to, and not in
lieu of, the services required to be performed by Wells Fargo Bank under the
Advisory Contract, and the expenses of Wells Fargo Bank will not necessarily be
reduced as a result of the receipt of this supplemental research information.
Furthermore, research services furnished by dealers through which Wells Fargo
Bank places securities transactions for the Fund may be used by Wells Fargo
Bank in servicing its other accounts, and not all of these services may be used
by Wells Fargo Bank in connection with advising the Fund.

Brokerage Commissions. For the year ended December 31, 1995, the
Fund did not pay any brokerage commissions.

Securities of Regular Broker Dealers. On December 31, 1995, the
Fund did not own any securities of its "regular brokers or dealers," as defined
in the 1940 Act, or their parents.

Portfolio Turnover. The portfolio turnover rate is not a limiting
factor when Wells Fargo Bank deems portfolio changes appropriate.

FEDERAL INCOME TAXES

The Prospectus describes generally the tax treatment of
distributions by the Fund. This section of the SAI includes additional
information concerning federal income taxes.

Qualification as a "regulated investment company" under the Code
requires, among other things, that (a) at least 90% of the Fund's annual gross
income be derived from interest, payments with respect to securities loans,
dividends and gains from the sale or other disposition of securities or options
thereon; (b) the Fund derives less than 30% of its gross income from gains from
the sale or other disposition of securities or options thereon held for less
than three months; and (c) the Fund diversifies its holdings so that, at the
end of each quarter of the taxable year, (i) at least 50% of the market value
of the Fund's assets is represented by cash, government securities and other
securities limited in respect of any one issuer to an amount not greater than
5% of the Fund's assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in
the securities of any one issuer (other than U.S. Government securities and the
securities of other regulated investment companies), or of two or more issuers
which the Fund controls and which are determined to be engaged in the same or
similar trades or businesses or related trades or businesses. As a regulated
investment company, the Fund will not be subject to federal income tax on its
net investment income and net capital gains distributed to its shareholders,
provided that it distributes to its shareholders at least 90% of the sum of its
net investment income and net tax-exempt income earned in each year.

20
<PAGE> 406

A 4% nondeductible excise tax will be imposed on the Fund to the
extent it does not meet certain minimum distribution requirements by the end of
each calendar year. This excise tax will not apply to tax-exempt income of the
Fund. The Fund will either actually or be deemed to distribute substantially
all of its net investment income and net capital gains by the end of each
calendar year and, thus, expects not to be subject to the excise tax.

Gains or losses on sales of portfolio securities by the Fund will
generally be long-term capital gains or losses if the securities have been held
by it for more than one year, except in certain cases including where the Funds
acquires a put or grants a call thereon. Other gains or losses on the sale of
securities will be short-term capital gains or losses. To the extent that the
Fund recognizes long-term capital gains, such gains will be distributed at
least annually. Such distributions will be taxable to shareholders as long-term
capital gains, regardless of how long a shareholder has held Fund shares. Such
distributions will be designated as capital gain distributions in a written
notice mailed by the Fund to shareholders not later than 60 days after the
close of the Fund's taxable year.

If a shareholder receives designated capital gain distributions
(to be treated by the shareholder as a long-term capital gain) with respect to
any Fund share and such Fund share is held for six months or less, then (unless
otherwise disallowed) any loss on the sale or exchange of that Fund share will
be treated as a long-term capital loss to the extent of the designated capital
gain distributions. In addition, any loss realized by a shareholder upon the
sale or redemption of Fund shares held less than six months is disallowed to
the extent of any tax-exempt interest dividends received by the shareholder
thereon. These rules shall not apply, however, to losses incurred under a
periodic redemption plan.

If an option granted by the Fund lapses or is terminated through a
closing transaction, such as a repurchase by the Fund of the option from its
holder, the Fund will realize a short-term capital gain or loss, depending on
whether the premium income is greater or less than the amount paid by the Fund
in the closing transaction. Some realized capital losses may be deferred if
they result from a position that is part of a tax "straddle." If securities are
sold by the 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 the Fund pursuant to the exercise of a put option granted by
it, the Fund will subtract the premium received from its cost basis in the
securities purchased. In addition, the amount of any gain or loss realized by
the Fund on closing out a futures contract will generally result in a realized
capital gain or loss for tax purposes. Futures contracts held at the end of
each calendar year will be required to be "marked-to-market" for federal income
tax purposes. In this regard, they will be deemed to have been sold at market
value pursuant to Section 1256 of the Code. Sixty percent (60%) of any net
gain or loss recognized on these deemed sales and sixty percent (60%) of any
net realized gain or loss from any actual sales, will be treated as long-term
capital gain or loss, and the remainder will be treated as short-term capital
gain or loss. Transactions that qualify as designated hedges are excepted from
the mark to market rule and the "60%/40%" rule.

21
<PAGE> 407

As of the printing of this SAI, the maximum individual tax rate
applicable to ordinary income is 39.60% (marginal rates may be higher for some
individuals due to phase out of exemptions and elimination of deductions), the
maximum individual rate applicable to net realized capital gains is 28.00% and
the maximum corporate tax rate applicable to ordinary income and net realized
capital gains is 35.00% (however, to eliminate the benefit of lower marginal
corporate income tax rates, corporations which have taxable income in excess of
$100,000 for a taxable year will be required to pay an additional amount of
income tax of up to $11,750 and corporations which have taxable income in
excess of $15,000,000 for a taxable year will be required to pay an additional
amount of tax of up to $100,000).

If a shareholder exchanges or otherwise disposes of shares of the
Fund within 90 days of having acquired such shares, and if, as a result of
having acquired those shares, the shareholder subsequently pays a reduced sales
charge for shares of the Fund, or of a different fund, the sales charge
previously incurred acquiring the Fund's shares shall not be taken into account
(to the extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of the Fund will be disallowed to the extent that substantially
identical shares are reacquired within the 61-day period beginning 30 days
before and ending 30 days after the shares are disposed of.

If, in the opinion of the Fund, ownership of its shares has or may
become concentrated to an extent that could cause the Fund to be deemed a
personal holding company within the meaning of the Code, the Fund may require
the redemption of shares or reject any order for the purchase of shares in an
effort to prevent such concentration.

Although dividends will be declared daily based on the Fund's
daily earnings, for federal income tax purposes, the Fund's earnings and
profits will be determined at the end of each taxable year and will be
allocated pro rata over the entire year. For federal income tax purposes, only
amounts paid out of earnings and profits will qualify as dividends. Thus, if
during a taxable year the Fund's declared dividends (as declared daily
throughout the year) exceed the Fund's net income (as determined at the end of
the year), only that portion of the year's distributions which equals the
year's earnings and profits will be deemed to have constituted a dividend. It
is expected that the Fund's net income, on an annual basis, will equal the
dividends declared during the year.

Foreign Shareholders. Under the Code, distributions of net
investment income by the Fund to a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation, or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or a lower treaty rate). Withholding will not apply if a
dividend paid by the Fund to a foreign shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens, U.S. residents or domestic
corporations will apply. Distributions of net long-term capital gains are not
subject to tax withholding, but in the case of a foreign shareholder who is a
nonresident alien individual,

22
<PAGE> 408

such distributions ordinarily will be subject to U.S. withholding tax at a rate
of 30% if the individual is physically present in the U.S. for more than 182
days during the taxable year.

Other Matters. Investors should be aware that the investments to
be made by the Fund may involve sophisticated tax rules such as the original
issue discount and mark to market rules that would result in income or gain
recognition by the Fund without corresponding current cash receipts. Although
the Fund will seek to avoid significant noncash income, such noncash income
could be recognized by the Fund, in which case the Fund may distribute cash
derived from other sources in order to meet the minimum distribution
requirements described above.

Special Tax-Exempt Income Considerations.

The Fund intends that at least 50% of the value of its total
assets at the close of each quarter of its taxable year will consist of
obligations the interest on which is exempt from federal income tax, so that it
will qualify under the Code to pay "exempt-interest dividends." The portion of
total dividends paid by the Fund with respect to any taxable year that
constitutes exempt-interest dividends will be the same for all shareholders
receiving dividends during such year. The exemption of interest income derived
from investments in tax-exempt obligations for federal income tax purposes may
not result in a similar exemption under the laws of a particular state or local
taxing authority. Not later than 60 days after the close of its taxable year,
the Fund will notify each shareholder of the portion of the dividends paid with
respect to such taxable year which constitutes exempt-interest dividends. The
aggregate amount of dividends so designated cannot exceed the excess of the
amount of interest excludable from gross income under Section 103 of the Code
received by the Fund during the taxable year over any amounts disallowed as
deductions under Sections 265 and 171(a)(2) of the Code. Finally, interest on
indebtedness and other expenses incurred by a shareholder to purchase or carry
shares of the Fund will not be deductible for federal income tax purposes to
the extent the shareholder receives exempt-interest dividends during his or her
taxable year. Exempt-interest dividends will be tax- exempt for federal income
tax purposes.

23
<PAGE> 409

in the corporate shareholder's "adjusted current earnings" as part of its AMT
calculation, and may also affect its federal "environmental tax" liability. As
of the printing of this SAI, individuals are subject to an AMT at a maximum
rate of 28% and corporations at a maximum rate of 20%. Shareholders with
questions or concerns about AMT should consult their tax advisors.

Other Matters. Shares of the Fund would generally not be
suitable for tax-exempt institutions or for retirement plans qualified under
Section 401 of the Code, H.R. 10 plans and IRAs since such plans and accounts
are generally tax-exempt and, therefore, would not benefit from the exempt
status of dividends from such Fund. Such dividends would be ultimately taxable
to the beneficiaries when distributed to them.

CAPITAL STOCK

The Fund is comprised of two classes of shares, Class A Shares and
Class D Shares. 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, on any matter submitted to a vote of shareholders, all shares
then entitled to vote will be voted separately by Fund or portfolio unless
otherwise required by the Act, in which case all shares will be voted in the
aggregate. For example, a change in the Fund's fundamental investment policies
would be voted upon only by shareholders of the Fund and not shareholders of
the Company's other investment portfolios. Additionally, approval of the
advisory contract is a matter to be determined separately by portfolio.
Approval by the shareholders of one portfolio is effective as to that portfolio
whether or not sufficient votes are received from the shareholders of the other
portfolios to approve the proposal as to those portfolios. As used in the
Prospectus and in this Statement of Additional Information, the term
"majority", when referring to approvals to be obtained from shareholders of a
class of shares of the Fund means the vote of the lesser of (i) 67% of the
shares of such class represented at a meeting if the holders of more than 50%
of the outstanding shares of such class are present in person or by proxy, or
(ii) more than 50% of the outstanding shares of such class. The term
"majority", when referring to the approvals to be obtained from shareholders of
the Company as a whole means the vote of the lesser of (i) 67% of the Company's
shares represented at a meeting if the holders of more than 50% of the
Company's outstanding shares are present in person or by proxy, or (ii) more
than 50% of the Company's outstanding shares. Shareholders are entitled to one
vote for each full share held and fractional votes for fractional shares held.
The Company may dispense with annual meetings of shareholders in any year in
which it is not required to elect directors under the Act.

Each share of a class of shares represents an equal proportional
interest in the Fund or portfolio with each other share of the same class and
is entitled to such dividends and distributions out of the income earned on the
assets belonging to the Fund as are declared in the discretion of the
Directors. In the event of the liquidation or dissolution of the Company,
shareholders of the Fund are entitled to receive the assets attributable to the
Fund that are available

24
<PAGE> 410
for distribution, and a distribution of any general assets not attributable to
a particular portfolio that are available for distribution in such manner and
on such basis as the Directors in their sole discretion may determine.

Shareholders are not entitled to any preemptive rights. All
shares, when issued, will be fully paid and non-assessable by the Company.

As of February 29, 1996, the shareholders identified below were
known by the Company to own the indicated percentage of the outstanding Class A
Shares and Class D Shares of the Fund in the following capacity:

25
<PAGE> 411

<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE
OF SHAREHOLDER OF CLASS CAPACITY
---------------- ---------- --------
<S> <C> <C>
CLASS A SHARES

Merrill Lynch Pierce 11.79% Record
Fenner & Smith Inc.
Trade House Account
P.O. Box 30561
New Brunswick, NJ 08989

Stephens Inc. 8.26% Record
for the Exclusive
Benefit of Customers
P.O. Box 34127
Little Rock, AR 72203

CLASS D SHARES

Merrill Lynch Pierce 39.73% Record
Fenner & Smith Inc.
Trade House Account
Attn: Book Entry
P.O. Box 30561
New Brunswick, NJ 08989

Stephens Inc. 5.88% Record
for the Exclusive
Benefit of Customers
P.O. Box 34127
Little Rock, AR 72203

NFSC FBO 5.01% Record
Dr. Lawrence E. Sirna
Yolanda V. Sirna
2228 Jwedish Dr. Apt. 16
Clearwater, FL 34623
</TABLE>

OTHER

26
<PAGE> 412

OTHER

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP has been selected as the independent
auditors for the Company. KPMG Peat Marwick LLP provides audit services, tax
return preparation and assistance and consultation in connection with review of
certain Commission filings. KPMG Peat Marwick LLP's address is Three
Embarcadero Center, San Francisco, California 94111.

FINANCIAL INFORMATION

The portfolio of investments, audited financial statements and
independent auditors' report for the Fund for the year ended December 31, 1995
are hereby incorporated into this SAI by reference to Amendment No. 8 to the
Registration Statement of Master Investment Trust (SEC File No. 811-6415), as
filed on Form N-1A with the SEC on March 21, 1996. The portfolio of
investments, audited financial statements and independent auditors' report for
the Fund are attached to all SAIs delivered to shareholders or prospective
shareholders.

27
<PAGE> 413
APPENDIX

The following is a description of the ratings given by Moody's and
S&P to state and municipal bonds, notes and commercial paper.

Municipal Bonds

Moody's: The two highest ratings for state and municipal bonds are
"Aaa" and "Aa." Bonds rated "Aaa" are judged to be of the "best quality" and
carry the smallest amount of investment risk. Bonds rated "Aa" are of "high
quality by all standards," but margins of protection or other elements make
long-term risks appear somewhat greater than "Aaa" rated bonds. Moody's applies
numerical modifiers: 1, 2 and 3 in rating category "Aa" in its rating system.
The modifier 1 indicates that the security ranks in the higher end of its
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end.

S&P: The two highest ratings for state and municipal bonds are
"AAA" and "AA." Bonds rated "AAA" have the highest ratings assigned by S&P and
have an extremely strong capacity to pay interest and repay principal. Bonds
rated "AA" have a "very strong capacity to pay interest and repay principal"
and differ "from the highest rated issued only in small degree." The rating
"AA" may be modified by the addition of a plus or minus sign to show relative
standing within the category.

Municipal Notes

Moody's: The highest ratings for state and municipal notes are
"MIG 1" and "MIG 2" (or "VMIG 1" and "VMIG 2" in the case of an issue having a
variable rate demand feature). Notes rated "MIG 1" or "VMIG 1" are judged to be
of the "best quality." Notes rated "MIG 2" or "VMIG 2" are of "high quality,"
with margins of protections "ample although not as large as in the preceding
group."

Municipal Commercial Paper

Moody's: The highest rating for state and municipal commercial
paper is "P-1" (Prime-1). Issuers rated "P- 1" have a "superior capacity for
repayment of short-term promissory obligations." Issuers rated "P-2" (Prime-2)
"have a strong capacity for repayment of short-term promissory obligations,"
but earnings trends, while sound, will be subject to more variation.

28
<PAGE> 414
S&P: The "A-1" rating for state and municipal commercial paper indicates that
the "degree of safety regarding timely payment is either overwhelming or very
strong." Commercial paper with "overwhelming safety characteristics" will be
rated "A-1+." Commercial paper with a strong capacity for timely payments on
issues will be rated "A-2."

29
<PAGE> 415
OVERLAND EXPRESS FUNDS, INC.

Telephone: 1-800-552-9612

STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996

OVERLAND SWEEP FUND

-------------------

Overland Express Funds, Inc. (the "Company") is an open-end,
series investment company. This Statement of Additional Information ("SAI")
contains information about one of the Company's investment portfolios -- the
Overland Sweep Fund (the "Fund"). The investment objective of the Fund is
described in the Prospectus. See "Investment Objective and Policies." The Fund
seeks to achieve its investment objective by investing all of its assets in the
Cash Investment Trust Master Portfolio (the "CIT Master Portfolio") a
professionally managed diversified portfolio offered by Master Investment Trust
(the "Trust"), which has the same investment objective as the Fund. The Fund
may withdraw its investment in the CIT Master Portfolio at any time, if the
Board of Directors of the Company determines that such action is in the best
interests of the Fund and its shareholders. Upon such withdrawal, the Company's
Board would consider alternative investments, including investing all of the
Fund's assets in another investment company with the same investment objective
as the Fund or hiring an investment adviser to manage the Fund's assets in
accordance with the investment policies and restrictions described in the
Prospectus and below with respect to the Trust.

This SAI is not a prospectus and should be read in conjunction
with the Fund's Prospectus, dated May 1, 1996. All terms used in this SAI that
are defined in the Prospectus will have the meanings assigned in the
Prospectus. A copy of the Prospectus may be obtained without charge by writing
Stephens Inc., the Company's sponsor, administrator and distributor, at 111
Center Street, Little Rock, Arkansas 72201, or calling the Transfer Agent at
the telephone number indicated above.

-------------------

1
<PAGE> 416
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Permitted Investment Activities . . . . . . . . . . . . . . . . . . . . . 5
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Calculation of Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>

2
<PAGE> 417

INVESTMENT RESTRICTIONS

The Fund and the CIT Master Portfolio are subject to the following
investment restrictions, all of which are fundamental policies; that is, they
may not be changed without approval by a vote of the holders of a majority of
the Fund's outstanding voting securities, as described under "Capital Stock."

Neither the Fund nor the CIT Master Portfolio may:

(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 the Fund's or the CIT Master
Portfolio's investments in that industry would exceed 25% of the current value
of its respective total assets, provided that there is no limitation with
respect to investments in (i) obligations of the United States Government, its
agencies or instrumentalities, and (ii) obligations of domestic banks (for the
purpose of this restriction, domestic bank obligations do not include
obligations of U.S. branches of foreign banks or obligations of foreign
branches of U.S. banks), and provided further that this investment restriction
does not affect the Fund's ability to invest a portion or all of its assets in
the CIT Master Portfolio;

(2) purchase or sell real estate or real estate limited
partnership interests (other than money market securities secured by real
estate or interests therein or securities issued by companies that invest in
real estate or interests therein), commodities or commodity contracts;

(3) purchase securities on margin (except for short-term
credits necessary for the clearance of transactions) or make short sales of
securities;

(4) underwrite securities of other issuers, except to the
extent that the purchase of permitted investments directly from the issuer
thereof or from an underwriter for an issuer and the later disposition of such
securities in accordance with the Fund's or the CIT Master Portfolio's
investment program (including the Fund's investment in the Trust) may be deemed
to be an underwriting;

(5) make investments for the purpose of exercising control or
management, provided that this restriction does not affect the Fund's ability
to invest a portion or all of its assets in the CIT Master Portfolio;

(6) issue senior securities, except that the Fund and the CIT
Master Portfolio may borrow from banks up to 10% of the current value of their
respective net assets for temporary purposes only in order to meet redemptions,
and these borrowings may be secured by the pledge of up to 10% of the current
value of their respective net assets (but investments may not be purchased
while any such borrowing in excess of 5% of their respective net assets
exists);

3
<PAGE> 418
(7) write, purchase or sell puts, calls, warrants or options or
any combination thereof, except that the Fund and the CIT Master Portfolio may
purchase securities with put rights in order to maintain liquidity; or

Whenever the Fund is requested to vote on a change in a
fundamental investment restriction of the CIT Master Portfolio, the Fund will
hold a meeting of its shareholders and will cast its vote as instructed by such
shareholders.

The Fund and the CIT Master Portfolio are subject to the following
non-fundamental policies:

Neither the Fund nor the CIT Master Portfolio may:

(1) purchase or retain securities of any issuer if the
officers, directors or trustees of the Company, the CIT Master Portfolio or the
Investment Adviser owning beneficially more than one-half of one percent (0.5%)
of the securities of the issuer together owned beneficially more than 5% of
such securities;

(2) purchase interests, leases, or limited partnership
interests in oil, gas, or other mineral exploration or development programs;

(3) invest in securities of issuers who, with their
predecessors, have been in existence less than three years, unless the
securities are fully guaranteed or insured by the U.S. Government, a state,
commonwealth, possession, territory, the District of Columbia or by an entity
in existence at least three years, or the securities are backed by the assets
and revenues of any of the foregoing if, by reason thereof, the value of its
aggregate investments in such securities will exceed 5% of its total assets,
provided that this restriction does not affect the Fund's ability to invest a
portion or all of its assets in the CIT Master Portfolio; or

(4) invest more than 10% of the current value of its net assets
in repurchase agreements maturing in more than seven days, fixed time deposits
that are subject to withdrawal penalties and that have maturities of more than
seven days, restricted securities (which are securities that must be registered
under the Securities Act of 1933 before they may be offered or sold to the
public), and illiquid securities, provided that this restriction does not
affect the Fund's ability to invest a portion or all of its assets in the CIT
Master Portfolio.

As provided in Rule 2a-7 under the Act, the CIT Master Portfolio
may only purchase "Eligible Securities" (as defined in Rule 2a-7) and only if,
immediately after such purchase, the CIT Master Portfolio would have no more
than 5% of its total assets in "First Tier Securities" (as

4
<PAGE> 419
defined in Rule 2a-7) of any one issuer, excluding government securities and
except as otherwise permitted for temporary purposes and for certain guarantees
and unconditional puts; the CIT Master Portfolio would own no more than 10% of
the voting securities of any one issuer; the CIT Master Portfolio would have no
more than 5% of its total assets in "Second Tier Securities" (as defined in
Rule 2a-7); and the CIT Master Portfolio would have no more than the greater of
$1 million or 1% of its total assets in Second Tier Securities of any one
issuer.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

Foreign Obligations. The CIT Master Portfolio may invest a portion
of its assets (no more than 5%) in obligations of foreign branches of U.S.
banks or U.S. branches of foreign banks that are denominated in and pay
interest in U.S. dollars. Investments in foreign obligations involve certain
considerations that are not typically associated with investing in domestic
obligations. There may be less publicly available information about a foreign
issuer than about a domestic issuer. Foreign issuers also are not subject to
the same accounting, auditing and financial reporting standards or governmental
supervision as domestic issuers. In addition, with respect to certain foreign
countries, taxes may be withheld at the source under foreign income tax laws,
and there is a possibility of expropriation or confiscatory taxation, political
or social instability or diplomatic developments that could adversely affect
investments in, the liquidity of, and the ability to enforce contractual
obligations with respect to, securities of issuers located in those countries.

Unrated Investments. The CIT Master Portfolio may purchase
instruments that are not rated if, in the opinion of Wells Fargo Bank as
investment adviser, such obligations are of comparable quality to other
high-quality investments that are permitted to be purchased by the CIT Master
Portfolio. After purchase by the CIT Master Portfolio, a security may cease to
be rated or its rating may be reduced below the minimum required for purchase
by the CIT Master Portfolio. Neither event requires an immediate sale of such
security by the CIT Master Portfolio. To the extent the ratings given by
Moody's Investors Service ("Moody's") or Standard and Poor's Rating Group
("S&P") may change as a result of changes in such organizations or their rating
systems, the CIT Master Portfolio will attempt to use comparable ratings as
standards for investments in accordance with the investment policies contained
in the Prospectus and in this SAI. The ratings of Moody's and S&P are more
fully described in the Appendix to this SAI.

MANAGEMENT

The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "The Fund, the Master
Portfolio and Management." The principal occupations during the past five years
of the Directors and principal executive Officer of the Company are listed
below. The address of each, unless otherwise indicated, is 111 Center Street,
Little Rock, Arkansas

5
<PAGE> 420

72201. Directors deemed to be "interested persons" of the Company for purposes
of the 1940 Act are indicated by an asterisk.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- ---------------------- -------- --------------------
<S> <C> <C>
Jack S. Euphrat, 73 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.

*R. Greg Feltus, 44 Director, Senior Vice President
Chairman and of Stephens ; Manager
President of Financial Services
Group; President of
Stephens
Insurance Services
Inc.; Senior Vice
President of Stephens
Sports Management
Inc.; and President of
Investor Brokerage
Insurance Inc.

Thomas S. Goho, 53 Director T.B. Rose Faculty
321 Beechcliff Court Fellow-Business,
Winston-Salem, NC 27104 Wake Forest University
Calloway School, of
Business and
Accountancy;Associate Professor of
Finance of the School of Business and
Accounting at Wake Forest University
since 1983.

*Zoe Ann Hines, 46 Director Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource
Management.

*W. Rodney Hughes, 69 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901
</TABLE>

6
<PAGE> 421

<TABLE>
<S> <C> <C>
Robert M. Joses, 77 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901

COMPENSATION TABLE
For the Year Ended December 31, 1995

*R. Greg Feltus 0 0
Director

Thomas S. Goho 10,188 39,750
Director

*Zoe Ann Hines 0 0
Director

*W. Rodney Hughes 9,438 37,000
Director
</TABLE>

7
<PAGE> 422

COMPENSATION TABLE (Continued)
For the Year Ended December 31, 1995

*J. Tucker Morse 8,313 33,250
Director
</TABLE>

Directors of the Company are compensated annually by the Company
and by all the registrants in the fund complex for their services as indicated
above and also are reimbursed for all out-of-pocket expenses relating to
attendance at board meetings. Each of the Directors and Officers of the Company
serves in the identical capacity as Officers and Directors of Stagecoach Funds,
Inc. and MasterWorks Funds Inc. (formerly, Stagecoach Inc.), and as Trustees
and/or Officer of Stagecoach Trust, Master Investment Portfolio, Life & Annuity
Trust, Master Investment Trust and Managed Series Investment Trust, each of
which is a registered open-end management investment company and each of which
is considered to be in the same "fund complex," as such term is defined in Form
N-1A under the 1940 Act, as the Company. The Directors are compensated by
other Companies and Trusts within the fund complex for their services as
Directors/Trustees to such Companies and Trusts. Currently the Directors do not
receive any retirement benefits or deferred compensation from the Company or
any other member of the fund complex.

As of the date of this SAI, Directors and officers of the Company
as a group beneficially owned less than 1% of the outstanding shares of the
Company.

Investment Adviser. The Fund has not engaged an investment
adviser. The Trust has engaged Wells Fargo Bank to advise the CIT Master
Portfolio. The Advisory Contract provides that Wells Fargo Bank shall furnish
to the CIT Master Portfolio investment guidance and policy direction in
connection with the daily portfolio management of the CIT Master Portfolio.
Pursuant to the Advisory Contract, Wells Fargo Bank furnishes to the Board of
Trustees of the Trust periodic reports on the investment strategy and
performance of the CIT Master Portfolio.

Wells Fargo Bank has agreed to provide to the CIT Master
Portfolio, among other things, money market security and fixed-income research,
analysis and statistical and economic data and information concerning interest
rate and security market trends, portfolio composition, credit conditions and
average maturities of the investments of the CIT Master Portfolio.

The Advisory Contract will continue in effect for more than two
years provided the continuance is approved annually (i) by the holders of a
majority of the CIT Master Portfolio's

8
<PAGE> 423
outstanding voting securities or by the Board of Trustees of the Trust and (ii)
by a majority of the Trustees of the Trust who are not parties to the Advisory
Contract or "interested persons" (as defined in the Act) of any such party.
The Advisory Contract may be terminated on 60 days' written notice by either
party and will terminate automatically if assigned.

For the years ended December 31, 1993, 1994 and 1995, the CIT
Master Portfolio paid to Wells Fargo Bank the advisory fees indicated below and
Wells Fargo Bank waived the indicated amounts:

[/R]
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
FEES FEES FEES FEES FEES FEES
PAID WAIVED PAID WAIVED PAID WAIVED
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$861,200 -0- $1,426,685 -0- $1,902,572 $255,082
</TABLE>
[/R]

Administrator and Distributor. The Company has retained Stephens
as administrator and distributor on behalf of the Fund. In addition, the Trust
has retained Stephens as administrator on behalf of the CIT Master Portfolio.
Under the respective Administration Agreements with the Company and the Trust,
Stephens, in connection therewith, furnishes the Fund and the CIT Master
Portfolio with office facilities, together with those ordinary clerical and
bookkeeping services that are not being furnished by Wells Fargo Bank. Stephens
also has entered into a Distribution Agreement with the Company pursuant to
which it has the responsibility of distributing shares of the Fund.

For the years ended December 31, 1993, 1994 and 1995, the Fund and
the CIT Master Portfolio paid administrative fees to Stephens as follows:

<TABLE>
<CAPTION>
FUND 1993 1994 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Overland Sweep Fund $86,086 $142,613 $215,624
CIT Master Portfolio $86,120 $142,669 $215,765
</TABLE>

Shareholder Servicing Agent. As described in the Prospectus, Wells
Fargo Bank serves as shareholder servicing agent for the Fund. For the year
ended December 31, 1995, the Fund paid no shareholder servicing fees to Wells
Fargo Bank.

Custodian and Transfer and Dividend Disbursing Agent. Wells
Fargo Bank has been retained to act as custodian and transfer and dividend
disbursing agent for the Fund and the CIT Master Portfolio. The custodian,
among other things, maintains a custody account or accounts in the name of the
Fund and the CIT Master Portfolio; receives and delivers all assets for the
Fund and the CIT Master Portfolio upon purchase and upon sale or maturity;
collects and receives all income and other payments and distributions on
account of the assets of the Fund and the CIT Master Portfolio and pays all
expenses of the Fund and the CIT Master Portfolio. For its services as
Custodian, Wells Fargo Bank receives an asset-based fee and

9
<PAGE> 424
transaction charges; and for its services as transfer and dividend disbursing
agent, it receives a base fee and per- account fees.

For the year ended December 31, 1995, the Fund did not pay any
custody fees. For the same period, the CIT Master Portfolio paid $149,559 to
Wells Fargo Bank for its services as custodian. For the same period, the Fund
paid $3,018,737 to Wells Fargo Bank for transfer and dividend disbursing agency
services and the CIT Master Portfolio did not pay any such fees.

DISTRIBUTION PLAN

As indicated in the Prospectus, the Fund has adopted a Plan under
Section 12(b) of the Act and Rule 12b-1 thereunder. The Plan was adopted by the
Company's Board of Directors on August 14, 1991, including a majority of the
Directors who were not "interested persons" (as defined in the 1940 Act) of the
Fund and who had no direct or indirect financial interest in the operation of
the Plan or in any agreement related to the Plan (the "Qualified Directors").

The Plan will continue in effect from year to year if such
continuance is approved by a majority vote of both the Directors of the Company
and the Qualified Directors. Agreements related to the Plan must also be
approved by such vote of the Directors and the Qualified Directors. Such
agreements 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 Fund. The Plan may not be amended to
increase materially the amounts payable thereunder without the approval of a
majority of the outstanding voting securities of the Fund, and no material
amendment to the Plan may be made except by a majority of both the Directors of
the Company and the Qualified Directors.

10
<PAGE> 425
The Plan requires that the Treasurer of the Fund shall provide to
the Directors, and the Directors 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 Directors who are not
"interested persons" of the Company be made by such disinterested Directors.

For the year ended December 31, 1995, the Fund's distributor
received the following amount of 12b-1 fees for the specified purposes set
forth below under the Fund's Plan.

PRINTING & MAILING MARKETING COMPENSATION TO
FUND TOTAL PROSPECTUS BROCHURES UNDERWRITERS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Overland Sweep Fund $4,743,731 $9,671 $20,777 $4,713,283
</TABLE>

For the year ended December 31, 1995, WFSI and its registered
representatives did not receive any compensation under the Plan.

CALCULATION OF YIELD

As indicated in the Prospectus, the Fund may advertise certain
yield information. Current yield for the Fund is calculated based on the net
changes, exclusive of capital changes, over a seven-day period, in the value of
a hypothetical pre-existing account having a balance of one share at the
beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return, and then multiplying the base period return by (365/7) with the
resulting yield figure carried to at least the nearest hundredth of one
percent. The yield for the Fund for the seven-day period ended December 31,
1995 was 4.50%.

Effective yield for the Fund is calculated by determining the net
change exclusive of capital changes in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
compounding the base period return by adding one, raising the sum to a power
equal to 365 divided by seven, and subtracting one from the result. The
effective yield for the Fund for the seven-day period ended December 31, 1995
was 4.61%.

The Fund's yield will fluctuate from time to time, unlike bank
deposits or other investments that pay a fixed yield for a stated period of
time, and does not provide a basis for determining future yields since it is
based on historical data. Yield is a function of portfolio

11
<PAGE> 426
quality, composition, maturity and market conditions as well as the expenses
incurred by or allocated to the Fund and the CIT Master Portfolio.

Yield information for the Fund may be useful in reviewing the
performance of the Fund and for providing a basis for comparison with
investment alternatives. The Fund's yield, however, may not be comparable to
the yields from investment alternatives because of differences in the foregoing
variables and differences in the methods used to value portfolio securities,
compute expenses and calculate yield.

In addition to the above performance information, the Fund may
advertise average annual total return information. Average annual total return
refers to the average annual compounded rates of return over one-, five-, and
ten-year periods (or the life of the Fund, which periods are stated in the
advertisement), and is measured by comparing the value of an investment in the
Fund at the beginning of the relevant period to the redemption value at the end
of the period and annualizing the result, assuming that all Fund dividends and
capital gains distributions are reinvested.

From time to time and only to the extent the comparison is
appropriate for the Fund, the Company may quote the Fund's performance or
price-earning ratio in advertising and other types of literature as compared to
the performance of the Lehman Brothers Municipal Bond Index, 1-Year Treasury
Bill Rate, the S&P Index, the Dow Jones Industrial Average, the Lehman Brothers
20+ Treasury Index, the Lehman Brothers 5-7 Year Treasury Index, Donoghue's
Money Fund Averages, Real Estate Investment Averages (as reported by the
National Association of Real Estate Investment Trusts), Gold Investment
Averages (provided by the World Gold Council), Bank Averages (which is
calculated from figures supplied by the U.S. League of Savings Institutions
based on effective annual rates of interest on both passbook and certificate
accounts), average annualized certificate of deposit rates (from the Federal
Reserve G-13 Statistical Releases or the Bank Rate Monitor), the Salomon One
Year Treasury Benchmark Index, the Consumer Price Index (as published by the
U.S. Bureau of Labor Statistics), Ten Year U.S. Government Bond Average, S&P's
Corporate Bond Yield Averages, Schabacter Investment Management Indices,
Salomon Brothers High Grade Bond Index, Lehman Brothers Long-Term High Quality
Government/Corporate Bond Index, other managed or unmanaged indices or
performance data of bonds, stocks or government securities (including data
provided by Ibbotson Associates), or by other services, companies, publications
or persons who monitor mutual funds on overall performance or other criteria.
The S&P Index and the Dow Jones Industrial Average are unmanaged indices of
selected common stock prices. The Fund's performance also may be compared to
those of other mutual funds having similar objectives. This comparative
performance could be expressed as a ranking prepared by Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc., Bloomberg Financial Markets
or Morningstar, Inc., independent services which monitor the performance of
mutual funds. The Fund's performance will be calculated by relating net asset
value per share at the beginning of a stated period to the net asset value of
the investment, assuming reinvestment of all gains distributions and dividends
paid, at the end of the period. Any such comparisons may be useful to investors
who wish to compare the Fund's past performance with that of its competitors.
Of course, past performance cannot be a guarantee of future results. The
Company also may include, from time to time, a reference to

12
<PAGE> 427
certain marketing approaches of the Distributor, including, for example, a
reference to a potential shareholder being contacted by a selected broker or
dealer. General mutual fund statistics provided by the Investment Company
Institute may also be used.

The Company also may use the following information in
advertisements and other types of literature, only to the extent the
information is appropriate for the Fund: (i) the Consumer Price Index may be
used to assess the real rate of return from an investment in the Fund; (ii)
other government statistics, including, but not limited to, The Survey of
Current Business, may be used to illustrate investment attributes of the Fund
or the general economic, business, investment, or financial environment in
which the Fund operates; (iii) the effect of tax-deferred compounding on the
investment returns of the Fund, or on returns in general, may be illustrated by
graphs, charts, etc., where such graphs or charts would compare, at various
points in time, the return from an investment in the Fund (or returns in
general) on a tax-deferred basis (assuming reinvestment of capital gains and
dividends and assuming one or more tax rates) with the return on a taxable
basis; and (iv) the sectors or industries in which the Fund invests may be
compared to relevant indices of stocks or surveys (e.g., S&P Industry Surveys)
to evaluate the Fund's historical performance or current or potential value
with respect to the particular industry or sector.

The Company also may discuss in advertising and other types of
literature that the Fund has been assigned a rating by a nationally recognized
statistical rating organization ("NRSRO"), such as S&P or Moody's. Such rating
would assess the creditworthiness of the investments held by the Fund. The
assigned rating would not be a recommendation to purchase, sell or hold the
Fund's shares since the rating would not comment on the market price of the
Fund's shares or the suitability of the Fund for a particular investor. In
addition, the assigned rating would be subject to change, suspension or
withdrawal as a result of changes in, or unavailability of, information
relating to the Fund or its investments. The Company may compare the Fund's
performance with other investments which are assigned ratings by NRSROs. Any
such comparisons may be useful to investors who wish to compare the Fund's past
performance with other rated investments.

The Company also may disclose in sales literature, information and
statements that the Company's investment adviser, Wells Fargo Bank, is listed
in Nelson Publications' ("Nelson's") "Top 20" performance rankings as published
in the 1994 edition of "America's Best Money Managers." The Nelson survey ranks
the performance of money managers in over 30 asset/style categories and is
based on analysis of performance composites and surveys of institutional money

13
<PAGE> 428

managers. The Company may also disclose in advertising and other types of sales
literature the assets and categories of assets under management by the
Company's investment adviser and the total amount of assets under management by
Wells Fargo Investment Management Group ("IMG"). As of December 31, 1995, IMG
had $30.1 billion in assets under management.

The Company may disclose in advertising, statements and other
literature the amount of assets and mutual fund assets managed by Wells Fargo
Bank. As of April 1, 1996, Wells Fargo Bank and its affiliates provided
investment advisory services for approximately $56 billion of assets of
individuals, trusts, estates and institutions and $17 billion of mutual fund
assets.

DETERMINATION OF NET ASSET VALUE

Net asset value per share for the Fund is determined by the
Custodian of the Fund on each day the Fund is open for trading.

As indicated under "Determination of Net Asset Value, Dividends
and Distributions" in the Prospectus, the CIT Master Portfolio uses the
amortized cost method to determine the value of its portfolio securities
pursuant to Rule 2a-7 under the Act. The amortized cost method involves valuing
a security at its cost and amortizing any discount or premium over the period
until maturity, regardless of the impact of fluctuating interest rates on the
market value of the security. While this method provides certainty in
valuation, it may result in periods during which the value, as determined by
amortized cost, is higher or lower than the price that the CIT Master Portfolio
would receive if the security were sold. During these periods the yield to
investors may differ somewhat from that which could be obtained from a similar
fund that uses a method of valuation based upon market prices. Thus, during
periods of declining interest rates, if the use of the amortized cost method
resulted in a lower value of the CIT Master Portfolio's investments on a
particular day, a prospective investor in the CIT Master Portfolio would be
able to obtain a somewhat higher yield than would result from investment in a
fund using solely market values, and existing CIT Master Portfolio investors
would receive correspondingly less income. The converse would apply during
periods of rising interest rates. Since the Fund expects to invest all of its
assets in the CIT Master Portfolio, Fund shareholders can expect that their
investments in the Fund will correspond similarly.

Rule 2a-7 provides that in order to value its portfolio using the
amortized cost method, the CIT Master Portfolio must maintain a dollar-weighted
average portfolio maturity of 90 days or less, purchase securities having
remaining maturities (as defined in Rule 2a-7) of thirteen months or less and
invest only in Eligible Securities determined by the Trust's Board of Trustees
to present minimal credit risks. The maturity of an instrument is generally
deemed to be the period remaining until the date when the principal amount
thereof is due or the date on which the instrument is to be redeemed. However,
Rule 2a-7 provides that the maturity of an instrument may be deemed shorter in
the case of certain instruments, including certain variable and floating rate
instruments subject to demand features. Pursuant to the Rule, the Board is
required to establish procedures designed to stabilize, to the extent
reasonably possible, the CIT Master

14
<PAGE> 429
Portfolio's net asset value. Such procedures include review of the Trust's
portfolio by the Board of Trustees, at such intervals as it may deem
appropriate, to determine whether the CIT Master Portfolio's net asset value
calculated by using available market quotations deviates within 1/2 of 1% of
the value based on amortized cost. The extent of any deviation will be examined
by the Board of Trustees. If such deviation exceeds 1/2 of 1%, the Board will
promptly consider what action, if any, will be initiated. In the event the
Board determines that a deviation exists that may result in material dilution
or other unfair results to investors, the Board will take such corrective
action as it regards as necessary and appropriate, including the sale of
portfolio instruments prior to maturity to realize capital gains or losses or
to shorten average portfolio maturity, withholding dividends or establishing a
net asset value by using available market quotations.

PORTFOLIO TRANSACTIONS

The CIT Master Portfolio has no obligation to deal with any dealer
or group of dealers in the execution of transactions in portfolio securities.
Subject to policies established by the Trust's Board of Trustees, Wells Fargo
Bank is responsible for the CIT Master Portfolio's investment decisions and the
placing of portfolio transactions. In placing orders, it is the policy of the
CIT Master Portfolio to obtain the best results taking into account the
dealer's general execution and operational facilities, the type of transaction
involved and other factors such as the dealer's risk in positioning the
securities involved. While Wells Fargo Bank generally seeks reasonably
competitive spreads or commissions, the CIT Master Portfolio will not
necessarily be paying the lowest spread or commission available.

Purchases and sales of the CIT Master Portfolio's portfolio
securities usually will be principal transactions. Portfolio securities
normally will be purchased or sold from or to dealers serving as market makers
for the securities at a net price. The CIT Master Portfolio also will purchase
portfolio securities in underwritten offerings and may purchase securities
directly from the issuer. Generally, taxable money market securities are traded
on a net basis and do not involve brokerage commissions. The cost of executing
the portfolio transactions will consist primarily of dealer spreads and
underwriting commissions. Under the Act, persons affiliated with the CIT Master
Portfolio are prohibited from dealing with the CIT Master Portfolio as a
principal in the purchase and sale of portfolio securities unless an exemptive
order allowing such transactions is obtained from the Commission or an
exemption is otherwise available. The CIT Master Portfolio may purchase
securities from underwriting syndicates of which Stephens or Wells Fargo Bank
is a member under certain conditions in accordance with the provisions of a
rule adopted under the Act and in compliance with procedures adopted by the
Trust's Board of Trustees.

Wells Fargo Bank, as the Investment Adviser of the CIT Master
Portfolio, may, in circumstances in which two or more dealers are in a position
to offer comparable results for a portfolio transaction, give preference to a
dealer that has provided statistical or other research services to Wells Fargo
Bank. By allocating transactions in this manner, Wells Fargo Bank is able to
supplement its research and analysis with the views and information of
securities firms. Information so received will be in addition to, and not in
lieu of, the services required to be

15
<PAGE> 430
performed by Wells Fargo Bank under the Advisory Contract, and the expenses of
Wells Fargo Bank will not necessarily be reduced as a result of the receipt of
this supplemental research information. Furthermore, research services
furnished by dealers through which Wells Fargo Bank places securities
transactions for the CIT Master Portfolio may be used by Wells Fargo Bank in
servicing its other accounts, and not all of these services may be used by
Wells Fargo Bank in connection with advising the CIT Master Portfolio.

Brokerage Commissions. For the year ended December 31, 1995, the
Fund and the CIT Master Portfolio did not pay brokerage commissions.

Securities of Regular Broker/Dealers. On December 31, 1995, the
CIT Master Portfolio owned securities of its "regular brokers or dealers" or
their parents, as defined in the 1940 Act as follows: $52,415,000 in Goldman
Sachs & Co. Repurchase Agreements.

Portfolio Turnover. Because the investments of the CIT Master
Portfolio consist of securities with relatively short-term maturities, the CIT
Master Portfolio can expect to experience high portfolio turnover. A high
portfolio turnover rate should not adversely affect the CIT Master Portfolio
(or the Fund), however, because portfolio transactions ordinarily will be made
directly with principals on a net basis and, consequently, the CIT Master
Portfolio usually will not incur brokerage expenses. No underwriting or
brokerage commissions or sales load will be incurred by the Fund when investing
in the CIT Master Portfolio.

FEDERAL INCOME TAXES

The Prospectus describes generally the tax treatment of
distributions by the Fund and the CIT Master Portfolio. This section of the SAI
includes additional information concerning federal income taxes.

Qualification as a "regulated investment company" under the Code
requires, among other things, that (a) at least 90% of the Fund's annual gross
income be derived from interest, payments with respect to securities loans,
dividends and gains from the sale or other disposition of securities; (b) the
Fund derive less than 30% of its gross income from gains from the sale or other
disposition of securities held for less than three months; and (c) the Fund
diversify its holdings so that, at the end of each quarter of the taxable year,
(i) at least 50% of the market value of the Fund's assets is represented by
cash, government securities and other securities limited in respect of any one
issuer to an amount not greater than 5% of the Fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
U.S. Government securities or the securities of other regulated investment
companies), or of two or more issuers which the Fund controls and which are
determined to be engaged in the same or similar trades or businesses or related
trades or businesses. For purposes of complying with these qualification
requirements, the Fund will "look-through" to the CIT Master Portfolio's
investments. As a regulated investment company, the Fund will not be subject to
federal income tax on its net

16
<PAGE> 431

investment income and net capital gains, if any, distributed to its
shareholders, provided that it distributes to its shareholders at least 90% of
its net investment income earned in each year.

A 4% nondeductible excise tax will be imposed on the Fund to the
extent it does not meet certain minimum distribution requirements by the end of
each calendar year. The Fund will either actually or be deemed to distribute
all of its net investment income and net capital gains by the end of each
calendar year and, thus, expects not to be subject to the excise tax.

It is expected that the net income of the Fund will be a positive
amount at the time of each determination thereof. If, however, the net income
of the Fund determined at any time is a negative amount (which could occur, for
instance, upon non-payment of interest and/or principal by an issuer of a
security held by the CIT Master Portfolio), the Fund would first offset the
negative amount with respect to each shareholder account from the dividends
declared during the month with respect to each such account. If and to the
extent that such negative amount exceeds such declared dividends at the end of
the month, the Fund will reduce the number of its outstanding shares by
treating each shareholder as having been redeemed by the Fund that number of
full and fractional shares in the account of such shareholder which represents
the shareholder's proportion of the amount of such excess. Each shareholder
will be deemed to have agreed to such redemption in these circumstances by
investing in the Fund.

Although dividends will be declared daily based on each day's
earnings, for federal income tax purposes the Fund's earnings and profits will
be determined at the end of each taxable year and will be allocated pro rata
over the entire year. For federal income tax purposes, only amounts paid out of
earnings and profits will qualify as dividends. Thus, if during a taxable year
the Fund's declared dividends (as declared daily throughout the year) exceed
the Fund's net income (as determined at the end of the year), only that portion
of the year's distributions which equals the year's earnings and profits will
be deemed to have constituted a dividend. It is expected that the Fund's net
income, on an annual basis, will equal the dividends declared during the year.

Gains or losses on sales of portfolio securities by the Master
Portfolio generally will be long-term capital gains or losses. To the extent
that the Master Portfolio, and thereby the Fund, recognizes long-term capital
gains, such gains will be distributed at least annually, and these
distributions will be taxable to shareholders as long-term capital gains,
regardless of how long a shareholder has held Fund shares. Such distributions
will be designated as capital gain distributions in a written notice mailed by
the Fund to shareholders not later than 60 days after the close of the Fund's
taxable year. If a shareholder receives a designated capital gain distribution
with respect to a Fund share and such Fund share is held for six months or
less, then (unless otherwise disallowed) any loss on the sale or exchange of
that Fund share will be treated as a long-term capital loss to the extent of
the designated capital gains distributions thereon.

17
<PAGE> 432
charge previously incurred acquiring the Fund's shares shall not be taken into
account (to the extent such previous sales charges do not exceed the reduction
in sales charges) for the purposes of determining the amount of gain or loss on
the exchange, but will be treated as having been incurred in the acquisition of
such other shares.

Any loss realized on a redemption of shares of the Fund will be
disallowed to the extent shares are reacquired within the 61-day period
beginning 30 days before and ending 30 days after the shares are disposed of.

As of the printing of this SAI, the maximum individual tax rate
applicable to ordinary income is 39.60%; (marginal rates may be higher for some
individuals due to phase-out of exemptions and elimination of deductions), the
maximum individual rate applicable to net realized capital gains is 28.00% and
the maximum corporate tax rate applicable to ordinary income and net realized
capital gains is 35.00%. However, to eliminate the benefit of lower marginal
corporate income tax rates, corporations which have taxable income in excess of
$100,000 for a taxable year will be required to pay an additional amount of
income tax of up to $11,750 and corporations which have taxable income in
excess of $15,000,000 for a taxable year will be required to pay an additional
amount of income tax of up to $100,000.

Foreign Shareholders. Under the Code, distributions of net
investment income by the Fund to a foreign corporation, foreign partnership,
nonresident alien individual, or nonresident alien fiduciary of a trust or
estate (a "foreign shareholder") will be subject to U.S. withholding tax (at a
rate of 30% or a lower treaty rate). Withholding will not apply if a dividend
paid by the Fund to a foreign shareholder is "effectively connected" with a
U.S. trade or business, in which case the reporting and withholding requirement
applicable to U.S. citizens, U.S. residents or domestic corporations will
apply. Distributions of net long-term capital gains are not subject to tax
withholding, but in the case of a foreign shareholder who is a nonresident
alien individual, such distributions ordinarily will be subject to U.S. income
tax at a rate of 30% if the individual is physically present in the U.S. for
more than 182 days during the taxable year.

CAPITAL STOCK

On any matter submitted to a vote of shareholders, all shares then
entitled to vote will be voted by the Fund unless otherwise required by the
Act, in which case all shares will be voted in the aggregate. For example, a
change in the Fund's fundamental investment policies would be voted upon only
by shareholders of the Fund, as would the approval of any advisory contract for
the Fund. However, all shares of the Company may vote together in the election
or selection of Directors, principal underwriters and accountants for the
Company. Approval by the shareholders of the Fund is effective whether or not
sufficient votes are received from the shareholders of the

18
<PAGE> 433
Company's other investment portfolios to approve the proposal as to those
investment portfolios. As used in the Prospectus and in this Statement of
Additional Information, 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 Company
as a whole, means the vote of the lesser of (i) 67% of the Company's shares
represented at a meeting if the holders of more than 50% of the Company's
outstanding shares are present in person or by proxy, or (ii) more than 50% of
the Company's outstanding shares. Shareholders are entitled to one vote for
each full share held and fractional votes for fractional shares held. The
Company may dispense with annual meetings of shareholders in any year in which
it is not required to elect Directors under the Act.

Each share of the Fund represents an equal proportional interest
in the Fund with each other share and is entitled to such dividends and
distributions out of the income earned on the assets belonging to the Fund as
are declared in the discretion of the Directors. In the event of the
liquidation or dissolution of the Company, shareholders of the Fund are
entitled to receive the assets attributable to the Fund that are available for
distribution, and a distribution of any general assets not attributable to a
particular investment portfolio that are available for distribution in such
manner and on such basis as the Directors in their sole discretion may
determine.

Shareholders are not entitled to any preemptive rights. All
shares, when issued, will be fully paid and non-assessable by the Company.

The Trust is a business trust organized under the laws of
Delaware. In accordance with Delaware law and in connection with the tax
treatment sought by the Trust, the Trust's Declaration of Trust provides that
its investors would be personally responsible for Trust liabilities and
obligations, but only to the extent the Trust property is insufficient to
satisfy such liabilities and obligations. The Declaration of Trust also
provides that the Trust shall maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Trust, its investors, Trustees, officers, employees and agents covering
possible tort and other liabilities, and that investors will be indemnified to
the extent they are held liable for a disproportionate share of Trust
obligations. Thus, the risk of an investor incurring financial loss on account
of investor liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.

The Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, but nothing in the Declaration of Trust protects a Trustee against any
liability to which the Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of the Trustee's office.

The interests in the CIT Master Portfolio have substantially
identical voting and other rights as those rights enumerated above for Fund
shares. The CIT Master Portfolio also intends

19
<PAGE> 434
to dispense with annual meetings, but is required by Section 16(c) of the Act
to hold a special meeting and assist investor communications under the
circumstances described above with respect to the Company. Whenever the Fund is
requested to vote on a matter with respect to the CIT Master Portfolio, the
Fund will hold a meeting of Fund shareholders and will cast its votes as
instructed by such shareholders.

In a situation where the Fund does not receive instruction from
certain of its shareholders on how to vote the corresponding shares of the CIT
Master Portfolio, the Fund will vote such shares in the same proportion as the
shares for which the Fund does receive voting instructions.

As of December 31, 1995, no shareholders were known by the Company
to own 5% or more of the Fund's outstanding shares.

OTHER

The Registration Statement of the Trust and the Company, including
the Fund's Prospectus, the SAI and the exhibits filed therewith, may be
examined at the office of the Commission in Washington, D.C. Statements
contained in the Fund's Prospectus or the SAI as to the contents of any
contract or other document referred to herein or in the Prospectus are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to these Registration
Statements, each such statement being qualified in all respects by such
reference.

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP has been selected as the independent
auditors for the Company and the Trust. KPMG Peat Marwick LLP provides audit
services, tax return preparation and assistance and consultation in connection
with review of certain Securities and Exchange Commission filings. KPMG Peat
Marwick LLP's address is Three Embarcadero Center, San Francisco, California
94111.

FINANCIAL INFORMATION

The portfolio of investments, audited financial statements and
independent auditors' report for the Fund and CIT Master Portfolio for the year
ended December 31, 1995, are hereby incorporated into this SAI by reference to
Amendment No. 8 to the registration statement of Master Investment Trust (SEC
File No. 811-6415), as filed on Form N-1A with the SEC on March 21, 1996. The
portfolio of investments, audited

20
<PAGE> 435

financial statements and independent auditors' reports are attached to all SAIs
delivered to shareholders or prospective shareholders.

21
<PAGE> 436
APPENDIX

The following is a description of the ratings given by Moody's and
S&P to corporate bonds and commercial paper.

Corporate Bonds

Moody's: The two highest ratings for corporate bonds are "Aaa" and
"Aa." Bonds rated "Aaa" are judged to be of the "best quality" and carry the
smallest amount of investment risk. Bonds rated "Aa" are of "high quality by
all standards," but margins of protection or other elements make long-term
risks appear somewhat greater than "Aaa" rated bonds. Moody's applies numerical
modifiers: 1, 2 and 3 in the "Aa" category in its rating system. The modifier 1
indicates that the security ranks in the higher end of its category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end.

S&P: The two highest ratings for corporate bonds are "AAA" and
"AA." Bonds rated "AAA" have the highest ratings assigned by S&P and have an
"extremely strong capacity to pay interest and repay principal." Bonds rated
"AA" have a "very strong capacity to pay interest and repay principal" and
differ "from the highest rated issued only in small degree." The ratings in the
"AA" category may be modified by the addition of a plus or minus sign to show
relative standing within the category.

Commercial Paper

Moody's: The highest rating for corporate commercial paper is
"P-1" (Prime-1). Issuers rated "P-1" have a "superior capacity for repayment of
short-term promissory obligations."

S&P: The "A-1" rating for corporate commercial paper indicates
that the "degree of safety regarding timely payment is either overwhelming or
very strong." Commercial paper with "overwhelming safety characteristics" will
be rated "A-1+." Commercial paper with a strong capacity for timely payments on
issues will be rated "A-2."

A-1
<PAGE> 437
OVERLAND EXPRESS FUNDS, INC.

Telephone: 1-800-552-9612

STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996

SHORT-TERM MUNICIPAL INCOME FUND
SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND

-------------------------------

Overland Express Funds, Inc. (the "Company") is an open-end series
investment company. This Statement of Additional Information ("SAI") contains
information about two of the Company's portfolios -- the Short-Term Municipal
Income Fund and the Short-Term Government-Corporate Income Fund (the "Funds").
The investment objective of each Fund is described in its Prospectus under
"Investment Objectives and Policies." Each Fund seeks to achieve its investment
objective by investing all of its assets in a separate Master Portfolio (each,
a "Master Portfolio" and collectively, the "Master Portfolios") of Master
Investment Trust (the "Trust") with the same investment objective as the Fund
bearing the corresponding name. Each Fund may withdraw its investment in the
corresponding Master Portfolio at any time, if the Board of Directors of the
Company determines that such action is in the best interests of the Fund and
its shareholders. Upon such withdrawal, the Company's Board would consider
alternative investments, including investing all of a Fund's assets in another
investment company with the same investment objective as the Fund or hiring an
investment adviser to manage the Fund's assets in accordance with the
investment policies and restrictions described in the Prospectus and below with
respect to the Trust.

This SAI is not a prospectus and should be read in conjunction
with the Funds' Prospectus, dated May 1, 1996. All terms used in this SAI that
are defined in the Prospectus have the meanings as assigned in the Prospectus.
A copy of the Prospectus may be obtained without charge by writing Stephens
Inc., the Company's sponsor, administrator and distributor, at 111 Center
Street, Little Rock, Arkansas 72201, or calling the Transfer Agent at the
telephone number indicated above.

-------------------------------

1
<PAGE> 438
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Information About Permitted Investment Activities . . . . . . . . . . . . 5
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Calculation of Yield and Total Return . . . . . . . . . . . . . . . . . . . . . . . 13
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>

2
<PAGE> 439
INVESTMENT RESTRICTIONS

The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Investment Objectives
and Policies."

The Funds and the Master Portfolios are subject to the following
investment restrictions, all of which are fundamental policies. These
restrictions cannot be changed, as to a Fund or a Master Portfolio, without
approval by the holders of a majority (as defined in the 1940 Act) of the
outstanding voting securities of such Fund or such Master Portfolio, as the
case may be. Whenever a Fund is requested to vote on a fundamental policy of
the Master Portfolio in which it invests, such Fund will hold a meeting of Fund
shareholders and will cast its votes as instructed by such Fund's shareholders.

Neither the Funds nor the Master Portfolios may:

(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 or a Master Portfolio's
investments in that industry would exceed 25% of the current value of the
Fund's or the Master Portfolio's total assets, provided that there is no
limitation with respect to: (1) investments in securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities; and (2) municipal
securities (for the purpose of this restriction, private activity bonds and
notes shall not be deemed municipal securities if the payment of principal and
interest on such bonds or notes is the ultimate responsibility of
non-governmental issuers); and provided further that there is no limitation
with respect to investments by the Fund in securities issued by registered
investment companies.

(2) purchase or sell real estate (other than securities secured
by real estate or interests therein or securities issued by companies that
invest in real estate or interests therein), commodities or commodity
contracts, or interests in oil, gas, or other mineral exploration or
development programs.

(3) purchase securities on margin (except for short-term
credits necessary for the clearance of transactions) or make short sales of
securities.

(4) underwrite securities of other issuers, except to the
extent that the purchase of permitted investments directly from the issuer
thereof or from an underwriter for an issuer and the later disposition of such
securities in accordance with a Fund's or a Master Portfolio's investment
program may be deemed to be an underwriting.

(5) make investments for the purpose of exercising control or
management.

(6) purchase puts, calls, straddles, spreads, or any
combination thereof, except that a Fund or a Master Portfolio may purchase
securities with put rights in order to maintain liquidity.

3
<PAGE> 440
(7) issue senior securities, except that a Fund or a Master
Portfolio may borrow from banks up to 10% of the current value of its net
assets for temporary purposes only in order to meet redemptions, and these
borrowings may be secured by the pledge of up to 10% of the current value of
its net assets (but investments may not be purchased by the Fund or the Master
Portfolio while any such outstanding borrowing in excess of 5% of its net
assets exists).

(8) purchase securities of any issuer (except securities issued
or guaranteed by the U.S. Government, its agencies and instrumentalities) if,
as a result, with respect to 75% of the total assets, more than 5% of the value
of a Fund's or a Master Portfolio's total assets would be invested in the
securities of any one issuer or the Fund or the Master Portfolio would own more
than 10% of the outstanding voting securities of such issuer.

(9) lend their portfolio securities having a value that exceeds
50% of the current value of their total assets, provided that, for purposes of
this restriction, the purchase of fixed time deposits, repurchase agreements,
commercial paper and other types of debt instruments commonly sold in a public
or private offering will not be subject to this restriction. The Funds and the
Master Portfolios do not intend to make loans of their portfolio securities
during the coming year.

The Funds and the Master Portfolios are subject to the following
non-fundamental policies. These restrictions may be changed by vote of a
majority of the Directors of the Company or the Trustees of the Trust, as the
case may be, at any time.

Neither the Funds nor the Master Portfolios may:

(1) invest more than 5% of their net assets at the time of
purchase in warrants, or more than 2% of their net assets in warrants which are
not listed on the New York or American Stock Exchange.

(2) purchase or retain securities of any issuer if the
officers, directors or trustees of the Company, the Trust or the Investment
Adviser owning beneficially more than one-half of one percent (0.5%) of the
securities of the issuer together own beneficially more than 5% of such
securities.

(3) invest in securities of issuers who, with their
predecessors, have been in existence less than three years, unless the
securities are guaranteed or insured by the U.S. Government, or a state or
municipality, or an agency or instrumentality thereof, if, by reason thereof,
the value of a Fund's or a Master Portfolio's aggregate investment in such
securities will exceed 5% of its total assets.

(4) write, purchase or sell options.

(5) invest more than 15% of the current value of their net
assets in repurchase agreements maturing in more than seven days, fixed time
deposits that are subject to withdrawal penalties and that have maturities of
more than seven days and other illiquid securities.

4
<PAGE> 441
(6) purchase, hold or deal in real estate limited partnerships.

(7) engage in any short sales other than short sales against the box.

ADDITIONAL INFORMATION ABOUT
PERMITTED INVESTMENT ACTIVITIES

The following information supplements and should be read in
conjunction with the sections in the Prospectus entitled "Investment Objectives
and Policies" and "Additional Information About Permitted Investment
Activities."

When-Issued Securities. The Master Portfolios may purchase
securities on a when-issued basis, in which case delivery and payment normally
take place within 120 days after the date of the commitment to purchase.
However, the Short-Term Government-Corporate Income Master Portfolio does not
intend to invest more than 5% of its net assets in when-issued securities
during the coming year. The Master Portfolio makes commitments to purchase
securities on a when- issued basis only with the intention of actually
acquiring the securities, but may sell them before the settlement date if it is
deemed advisable. When-issued securities are subject to market fluctuation, and
no income accrues to the purchaser during the period prior to issuance. The
purchase price and the interest rate that will be received on debt securities
are fixed at the time the purchaser enters into the commitment. Purchasing a
security on a when-issued basis can involve a risk that the market price at the
time of delivery may be lower than the agreed-upon purchase price, in which
case there could be an unrealized loss at the time of delivery.

The Master Portfolios have established segregated accounts in
which each Master Portfolio maintains liquid assets in an amount at least equal
in value to each Master Portfolio's commitments to purchase when-issued
securities. If the value of these assets declines, the Master Portfolios 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.

Municipal Bonds. As discussed in the Prospectus, the two principal
classifications of municipal bonds in which the Short-Term Municipal Income
Master Portfolio may invest are "general obligation" and "revenue" bonds.
Municipal bonds are debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities such
as bridges, highways, housing, hospitals, mass transportation, schools, streets
and water and sewer works. Other public purposes for which municipal bonds may
be issued include the refunding of outstanding obligations and obtaining funds
for general operating expenses or to loan to other public institutions and
facilities. Industrial development bonds are a specific type of revenue bond
backed by the credit and security of a private user. Certain types of
industrial development bonds are issued by or on behalf of public authorities
to obtain funds to provide privately-operated housing facilities, sports
facilities, convention or trade show facilities, airport, mass transit, port or
parking facilities, air or water pollution control facilities and certain local
facilities for water supply, gas, electricity, or sewage or solid waste
disposal. Assessment bonds,

5
<PAGE> 442

wherein a specially created district or project area levies a tax (generally on
its taxable property) to pay for an improvement or project may be considered a
variant of either category. There are, of course, other variations in the types
of municipal bonds, both within a particular classification and between
classifications, depending on numerous factors. Subject to its investment
objective and policies, the Master Portfolio is not limited with respect to
which category of municipal bond it may acquire. Some or all of these bonds may
be considered "private activity bonds" for federal income tax purposes.

Municipal Notes. The Short-Term Municipal Income Master Portfolio
may invest in municipal notes. Municipal notes include, but are not limited to,
tax anticipation notes ("TANs"), bond anticipation notes ("BANs"), revenue
anticipation notes ("RANs") and construction loan notes. Notes sold as interim
financing in anticipation of collection of taxes, a bond sale or receipt of
other revenues are usually general obligations of the issuer.

The values of outstanding municipal securities will vary as a
result of changing market evaluations of the ability of their issuers to meet
the interest and principal payments (i.e., credit risk). Such values will also
change in response to changes in the interest rates payable on new issues of
municipal securities (i.e., market risk). Should such interest rates rise, the
value of outstanding securities, including those held by the Short-Term
Municipal Income Master Portfolio, will generally decline and (if purchased at
par value) will sell at a discount. If interest rates fall, the values of
outstanding securities will generally increase and (if purchased at par value)
will sell at a premium. Changes in the value of municipal securities held by
the Master Portfolio arising from these or other factors will cause changes in
the net asset value per share of the Portfolio.

Unrated Investments. Each Fund may purchase instruments that are
not rated if, in the opinion of Wells Fargo Bank as Investment Adviser, such
obligations are of

6
<PAGE> 443

comparable quality to other high-quality investments that are permitted to be
purchased by such Fund. After purchase by any of the Funds, a security may
cease to be rated or its rating may be reduced below the minimum required for
purchase by such Fund. Neither event requires an immediate sale of such
security by such Fund. To the extent the ratings given by Moody's or S&P may
change as a result of changes in such organizations or their rating systems,
the Funds will attempt to use comparable ratings as standards for investments
in accordance with the investment policies contained in their Prospectuses and
in this SAI. The ratings of Moody's and S&P are more fully described in the
Appendix to this SAI.

MANAGEMENT

*R. Greg Feltus, 44 Director, Senior Vice President
Chairman and of Stephens ; Manager
President of Financial Services
Group; President of
Stephens
Insurance Services
Inc.; Senior Vice
President of Stephens
Sports Management
Inc.; and President of
Investor Brokerage
Insurance Inc.
</TABLE>

7
<PAGE> 444

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- --------------------- -------- --------------------
<S> <C> <C>
Thomas S. Goho, 53 Director T.B. Rose Faculty
321 Beechcliff Court Fellow-Business,
Winston-Salem, NC 27104 Wake Forest University
Calloway School, of
Business and
Accountancy; Associate Professor of
Finance of the School of Business and
Accounting at Wake Forest University
since 1983.

*Zoe Ann Hines, 46 Director Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource
Management.

*W. Rodney Hughes, 69 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901

Robert M. Joses, 77 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901

8
<PAGE> 445

COMPENSATION TABLE
For the Fiscal Year Ended December 31, 1995

*R. Greg Feltus 0 0
Director

Thomas S. Goho 10,188 39,750
Director

*Zoe Ann Hines 0 0
Director

*W. Rodney Hughes 9,438 37,000
Director

Robert M. Joses 9,938 39,000
Director

*J. Tucker Morse 8,313 33,250
Director
</TABLE>

As of the date of this SAI, Directors and officers of the Company
as a group beneficially owned less than 1% of the outstanding shares of the
Company.

9
<PAGE> 446
Investment Adviser. The Funds have not engaged an investment
adviser. The Master Portfolios are advised by Wells Fargo Bank. The Advisory
Contract for each Master Portfolio provides that Wells Fargo Bank shall furnish
to the Master Portfolio investment guidance and policy direction in connection
with the daily portfolio management of the Master Portfolio. Pursuant to the
Advisory Contracts, Wells Fargo Bank furnishes to the Board of Trustees of the
Trust periodic reports on the investment strategy and performance of the Master
Portfolios.

Wells Fargo Bank has agreed to provide to the Master Portfolios,
among other things, money market and fixed-income research, analysis and
statistical and economic data and information concerning interest rate and
security market trends, portfolio composition, credit conditions and average
maturities of the investments of the Master Portfolios. Each Fund, and
indirectly each Fund's shareholders, would bear a pro rata portion of any
advisory fees paid by its corresponding Master Portfolio, respectively.

Each Advisory Contract will continue in effect for more than two
years from the effective date provided the continuance is approved annually (i)
by the holders of a majority of the respective Master Portfolio's outstanding
voting securities or by the Trust's Board of Trustees and (ii) by a majority of
the Trustees of the Trust who are not parties to the Advisory Contracts or
"interested persons" (as defined in the 1940 Act) of any such party. The
Advisory Contracts may be terminated on 60 days' written notice by either party
and will terminate automatically if assigned.

For the years ended December 31, 1994 and 1995, the Master
Portfolios paid to Wells Fargo Bank the following advisory fees and Wells Fargo
Bank waived the indicated amounts:

<TABLE>
<CAPTION>
1994* 1995
----- ----
MASTER PORTFOLIO FEES PAID FEES WAIVED FEES PAID FEES WAIVED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Municipal Income $ 0 $7,879 $ 0 $62,512
Short-Term Government-Corporate Income $ 0 $131 $ 0 $11,944
</TABLE>

_________________

*The Short-Term Municipal Income and Short-Term Government-Corporate Income
Master Portfolios commenced operations on June 3, 1994 and September 19, 1994,
respectively.

Administrator and Distributor. The Company has retained Stephens
as administrator and distributor on behalf of the Funds. In addition, the Trust
has retained Stephens as administrator on behalf of the Master Portfolios.
Under the respective Administration Agreements with the

10
<PAGE> 447

Company and the Trust, Stephens, in connection therewith, furnishes the Company
and the Trust with office facilities, together with those ordinary clerical and
bookkeeping services that are not being furnished by Wells Fargo Bank.
Stephens also pays the compensation of the Company's Directors, officers and
employees who are affiliated with Stephens.

For the years ended December 31, 1994 and 1995, the Funds paid
administrative fees to Stephens as follows:

<TABLE>
<CAPTION>
FUND 1994* 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Short-Term Municipal Income Fund $2,497 $19,436
Short-Term Government-Corporate $39 $3,560
Income Fund
</TABLE>

____________________

*The Short-Term Municipal Income Fund and the Short-Term Government-Corporate
Income Fund commenced operations on June 3, 1994 and September 19, 1994,
respectively.

Custodian and Transfer and Dividend Disbursing Agent. Wells Fargo
Bank has been retained to act as Custodian and Transfer and Dividend Disbursing
Agent for the Funds and the Master Portfolios. The Custodian, among other
things, maintains a custody account or accounts in the name of each Fund and
each Master Portfolio, receives and delivers all assets for each Fund and each
Master Portfolio upon purchase and upon sale or maturity, collects and receives
all income and other payments and distributions on account of the assets of
each Fund and each Master Portfolio, and pays all expenses of each Fund and
each Master Portfolio. For its services as Custodian, Wells Fargo Bank receives
an asset-based fee and transaction charges from each Master Portfolio; and for
its services as transfer and dividend disbursing agent, Wells Fargo Bank
receives a base fee and per-account fees from each Fund. For the year ended
December 31, 1995, the Funds did not pay any custody or transfer and dividend
disbursing agency fees.

For the year ended December 31, 1994, the aggregate dollar amount
of underwriting commissions paid to Stephens was $1,408,759 and Stephens
retained

11
<PAGE> 448

$1,351,388 of such commissions. WFSI and its registered representatives
received $57,371 of such commissions.

For the year ended December 31, 1995, the aggregate dollar amount of
underwriting commissions paid to Stephens on sales/redemptions of the
Registrant's shares was $1,478,541. Stephens retained $1,447,175 of such
commissions. WFSI and its registered representatives retained $31,366 of such
commissions.

DISTRIBUTION PLANS

The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Distribution Plans."

As indicated in the Prospectus of the Funds, each Fund has adopted
a Plan under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the
"Rule"). A Plan for each Fund was adopted on April 27, 1994, by the Board of
Directors, including a majority of the Directors who were not "interested
persons" (as defined in the 1940 Act) of the Funds and who had no direct or
indirect financial interest in the operation of the Plans or in any agreement
related to the Plans (the "Qualified Directors").

Under the Plans and pursuant to the Distribution Agreement, the
Funds may pay the Distributor, as compensation for distribution-related
services, monthly fees at annual rates of up to 0.25% of the average daily net
assets of each Fund. The actual fee payable to the Distributor is determined,
within such limit, from time to time by mutual agreement between the Company
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 NASD Rules of Fair Practice. The Distributor may enter
into selling agreements with one or more selling agents under which such agents
may receive compensation for distribution-related services from the
Distributor, including, but not limited to, commissions or other payments to
such agents based on the average daily net assets of a Fund's shares
attributable to them. 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.

Each of the Plans will continue in effect from year to year if
such continuance is approved by a majority vote of both the Directors of the
Company and the Qualified Directors. Any Distribution Agreement related to the
Plans also must be approved by such vote of the Directors and the Qualified
Directors. The Distribution Agreement terminates 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 Fund involved. The Plans
may not be amended to increase materially the amounts payable thereunder
without the approval of a majority of the outstanding voting securities of the
Fund involved, and no material amendments to the

12
<PAGE> 449
Plans may be made except by a majority of both the Directors of the Company and
the Qualified Directors.

Each of the Plans requires that the Treasurer of the Company shall
provide to the Directors, and the Directors shall review, at least quarterly, a
written report of the amounts expended (and purposes therefor) under the Plans.
The Rule also requires that the selection and nomination of Directors who are
not "interested persons" of the Company be made by such disinterested
Directors.

For the year ended December 31, 1995, the Funds' distributor
received the following amounts of 12b-1 fees for the specified purposes set
forth below under each Fund's Plan.

<TABLE>
<CAPTION>
PRINTING & MAILING MARKETING COMPENSATION TO
FUND TOTAL PROSPECTUS BROCHURES UNDERWRITERS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Government Corporate
Income $5,933 N/A N/A $5,933

Short-Term Municipal Income
$32,393 N/A N/A $32,393
</TABLE>

For the year ended December 31, 1995, WFSI and its registered
representatives did not receive any compensation under each Fund's Plans.

CALCULATION OF YIELD AND TOTAL RETURN

The following information supplements and should be read in
conjunction with the sections in the Prospectus entitled "Determination of Net
Asset Value" and "Performance Data."

As indicated in the Funds' Prospectus, the Funds may advertise
certain total return information computed in the manner described in the
Prospectus. 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 in a
Fund ("P") over a period of years ("n") according to the following formula:
P(1+T)n = ERV. In addition, as indicated in the Prospectus, the Funds also may
at times, calculate total return based on net asset value per share (rather
than the public offering price), in which case the figures would not reflect
the effect of any sales charges that would have been paid by an investor, or
might be based on the assumption that a sales charge other than the maximum
sales charge (reflecting a Volume Discount) was assessed, provided that total
return data derived pursuant to the calculation described above also are
presented.

13
<PAGE> 450

In addition to the above performance information, the Funds may
also advertise the cumulative total return of a Fund for one-month,
three-month, six-month, and year-to-date periods. The cumulative total return
for such periods is based on the overall percentage change in value of a
hypothetical investment in a Fund, assuming all Fund dividends and capital gain
distributions are reinvested, without reflecting the effect of any sales charge
that would be paid by an investor, and is not annualized.

The average annual total return on shares of the Short-Term
Municipal Income Fund for the period since inception (June 3, 1994) to December
31, 1995, assuming payment of the maximum 3.00% sales load and no sales load,
was 1.98% and 3.90%, respectively. The average annual total return for the year
ended December 31, 1995, assuming a 3.00% sales load was 2.96%, and no sales
load was 6.10%.

The average annual total return on shares of the Short-Term
Government-Corporate Income Fund for the period since inception (September 19,
1994) to December 31, 1995, assuming payment of the maximum 3.00% sales load
and no sales load, was 4.00% and 6.41%, respectively. The average annual total
return for the year ended December 31, 1995, assuming a payment of a 3.00%
sales load was 4.86%, and no sales load, was 8.05%.

As indicated in the Funds' Prospectus, the Funds may also
advertise certain yield information. As and to the extent required by the SEC,
yield for each Fund's shares is calculated based on a 30-day (or one-month)
period, computed by dividing the net investment income per share earned during
the period by the maximum offering price per share of the Fund on the last day
of the period, according to the following formula: YIELD = 2[((a-b:-cd)+1)6-1],
where a = dividends and interest earned during the period; b = expenses accrued
for the period (net of reimbursements); c = the average daily number of shares
of the Fund outstanding during the period that were entitled to receive
dividends; and d = the maximum offering price per share of the Fund on the last
day of the period. The net investment income of a Fund includes actual interest
income, plus or minus amortized purchase discount (which may include original
issue discount) or premium, less accrued expenses. Realized and unrealized
gains and losses on portfolio securities are not included in net investment
income. For purposes of sales literature, yield also may be calculated on the
basis of the net asset value per share rather than the public offering price,
or based on the assumption that a sales charge other than the maximum sales
charge (reflecting a Volume Discount) was assessed, provided that the yield
data derived pursuant to the calculation described above also are presented.
For the 30 days ended December 31, 1995, the yield on shares of the Short-Term
Municipal Income Fund assuming payment of the maximum 3.00% sales load, was
2.43%, and no sales load, was 3.66%. Similarly, for the 30 days ended December
31, 1995 the yield on shares of the Short-Term Government- Corporate Income
Fund assuming payment of the maximum 3.00% sales load, was 2.66%, and no sales
load, was 4.96%.

The tax-equivalent yield for the Short-Term Municipal Income Fund
is computed by dividing that portion of the yield which is tax-exempt by one
minus a stated income tax rate and

14
<PAGE> 451

adding the product to that portion, if any, of the yield of the Fund that is
not tax-exempt. This yield figure may not reflect the applicability of the
alternative minimum tax. For the 30 days ended December 31, 1995, the
tax-equivalent yield for the Short-Term Municipal Income Fund, assuming the
1995 maximum combined federal and California personal income tax rate of 42.40%
and payment of the maximum sales load of 3.00%, was 6.35%, and assuming the
same tax rate and no sales load, was 6.55%.

The yield for the Funds' shares will fluctuate from time to time,
unlike fixed-rate bank deposits or other investments that pay a fixed yield for
a stated period of time. Past yields are based on historical data and do not
provide a basis for determining future yields, since yield is a function of
portfolio quality, composition, maturity and market conditions as well as the
expenses allocated to the Funds.

In addition, investors should recognize that changes in the net
asset values of shares of the Funds will affect the yield of the Funds' shares
for any specified period, and such changes should be considered together with
the Funds' yield in ascertaining the Funds' total return to shareholders for
the period. Yield information for the Funds' shares may be useful in reviewing
the performance of the Funds' shares and for providing a basis for comparison
with investment alternatives. The yield of the Funds' shares, however, may not
be comparable to the yields from investment alternatives because of differences
in the foregoing variables and differences in the methods used to value
portfolio securities, compute expenses and calculate yield.

From time to time and only to the extent the comparison is
appropriate for the Funds, the Company may quote the performance or
price-earning ratio of the Funds' shares in advertising and other types of
literature as compared to the performance of the Lehman Brothers Municipal Bond
Index, 1-Year Treasury Bill Rate, S&P Index, the Dow Jones Industrial Average,
the Lehman Brothers 20+ Treasury Index, the Lehman Brothers 5-7 Year Treasury
Index, IBC/Donoghue's Money Fund Averages, Real Estate Investment Averages (as
reported by the National Association of Real Estate Investment Trusts), Gold
Investment Averages (provided by the World Gold Council), Bank Averages (which
is calculated from figures supplied by the U.S. League of Savings Institutions
based on effective annual rates of interest on both passbook and certificate
accounts), average annualized certificate of deposit rates (from the Federal
Reserve G-13 Statistical Releases or the Bank Rate Monitor), the Salomon One
Year Treasury Benchmark Index, the Consumer Price Index (as published by the
U.S. Bureau of Labor Statistics), Ten Year U.S. Government Bond Average, S&P's
Corporate Bond Yield Averages, Schabacter Investment Management Indices,
Salomon Brothers High Grade Bond Index, Lehman Brothers Long-Term High Quality
Government/Corporate Bond Index, other managed or unmanaged indices or
performance data of bonds, stocks or government securities (including data
provided by Ibbotson Associates), or by other services, companies, publications
or persons who monitor mutual funds on overall performance or other criteria.
The S&P Index and the Dow Jones Industrial Average are unmanaged indices of
selected common stock prices. The performance of the Funds also may be compared
to those of other mutual funds having similar objectives. This comparative
performance could be expressed as a ranking prepared by Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc., Bloomberg Financial Markets
or Morningstar, Inc., independent services which monitor the performance of
mutual funds. The performance of the Funds is

15
<PAGE> 452
calculated by relating net asset value per share at the beginning of a stated
period to the net asset value of the investment at the end of the period,
assuming reinvestment of all capital gain distributions and dividends paid at
net asset value. Any such comparisons may be useful to investors who wish to
compare the past performance of the Funds with that of their competitors. Of
course, past performance cannot be a guarantee of future results. The Company
also may include, from time to time, a reference to certain marketing
approaches of the Distributor, including, for example, a reference to a
potential shareholder being contacted by a selected broker or dealer. General
mutual fund statistics provided by the Investment Company Institute may also be
used.

In addition, the Company 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
Company also may include in advertising and other types of literature,
information and other data from reports and studies prepared by the Tax
Foundation, including information regarding federal and state tax levels and
the related "Tax Freedom Day."

The Company also may use the following information in
advertisements and other types of literature, only to the extent the
information is appropriate for the Funds: (i) the Consumer Price Index may be
used to assess the real rate of return from an investment in the Funds; (ii)
other government statistics, including, but not limited to, The Survey of
Current Business, may be used to illustrate investment attributes of the Funds
or the general economic, business, investment, or financial environment in
which the Funds operate; (iii) the effect of tax-deferred compounding on the
investment returns of the Funds or on returns in general, may be illustrated by
graphs, charts, etc., where such graphs or charts would compare, at various
points in time, the return from an investment in the Funds (or returns in
general) on a tax-deferred basis (assuming reinvestment of capital gains and
dividends at net asset value and assuming one or more tax rates) with the
return on a taxable basis; and (iv) the sectors or industries in which the
Funds invest 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 the Funds with respect to the particular industry or sector.

The Company also may discuss in advertising and other types of
literature that the Funds have been assigned a rating by an NRSRO, such as S&P
or Moody's. Such rating would assess the creditworthiness of the investments
held by the Funds. The assigned rating would not be a recommendation to
purchase, sell or hold the Funds' shares since the rating would not comment on
the market price of the Funds' shares or the suitability of the Funds for a
particular investor. In addition, the assigned rating would be subject to
change, suspension or withdrawal as a result of changes in, or unavailability
of, information relating to the Funds or their investments. The Company may
compare the performance of the Funds with other investments that are assigned
ratings by NRSROs. Any such comparisons may be useful to investors who wish to
compare the Funds' past performance with other rated investments.

16
<PAGE> 453
The Company also may disclose in advertising and other types of
literature, information and statements that the Company's investment adviser,
Wells Fargo Bank, is listed in Nelson Publications' ("Nelson's") "Top 20"
performance rankings as published in the 1994 edition of "America's Best Money
Managers." The Nelson survey ranks the performance of money managers in over 30
asset/style categories and is based on analysis of performance composites and
surveys of institutional money managers. The Company may also disclose in
advertising and other types of sales literature the assets and categories of
assets under management by the Company's investment adviser.

From time to time, the Funds may use the following statements, or
variations thereof, in advertisements and other promotional materials: "Wells
Fargo Bank, as a Shareholder Servicing Agent for the Stagecoach Funds, provides
various services to its customers that are also shareholders of the Funds.
These services may include access to Stagecoach Funds' 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 Stagecoach Funds account statements." The
Company may also disclose in advertising and other types of sales literature
the assets and categories of assets under management by its investment adviser
or sub-adviser and the total amount of assets under management by Wells Fargo
Investment Management Group ("IMG"). As of December 31, 1995, IMG had $30.1
billion in assets under management. The Company may disclose in advertising,
statements and other literature the amount of assets and mutual fund assets
managed by Wells Fargo Bank. As of April 1, 1996, Wells Fargo Bank and its
affiliates provided investment advisory services for approximately $56 billion
of assets of individuals, trusts, estates and institutions and $17 billion of
mutual fund assets.

The Company may disclose in sales literature, information and
statements the distribution rate on the Fund's shares. Distribution rate, which
may be annualized, is the amount determined by dividing the dollar amount per
share of the most recent dividend by the most recent NAV or maximum offering
price per share as of a date specified in the sales literature. Distribution
rate will be accompanied by the standard 30-day yield as required by the SEC.

The Company also may disclose in advertising and other types of
literature, information and statements, the average credit quality of each
Fund's portfolio or categories of investments therein, as of a specified date
or period. Average credit quality is calculated on a dollar weighted average
basis based on ratings assigned each issue or issuer, as the case may be, by
S&P and/or Moody's. In the event one rating agency does not rate the issue or
issuer, as the case may be, in the same tier as the other agency, the highest
rating is used in the calculation.

17
<PAGE> 454

DETERMINATION OF NET ASSET VALUE

The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Purchase of Shares."

Net asset value per share for each Fund and net asset value per
unit of the Master Portfolio is determined by Wells Fargo Bank on each day the
Exchange is open for trading.

Securities of the Master Portfolios for which market quotations
are available are valued at latest prices. In the absence of any sale of such
securities on the valuation date and in the case of other securities, including
U.S. Government securities but excluding debt instruments maturing in 60 days
or less, the valuations are based on latest quoted bid prices. Debt instruments
maturing in 60 days or less are valued at amortized cost. In all cases, bid
prices will be furnished by a reputable independent pricing service approved by
the Trust's Board of Trustees. Prices provided by an independent pricing
service may be determined without exclusive reliance on quoted prices and may
take into account appropriate factors such as institutional-size trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data. All other securities and
other assets of the Master Portfolios for which current market quotations are
not readily available are valued at fair value as determined in good faith by
the Trust's Trustees and in accordance with procedures adopted by the Trustees.

Expenses and fees, including advisory fees, are accrued daily and
are taken into account for the purpose of determining the net asset value of
each Master Portfolio's shares.

PORTFOLIO TRANSACTIONS

The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Investment Objectives
and Policies."

The Trust has no obligation to deal with any dealer or group of
dealers in the execution of transactions in portfolio securities. Subject to
policies established by the Trust's Board of Trustees, Wells Fargo Bank is
responsible for the Master Portfolios' portfolio decisions and the placing of
portfolio transactions. In placing orders, it is the policy of the Company to
obtain the best results taking into account the dealer's general execution and
operational facilities, the type of transaction involved and other factors such
as the dealer's risk in positioning the securities involved. While Wells Fargo
Bank generally seeks reasonably competitive spreads or commissions, the Master
Portfolios will not necessarily be paying the lowest spread or commission
available.

Purchases and sales of securities by the Master Portfolios are
usually principal transactions. Portfolio securities normally are purchased or
sold from or to dealers serving as market makers for the securities at a net
price. The Master Portfolios also may purchase portfolio securities in
underwritten offerings and may purchase securities directly from the issuer.
The cost of executing the Master Portfolios' portfolio securities transactions
consists primarily of dealer spreads and underwriting commissions. Under the
1940 Act, persons affiliated with the Trust are

18
<PAGE> 455
prohibited from dealing with the Trust as a principal in the purchase and sale
of securities unless an exemptive order or other relief allowing such
transactions is obtained from the SEC or an exemption is otherwise available.
The Master Portfolios may purchase securities from underwriting syndicates of
which Stephens or Wells Fargo Bank is a member under certain conditions in
accordance with the provisions of a rule adopted under the 1940 Act and in
compliance with procedures adopted by the Board of Trustees.

Wells Fargo Bank, as the Investment Adviser of the Master
Portfolios, may, in circumstances in which two or more brokers are in a
position to offer comparable results for a Master Portfolio's portfolio
transaction, give preference to a broker that has provided statistical or other
research services to Wells Fargo Bank. By allocating transactions in this
manner, Wells Fargo Bank is able to supplement its research and analysis with
the views and information of securities firms. Information so received is in
addition to, and not in lieu of, the services required to be performed by Wells
Fargo Bank under the Advisory Contracts, and the expenses of Wells Fargo Bank
are not necessarily reduced as a result of the receipt of this supplemental
research information. Furthermore, research services furnished by dealers
through which Wells Fargo Bank places securities transactions for the Master
Portfolios may be used by Wells Fargo Bank in servicing its other accounts, and
not all of these services may be used by Wells Fargo Bank in connection with
advising the Master Portfolios.

Brokerage Commissions. For the year ended December 31, 1995,
neither the Funds nor the Master Portfolios paid any Brokerage Commissions.

Securities of Regular Broker Dealers. As of December 31, 1995,
only the Short-Term Government-Corporate Income Master Portfolio owned
securities of its "regular brokers or dealers" or their parents as defined in
the 1940 Act: $93,000 of Goldman Sachs Pooled Repurchase Agreements.

Portfolio Turnover. For the year ended December 31, 1995, the
portfolio turnover rates were 227% and 46%, respectively, for the Short-Term
Government-Corporate Income Master Portfolio and the Short-Term Municipal
Income Master Portfolio. Portfolio turnover generally involves some expense to
a Master Portfolio, including brokerage commissions or dealer mark-ups and
other transaction costs on the sale of securities and the reinvestment in other
securities. A high portfolio turnover rate should not result in the Master
Portfolios paying substantially more brokerage commissions, since most
transactions in government securities and municipal securities are effected on
a principal basis. Portfolio turnover also can generate short-term capital
gains tax consequences. The portfolio turnover rate will not be a limiting
factor when Wells Fargo Bank deems portfolio changes appropriate.

FEDERAL INCOME TAXES

The following information supplements and should be read in
conjunction with the sections in the Prospectus entitled "Dividends and
Distributions" and "Taxes."

19
<PAGE> 456

The Prospectus of the Funds describes generally the tax treatment
of distributions by the Funds and the Master Portfolios. This section of the
SAI includes additional information concerning federal income taxes.

Qualification of each Fund as a regulated investment company under
the Internal Revenue Code of 1986, as amended (the "Code") requires, among
other things, that (a) at least 90% of the Fund's annual gross income be
derived from interest, payments with respect to securities loans, dividends and
gains from the sale or other disposition of securities or options thereon; (b)
the Fund derives less than 30% of its gross income from gains from the sale or
other disposition of securities or options thereon held for less than three
months; and (c) the Fund diversifies its holdings so that, at the end of each
quarter of the taxable year, (i) at least 50% of the market value of the Fund's
assets is represented by cash, government securities and other securities
limited in respect of any one issuer to an amount not greater than 5% of the
Fund's assets and 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of the Fund's assets is invested in the
securities of any one issuer (other than U.S. Government securities and the
securities of other regulated investment companies), or of two or more issuers
which the Fund controls and which are determined to be engaged in the same or
similar trades or businesses or related trades or businesses. For purposes of
complying with these qualification requirements, each Fund will "look-through"
to its corresponding Master Portfolio's investments. As a regulated investment
company, each Fund will not be subject to federal income tax on its net
investment income and net capital gains distributed to its shareholders,
provided that it distributes to its shareholders at least 90% of the sum of its
net investment company taxable income and net tax-exempt income earned in each
year.

A 4% nondeductible excise tax will be imposed on a Fund to the
extent it does not meet certain minimum distribution requirements by the end of
each calendar year. Each Fund will either actually or be deemed to distribute
substantially all of its net investment income and net capital gains by the end
of each calendar year and, thus, expects not to be subject to the excise tax.

Although dividends will be declared daily based on each day's
earnings, for federal income tax purposes, each Fund's earnings and profits
will be determined at the end of each taxable year and will be allocated pro
rata over the entire year. For federal income tax purposes, only amounts paid
out of earnings and profits will qualify as dividends. Thus, if during a
taxable year the Fund's declared dividends (as declared daily throughout the
year) exceed the Fund's net income (as determined at the end of the year), only
that portion of the year's distributions which equals the year's earnings and
profits will be deemed to have constituted a dividend. It is expected that each
Fund's net income, on an annual basis, will equal the dividends declared during
the year.

Gains or losses on sales of portfolio securities by the Master
Portfolios will generally be long-term capital gains or losses. Market discount
earned on tax-exempt obligations, however, will not qualify as tax-exempt
income. Other gains or losses on the sale of securities will be short-term
capital gains or losses. To the extent that a Master Portfolio, and thereby its
corresponding Fund, recognizes long-term capital gains, such gains will be
distributed at

20
<PAGE> 457

least annually by the Fund. Such distributions will be taxable to shareholders
as long-term capital gains, regardless of how long a shareholder has held Fund
shares. Such distributions will be designated as capital gain distributions in
a written notice mailed by the Fund to shareholders not later than 60 days
after the close of the Fund's taxable year.

If a shareholder receives designated capital gain distributions
(to be treated by the shareholder as a long-term capital gain) with respect to
any Fund share and such Fund share is held for six months or less, then (unless
otherwise disallowed) any loss on the sale or exchange of that Fund share will
be treated as a long-term capital loss to the extent of the designated capital
gains distribution thereon. In addition, any loss realized by a shareholder
upon the sale or redemption of Fund shares held less than six months is
disallowed to the extent of any tax-exempt interest dividends received by the
shareholder thereon. These rules shall not apply, however, to losses incurred
under a periodic redemption plan.

As of the date of this SAI, the maximum individual tax rate
applicable to ordinary income is 39.60%; (marginal rates may be higher for some
individuals due to phase out of exemptions and elimination of deductions) the
maximum individual tax rate applicable to net capital gains is 28.00%; and the
maximum corporate tax rate applicable to ordinary income and net capital gains
is 35.00% (however, to eliminate the benefit of lower marginal corporate income
tax rates, corporations which have taxable income in excess of $100,000 for a
taxable year will be required to pay an additional amount of income tax of up
to $11,750 and corporations which have taxable income in excess of $15,000,000
for a taxable year will be required to pay an additional amount of income tax
of up to $100,000).

Also, any loss realized on a redemption or exchange of shares of a
Fund will be disallowed to the extent shares are reacquired within the 61-day
period beginning 30 days before and ending 30 days after the shares are
disposed of.

The amount of any gain or loss realized by the Fund on closing out
a futures contract will generally result in a realized capital gain or loss for
tax purposes. Futures contracts held at the end of each calendar year will be
required to be "marked to market" for federal income tax purposes. In this
regard, they will be deemed to have been sold at market value. Sixty percent
(60%) of any net gain or loss recognized on these deemed sales and sixty
percent (60%) of any net realized gain or loss from any actual sales, will be
treated as long-term capital gain or loss, and the remainder will be treated as
short-term capital gain or loss.

21
<PAGE> 458

If, in the opinion of each Fund, ownership of its shares has or
may become concentrated to an extent that could cause the Fund to be deemed a
personal holding company within the meaning of the Code, the Fund may require
the redemption of shares or reject any order for the purchase of shares in an
effort to prevent such concentration.

Short-Term Municipal Income Fund. The percentage of total
dividends paid by this Fund with respect to any taxable year which qualify for
exclusion from gross income ("exempt-interest dividends") will be the same for
all shareholders receiving dividends within such year. In order for this Fund
to pay exempt-interest dividends during any taxable year, at the close of each
fiscal quarter at least 50% of the aggregate value of the Fund's assets must
consist of tax-exempt obligations. The exemption of interest income derived
from investments in tax-exempt obligations for federal income tax purposes may
not result in a similar exemption under the laws of a particular state or local
taxing authority. It is anticipated that the Fund will meet this requirement
with respect to each fiscal quarter.

The Fund will notify each shareholder in writing within 60 days of
the end of each calendar year of the portion of the dividends paid with respect
to such year that constitutes exempt-interest dividends. The aggregate amount
of dividends so designated cannot, however, exceed the excess of the amount of
interest excludable from gross income under Section 103 of the Code received by
the Fund during the taxable year over any amounts disallowed as deductions
under Sections 265 and 171(a)(2) of the Code. Interest on indebtedness and
other expenses incurred by a shareholder to purchase or carry Fund shares is
not deductible for income tax purposes to the extent the shareholder receives
exempt- interest dividends during his or her taxable year. Exempt-interest
dividends will be tax-exempt for purposes of federal income tax.

In addition, the IRS has devised federal alternative minimum tax
("AMT") rules to ensure that at least a minimum amount of tax is paid by
taxpayers who obtain significant benefit from certain tax deductions and
exemptions. Some of these deductions and exemptions have been designated "tax
preference items" which must be added back to taxable income for purposes of
calculating AMT. Among the tax preference items is exempt-interest from
"private activity bonds," issued after August 7, 1986. To the extent that the
Fund invests in private activity bonds, shareholders who pay AMT will be
required to report that portion of Fund dividends attributed to income from the
bonds as a tax preference item in determining their AMT. Shareholders will be
notified of the tax status of distributions made by the Funds. Persons who may
be "substantial users" (or "related persons" of substantial users) of
facilities financed by private activity bonds should consult their tax advisors
before purchasing shares in the Fund. With respect to corporate shareholders of
the Fund, exempt-interest dividends paid by the Fund are included in the
corporate shareholder's "adjusted current earnings" as part of its AMT
calculation, and may also affect its federal "environmental tax" liability. As
of the printing of this SAI, individuals are subject to an AMT at a minimum
rate of 28.00% and corporations at a maximum rate of 20.00%. Shareholders with
questions or concerns about AMT should consult their tax advisors.

22
<PAGE> 459
Foreign Shareholders. Under the Code, distributions of net
investment income by the Funds to a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation, or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or a lower treaty rate). Withholding will not apply if a
dividend paid by a Fund to a foreign shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens, U.S. residents or domestic
corporations will apply. Distributions of net long-term capital gains are not
subject to tax withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, such distributions ordinarily will be subject to
U.S. income tax at a rate of 30% if the individual is physically present in the
U.S. for more than 182 days during the taxable year.

Other Matters. Investors should be aware that the investments to
be made by the Master Portfolios may involve sophisticated tax rules such as
the original issue discount rules that would result in income or gain
recognition by the Master Portfolios without corresponding current cash
receipts. Although the Master Portfolios will seek to avoid significant noncash
income, such noncash income could be recognized by a Master Portfolio, in which
case the Master Portfolio may distribute cash derived from other sources in
order to meet the minimum distribution requirements described above.

Shares of the Short-Term Municipal Income Fund may not be suitable
for tax-exempt institutions, retirement plans qualified under Section 401 of
the Code, H.R. 10 plans, and IRAs since such institutions, plans and accounts
are generally tax-exempt and, therefore, would not benefit from the exempt
status of dividends from this Fund.

CAPITAL STOCK

The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Organization and
Capital Stock."

The Funds have only one class of shares, but other of the
Company's portfolios are comprised of two or more classes of shares. 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, on any
matter submitted to a vote of shareholders, all shares then entitled to vote
will be voted separately by portfolio of the Company unless otherwise required
by the 1940 Act, in which case all shares will be voted in the aggregate. For
example, a change in one of the Funds' fundamental investment policies would be
voted upon only by shareholders of such Fund and not by shareholders of the
Company's other investment portfolios. Additionally, approval of an advisory
contract is a matter to be determined separately by portfolio. Approval by the
shareholders of one portfolio is effective as to that portfolio whether or not
sufficient votes are received from the shareholders of the other portfolios to
approve the proposal as to those portfolios. As used in the Prospectus and in
this SAI, the term "majority," when referring to approvals to be obtained from
shareholders of a 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

23
<PAGE> 460
outstanding shares of the Fund. The term "majority," when referring to the
approvals to be obtained from shareholders of the Company as a whole, means the
vote of the lesser of (i) 67% of the Company's shares represented at a meeting
if the holders of more than 50% of the Company's outstanding shares are present
in person or by proxy, or (ii) more than 50% of the Company's outstanding
shares. Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held. The Company may dispense with
annual meetings 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 and is entitled to such dividends and distributions out of
the income earned on the assets belonging to the Fund as are declared in the
discretion of the Directors. In the event of the liquidation or dissolution of
the Company, shareholders of a Fund are entitled to receive the assets
attributable to the Fund that are available for distribution, and a
distribution of any general assets not attributable to the Fund or a portfolio
that are available for distribution in such manner and on such basis as the
Directors in their sole discretion may determine.

Shares have no preemptive rights. All shares, when issued in
accord with the prospectus and for the consideration described therein, will be
fully paid and non-assessable by the Company.

The interests in the Master Portfolios have substantially
identical voting and other rights as those rights enumerated above for Fund
shares. The Trust also intends to dispense with annual meetings, but will hold
a special meeting and assist investor communications under the circumstances
described above with respect to the Company in accord with provisions under
Section 16(c) of the Act. Whenever a Fund is requested to vote on a matter with
respect to a

24
<PAGE> 461
Master Portfolio, the Fund will hold a meeting of Fund shareholders and will
cast its votes as instructed by such shareholders.

In a situation where a Fund does not receive instruction from
certain of its shareholders on how to vote the corresponding shares of a Master
Portfolio, the Fund will vote such shares in the same proportion as the shares
for which the Fund does receive voting instructions.

As of February 29, 1996, the shareholders identified below were
known by the Company to own 5% or more of the outstanding shares of the
Short-Term Municipal Income Fund or the Short-Term Government-Corporate Income
Fund in the following capacities:

<TABLE>
<CAPTION>
PERCENTAGE OF CAPACITY
NAME OF FUND NAME AND ADDRESS OF SHAREHOLDER FUND OWNED
- ------------ ------------------------------- ----- -----
<S> <C> <C> <C>
Short-Term Municipal Income Fund Wells Fargo Bank Agent FBO 5.38% Record
Alma Properties
201 3rd Street, 11th Floor
San Francisco, CA 94163

Wells Fargo Bank Agent FBO 5.37% Record
Moore Trust
201 3rd Street, 11th Floor
San Francisco, CA 94163

Wells Fargo Bank Agent FBO 11.78% Record
Symons
201 3rd Street, 11th Floor
San Francisco, CA 94163

Richard M. Jacobsen & 7.66% Record
Susan P. Jacobsen TTEES
Richard & Susan Jacobsen Family TR
3201 Ash Street
Palo Alto, CA 94306

Herman & Raymond Christensen 27.74% Beneficial
801 American Street
San Carlos, CA 94070

JJ & W 14.04% Beneficial
P.O. Box 5807
Redwood City, CA 94063
</TABLE>

25
<PAGE> 462
<TABLE>
<CAPTION>
PERCENTAGE OF CAPACITY
NAME OF FUND NAME AND ADDRESS OF SHAREHOLDER FUND OWNED
- ------------ ------------------------------- ----- -----
<S> <C> <C> <C>
Short-Term Government-Corporate Wells Fargo Bank Agent for Advanced Medical 9.65% Beneficial
Income Fund 201 3rd Street, 11th Floor
San Francisco, CA 94163

Wells Fargo Bank Agent for 6.72% Beneficial
Oxnard Skating
201 3rd Street, 11th Floor
San Francisco, CA 94163

Wells Fargo Bank Agent for 11.75% Beneficial
Hiller Museum
201 3rd Street, 11th Floor
San Francisco, CA 94163

Wells Fargo Bank Agent FBO 11.11% Beneficial
Victoria Partnership
201 3rd Street, 11th Floor
San Francisco, CA 94163

Wells Fargo Bank Agent FBO Xeruco 29.00% Beneficial
201 3rd Street, 11th Floor
San Francisco, CA 94163

Wells Fargo Bank Agent FBO 5.75% Beneficial
Table Mountain
201 3rd Street, 11th Floor
San Francisco, CA 94163

Wells Fargo Bank Agent FBO 7.27% Beneficial
Aids Emergency Fund
201 3rd Street, 11th Floor
San Francisco, CA 94163

Wells Fargo Bank Agent FBO Interlink 5.68% Beneficial
201 3rd Street, 11th Floor
San Francisco, CA 94163
</TABLE>
[/R]

26
<PAGE> 463
OTHER

The Registration Statements of the Trust and the Company,
including the Funds' Prospectus, the SAI and the exhibits filed therewith, may
be examined at the office of the SEC in Washington, D.C. Statements contained
in the Prospectus or the SAI as to the contents of any contract or other
document referred to herein or in the Prospectus are not necessarily complete,
and, in each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP has been selected as the independent
auditors for the Company and the Trust. KPMG Peat Marwick LLP provides audit
services, tax return preparation and assistance and consultation in connection
with review of certain SEC filings. KPMG Peat Marwick LLP's address is Three
Embarcadero Center, San Francisco, California 94111.

FINANCIAL INFORMATION

The portfolio of investments, audited financial statements and
independent auditors' report for the Funds and Master Portfolios for the year
ended December 31, 1995 are hereby incorporated into this SAI by reference to
Amendment No. 8 to the Registration Statement of Master Investment Trust (SEC
File No. 811-6415), as filed on Form N-1A with the SEC on March 21, 1996. The
portfolio of investments, audited financial statements and independent
auditors' report for the Funds are attached to all SAIs delivered to
shareholders or prospective shareholders.

27
<PAGE> 464
APPENDIX

The following is a description of the ratings given by Moody's and
S&P to corporate bonds, municipal securities and commercial paper.

Corporate Bonds

Moody's: The four highest ratings for corporate bonds are "Aaa,"
"Aa," "A" and "Baa." Bonds rated "Aaa" are judged to be of the "best quality"
and carry the smallest amount of investment risk. Bonds rated "Aa" are of "high
quality by all standards," but margins of protection or other elements make
long-term risks appear somewhat greater than "Aaa" rated bonds. Bonds rated "A"
possess many favorable investment attributes and are considered to be upper
medium grade obligations. Bonds rated "Baa" are considered to be medium grade
obligations; interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds have
speculative characteristics as well. Moody's applies numerical modifiers: 1, 2
and 3 in each rating category from "Aa" through "Baa" in its rating system. The
modifier 1 indicates that the security ranks in the higher end of its category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end.

S&P: The four highest ratings for corporate bonds are "AAA," "AA,"
"A" and "BBB." Bonds rated "AAA" have the highest ratings assigned by S&P and
have an extremely strong capacity to pay interest and repay principal. Bonds
rated "AA" have a "very strong capacity to pay interest and repay principal"
and differ "from the highest rated issued only in small degree." Bonds rated
"A" have a "strong capacity" to pay interest and repay principal, but are
"somewhat more susceptible" to adverse effects of changes in economic
conditions or other circumstances than bonds in higher rated categories. Bonds
rated "BBB" are regarded as having an "adequate capacity" to pay interest and
repay principal, but changes in economic conditions or other circumstances are
more likely to lead to a "weakened capacity" to make such repayments. The
ratings from "AA" to "BBB" may be modified by the addition of a plus or minus
sign to show relative standing within the category.

Commercial Paper/Municipal Securities

Moody's: The highest rating for commercial paper is "P-1"
(Prime-1). Issuers rated "P-1" have a "superior capacity for repayment of
short-term promissory obligations." Issuers rated "P-2" (Prime-2) "have a
strong capacity for repayment of short-term promissory obligations," but
earnings trends, while sound, will be subject to more variation.

S&P: The "A-1" rating for commercial paper indicates that the
"degree of safety regarding timely payment is either overwhelming or very
strong." Commercial paper with "overwhelming safety characteristics" will be
rated "A-1+." Commercial paper with a strong capacity for timely payments on
issues will be rated "A-2."

A-1
<PAGE> 465
OVERLAND EXPRESS FUNDS, INC.

Telephone: 1-800-552-9612

STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996

VARIABLE RATE GOVERNMENT FUND

-----------------------------

Overland Express Funds, Inc. (the "Company") is an open-end series
investment company. This Statement of Additional Information ("SAI") contains
information about one of the Company's portfolios -- the Variable Rate
Government Fund (the "Fund"). The Variable Rate Government Fund offers two
classes of shares -- Class A Shares and Class D Shares. This SAI relates to
both such classes of shares of the Fund. The investment objective of the Fund
is described in its Prospectus under "Investment Objective and Policies."

This SAI is not a prospectus and should be read in conjunction
with the Fund's Prospectus dated May 1, 1996. All terms used in this SAI that
are defined in the Prospectus will have the meanings assigned in the
Prospectus. A copy of the Prospectus may be obtained without charge by writing
Stephens Inc., the Company's sponsor, administrator and distributor, at 111
Center Street, Little Rock, Arkansas 72201, or calling the Transfer Agent at
the telephone number indicated above.

-----------------------------

1
<PAGE> 466
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Permitted Investment Activities . . . . . . . . . . . . . . . . . . . . 5
Investment by Federal Credit Unions in the Fund . . . . . . . . . . . . . . . . . 6
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Servicing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Calculation of Yield and Total Return . . . . . . . . . . . . . . . . . . . . . . 12
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . 16
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>

2
<PAGE> 467
INVESTMENT RESTRICTIONS

The Fund is subject to the following investment restrictions, all
of which are fundamental policies:

The Fund may not:

(2) purchase or sell real estate (other than securities secured
by real estate or interests therein or securities issued by companies that
invest in real estate or interests therein), commodities or commodity contracts
or interests, in oil, gas, or other mineral exploration or development
programs;

(3) purchase securities on margin (except for short-term
credits necessary for the clearance of transactions) or make short sales of
securities;

(5) invest more than 10% of the current value of its net assets
in repurchase agreements maturing in more than seven days, restricted
securities, which are securities that must be registered under the Securities
Act of 1933 (the "1933 Act") before they may be offered or sold to the public,
and illiquid securities;

(6) make investments for the purpose of exercising control or
management;

(7) purchase puts, calls, straddles, spreads, or any
combination thereof, except that the Fund may purchase securities with put
rights in order to maintain liquidity;

(8) issue senior securities, except that the Fund may borrow
from banks up to 10% of the current value of its net assets for temporary
purposes only in order to meet redemptions, and these borrowings may be secured
by the pledge of up to 10% of the current value of its net assets (but
investments may not be purchased by the Fund while any such outstanding
borrowing exists);

(9) invest more than 10% of the current value of its net assets
in fixed time deposits that are subject to withdrawal penalties and that have
maturities of more than seven days;

3
<PAGE> 468
(10) purchase securities of any issuer (except securities issued
or guaranteed by the U.S. Government, its agencies and instrumentalities) if,
as a result, with respect to 75% of the total assets of the Fund, more than 5%
of the value of the Fund's total assets would be invested in the securities of
any one issuer or, with respect to 100% of the Fund's total assets, the Fund
would own more than 10% of the outstanding voting securities of such issuer;
and

(11) lend its portfolio securities having a value that exceeds
50% of the current value of its total assets, provided that, for purposes of
this restriction, loans will not include the purchase of fixed time deposits,
repurchase agreements, commercial paper and other types of debt instruments
commonly sold in a public or private offering.

With respect to fundamental investment restriction (5), the Fund
does not intend to invest, during the coming year, in repurchase agreements
maturing in more than seven days, restricted securities, which are securities
that must be registered under the 1933 Act before they may be offered or sold
to the public or illiquid securities. With respect to fundamental investment
restriction (7), the Fund does not intend to purchase, during the coming year,
puts, calls, straddles, spreads, or purchase securities with put rights in
order to maintain liquidity. With respect to fundamental investment restriction
(9), the Fund does not intend to invest, during the coming year, in fixed time
deposits that are subject to withdrawal penalties and that have maturities of
more than seven days. With respect to fundamental investment restriction (11),
the Fund does not intend to make loans of its portfolio securities during the
coming year.

The Fund is subject to the following non-fundamental policies:

The Fund may not:

(1) invest in warrants, and not more than 2% of its net assets
in warrants which are not listed on the New York or American Stock Exchange;

(2) purchase or retain securities of any issuer if the officers
or Directors of the Company or its Investment Adviser owning beneficially more
than one-half of one percent (0.5%) of the securities of the issuer together
own beneficially more than 5% of such securities;

(4) write, purchase or sell options; and

(5) purchase or sell real estate limited partnership interests.

In addition, the Fund will not invest in commercial paper or
equity securities.

4
<PAGE> 469
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

When-Issued Securities. The Fund may purchase securities on a
when-issued basis, in which case delivery and payment normally take place
within 45 days after the date of the commitment to purchase. However, the Fund
does not intend to invest more than 5% of its net assets in when-issued
securities during the coming year. The Fund only will make commitments to
purchase securities on a when-issued basis with the intention of actually
acquiring the securities, but may sell them before the settlement date if it is
deemed advisable. When-issued securities are subject to market fluctuation, and
no income accrues to the purchaser during the period prior to issuance. The
purchase price and the interest rate that will be received on debt securities
are fixed at the time the purchaser enters into the commitment. Purchasing a
security on a when-issued basis can involve a risk that the market price at the
time of delivery may be lower than the agreed-upon purchase price, in which
case there could be an unrealized loss at the time of delivery.

The Fund will establish a segregated account in which it will
maintain cash, U.S. Government obligations or other high-quality debt
instruments in an amount at least equal in value to the Fund's commitments to
purchase when- issued securities. If the value of these assets declines, the
Fund will 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.

High-Risk Mortgage Securities. As stated in its Prospectus, the
Fund will not invest in Collateralized Mortgage Obligations ("CMOs") that, at
the time of purchase, are "high-risk mortgage securities" as defined in the
then current Federal Financial Institutions Examination Council Supervisory
Policy Statement on Securities Activities (the "FFIEC Policy Statement"). Under
the FFIEC Policy Statement, a CMO qualifies as a "high-risk mortgage security"
if it meets an Average Life Test, an Average Life Sensitivity Test, or a Price
Sensitivity Test. A CMO meets the Average Life Test if it has an expected
weighted average life greater than 10 years. A CMO meets the Average Life
Sensitivity Test if the expected weighted average life of the CMO either (i)
extends by more than 4 years, assuming an immediate and sustained parallel
shift in the yield curve of plus 300 basis points, or (ii) shortens by more
than 6 years, assuming an immediate and sustained parallel shift in the yield
curve of minus 300 basis points. A CMO meets the Price Sensitivity Test if an
immediate and sustained parallel shift in the yield curve of plus or minus 300
basis points would result in an estimated change in the price of the CMO of
more than 17 percent. Under the FFIEC Policy Statement, a CMO floating- rate
debt class, i.e., a CMO the rate of which adjusts at least annually on a
one-for-one basis with a conventional, widely used market interest rate index
(such as the London Interbank Offered Rate), will not be subject to the Average
Life and Average Life Sensitivity Tests if it bears a rate that is below the
contractual cap on the instrument.

5
<PAGE> 470
INVESTMENT BY FEDERAL CREDIT UNIONS IN THE FUND

The Fund will invest only in investments that are permissible for
federal credit unions under the regulations of the National Credit Union
Administration ("NCUA"). Federal credit unions may invest in CMOs that do
constitute "high-risk mortgage securities" for purposes of the FFIEC Policy
Statement. The Fund will enter into repurchase transactions and cash forward
agreements (i.e., "when-issued" securities) only to the extent permissible for
federal credit unions. Specifically, the Fund will enter into repurchase
transactions only where the purchase price of the security obtained in the
transaction will be at or below the market price and either: (1) the repurchase
transaction will be with another financial institution or (2) the Fund will
take physical possession of the security or receive written confirmation of the
purchase and a custodial or safekeeping receipt from a third party under a
written bailment for hire contract, or be recorded as the owner of the security
through the Federal Reserve Book-Entry System. In addition, the Fund will enter
into a cash forward agreement to purchase a security only where: (1) the period
from the trade date to the settlement date does not exceed 120 days; (2) the
Fund has written cash flow projections evidencing its ability to purchase the
security; and (3) the cash forward agreement is settled on a cash basis at the
settlement date.

MANAGEMENT

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- --------------------- -------- --------------------
<S> <C> <C>
Jack S. Euphrat, 73 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.

*R. Greg Feltus, 44 Director, Senior Vice President
Chairman and of Stephens; Manager
President of Financial Services
Group; President of
Stephens Insurance
Services Inc.; Senior Vice
President of Stephens
Sports Management
Inc.; and President of
Investor Brokerage
Insurance Inc.
</TABLE>

6
<PAGE> 471

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- --------------------- -------- --------------------
<S> <C> <C>
Thomas S. Goho, 53 Director T.B. Rose Faculty
321 Beechcliff Court Fellow-Business,
Winston-Salem, NC 27104 Wake Forest University
Calloway School of Business and
Accountancy; Associate Professor of
Finance of the School of Business and
Accounting at Wake Forest University
since 1983.

*Zoe Ann Hines, 46 Director Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource Management.

*W. Rodney Hughes, 69 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901

Robert M. Joses, 77 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901

7
<PAGE> 472
COMPENSATION TABLE
For the Year Ended December 31, 1995

*R. Greg Feltus 0 0
Director

Thomas S. Goho 10,188 39,750
Director

*Zoe Ann Hines 0 0
Director

*W. Rodney Hughes 9,438 37,000
Director

Robert M. Joses 9,938 39,000
Director

*J. Tucker Morse 8,313 33,250
Director
</TABLE>

Directors of the Company are compensated annually by the Company
and by all the registrants in the fund complex for their services as indicated
above and also are reimbursed for all out-of-pocket expenses relating to
attendance at board meetings. Each of the Directors and Officers of the Company
serves in the identical capacity as Officers and Directors of Stagecoach Funds,
Inc. and MasterWorks Funds Inc. (formerly, Stagecoach Inc.), and as Trustees
and/or Officer of Stagecoach Trust, Master Investment Portfolio, Life & Annuity
Trust, Master Investment Trust and Managed Series Investment Trust, each of
which is a registered open-end management investment company and each of which
is considered to be in the same "fund complex," as such term is defined in Form
N-1A under the 1940 Act, as the Company. The Directors are compensated by
other Companies and Trusts within the fund complex for their services as
Directors/Trustees to such Companies and Trusts. Currently the Directors do not
receive any retirement benefits or deferred compensation from the Company or
any other member of the fund complex.

As of the date of this SAI, Directors and officers of the Company
as a group beneficially owned less than 1% of the outstanding shares of the
Company.

8
<PAGE> 473
Investment Adviser. The Fund is advised by Wells Fargo Bank. The
Advisory Contract provides that Wells Fargo Bank shall furnish to the Fund
investment guidance and policy direction in connection with the daily portfolio
management of the Fund. Pursuant to the Advisory Contract, Wells Fargo Bank
furnishes to the Board of Directors periodic reports on the investment strategy
and performance of the Fund.

The Advisory Contract will continue in effect for more than two
years from the effective date provided the continuance is approved annually (i)
by the holders of a majority of the Fund's outstanding voting securities or by
the Company's Board of Directors and (ii) by a majority of the Directors of the
Company who are not parties to the Advisory Contract or "interested persons"
(as defined in the 1940 Act) of any such party. The Advisory Contract may be
terminated on 60 days' written notice by either party and will terminate
automatically if assigned. For the years ended December 31, 1993, 1994, and
1995 the Fund paid Wells Fargo Bank the advisory fees indicated below and Wells
Fargo Bank waived the following amounts:

<TABLE>
<CAPTION>
1993 1994 1995
FEES FEES FEES FEES FEES FEES
PAID WAIVED PAID WAIVED PAID WAIVED
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$8,468,995 $2,976,838 $6,929,600 $1,622,859 $3,561,101 $554,480
</TABLE>

Administrator and Distributor. The Company has retained Stephens
as administrator and distributor on behalf of the Fund. In connection with the
Administration Agreement with the Company, Stephens furnishes the Company with
office facilities, together with those ordinary clerical and bookkeeping
services that are not being furnished by Wells Fargo Bank. Stephens also has
entered into a Distribution Agreement with the Company pursuant to which
Stephens has the responsibility of distributing Class A Shares and Class D
Shares of the Fund.

For the years ended December 31, 1993, 1994, and 1995, the Fund's
paid the following amounts in administrative fees to Stephens:

9
<PAGE> 474

Custodian and Transfer and Dividend Disbursing Agent. Wells Fargo
Bank has been retained to act as Custodian and Transfer and Dividend Disbursing
Agent for the Fund. The Custodian, among other things, maintains a custody
account or accounts in the name of the Fund, receives and delivers all assets
for the Fund upon purchase and upon sale or maturity, collects and receives all
income and other payments and distributions on account of the assets of the
Fund, and pays all expenses of the Fund. For its services as Custodian, Wells
Fargo Bank receives an asset-based fee and transaction charges from the Fund;
and for its services as transfer and dividend disbursing agent, it receives a
base fee and per-account fees from the Fund. For the year ended December 31,
1995, the Fund did not pay Wells Fargo Bank any fees for custodian or transfer
and dividend disbursing agency services.

DISTRIBUTION PLANS

As indicated in the Prospectus, the Fund, on behalf of each of its
classes of shares, has adopted a Plan under Section 12(b) of the 1940 Act and
Rule 12b-1 thereunder (the "Rule").

Under the Plan and pursuant to the Distribution Agreement, the
Fund may pay the Distributor, as compensation for distribution-related
services, monthly fees at an annual rate of up to 0.25% of the average daily
net assets attributable to the Class A Shares of the Fund and up to 0.50% of
the average daily net assets attributable to the Class D Shares of the Fund.
The actual fee payable to the Distributor is determined, within such limits,
from time to time by mutual agreement between the Company 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 NASD Rules of Fair Practice. The Distributor may enter into selling
agreements with one or more selling agents under which such agents may receive
compensation for distribution-related services from the Distributor, including,
but not limited to, commissions or other payments to such agents based on the
average daily net assets of the Fund's shares attributable to them. The
Distributor may retain any portion of the total distribution fee

10
<PAGE> 475
payable thereunder to compensate it for distribution-related services provided
by it or to reimburse it for other distribution-related expenses.

The Plan will continue in effect from year to year if such
continuance is approved by a majority vote of both the Directors of the Company
and the Qualified Directors. Any Distribution Agreement related to the Plan
also must be approved by such vote of the Directors and the Qualified
Directors. 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 Fund. The Plan may not be amended
to increase materially the amounts payable thereunder without the approval of a
majority of the outstanding voting securities of the Fund, and no material
amendment to the Plan may be made except by a majority of both the Directors of
the Company and the Qualified Directors.

The Plan requires that the Treasurer of the Company shall provide
to the Directors, and the Directors 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 Directors who are not
"interested persons" of the Company be made by such disinterested Directors.

For the year ended December 31, 1995, the Funds' distributor
received the following amounts of 12b-1 fees for the specified purposes set
forth below under each Fund's Plan.

<TABLE>
<CAPTION>
PRINTING & MAILING MARKETING COMPENSATION TO
FUND TOTAL PROSPECTUS BROCHURES UNDERWRITERS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Variable Rate Gov't
Class A $2,032,814 N/A N/A $2,032,814
Class D $49,954 N/A N/A $49,954
</TABLE>

For the year ended December 31, 1995, WFSI and its registered
representatives did not receive any compensation under the Plans.

SERVICING PLAN

As indicated in the Prospectus, the Fund has adopted a Servicing
Plan ("Servicing Plan") with respect to its Class D Shares. Under the Servicing
Plan and pursuant to any related Shareholder Servicing Agreements, the Fund may
pay one or more servicing agents, as compensation for performing certain
services, a fee at an annual rate of up to 0.25% of the average daily net
assets of the Fund attributable to its Class D Shares. The actual fee payable
to servicing agents is determined, within such limit, from time to time by
mutual agreement between the Company and each servicing agent and will not
exceed the maximum service fees payable by mutual funds sold by members of the
NASD under the NASD Rules of Fair Practice.

11
<PAGE> 476

The Servicing Plan will continue in effect from year to year if
such continuance is approved by a majority vote of both the Directors of the
Company and the Servicing Plan Qualified Directors. Any form of Shareholder
Servicing Agreement related to the Servicing Plan also must be approved by such
vote of the Directors and the Servicing Plan Qualified Directors. Shareholder
Servicing Agreements 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 Class D Shares of the Fund. The Servicing Plan may not be
amended to increase materially the amount payable thereunder without the
approval of a majority of the outstanding Class D Shares of the Fund, and no
material amendment to the Servicing Plan may be made except by a majority of
both the Directors of the Company and the Qualified Directors.

For the year ended December 31, 1995, the Fund paid $24,977 in
servicing fees pursuant to the Plan for the Class D Shares.

CALCULATION OF YIELD AND TOTAL RETURN

As indicated in the Prospectus, the Fund may advertise certain
total return information for each class of shares computed in the manner
described in the Prospectus. As and to the extent required by the SEC, an
average annual compound rate of return ("T") will be computed by using the
redeemable value at the end of a specified period ("ERV") of a hypothetical
initial investment in a Fund or a class of shares ("P") over a period of years
("n") according to the following formula: P(1+T)n = ERV. In addition, as
indicated in the Prospectus, the Fund also may at times, calculate total return
for the Fund or a class of shares based on net asset value per share (rather
than the public offering price), in which case the figures would not reflect
the effect of any sales charges that would have been paid by an investor, or
based on the assumption that a sales charge other than the maximum sales charge
(reflecting a Volume Discount) was assessed, provided that total return data
derived pursuant to the calculation described above also are presented.

The average annual total return on the Class A Shares of the Fund
for the period since inception (November 1, 1990) to December 31, 1995,
assuming a 3.00% sales load and no sales load, was 4.01% and 4.63%,
respectively. The average annual total return on the Class D Shares

12
<PAGE> 477
of the Fund for the period since inception (July 1, 1993) to December 31, 1995,
assuming no CDSC was paid, was 1.53%.

The average annual total return on the Class A Shares of the Fund
for the five-year period ended December 31, 1995, assuming a 3.00% sales load
and no sales load, was 3.59% and 4.22%, respectively.

The average annual total return on the Class A Shares of the Fund
for the year ended December 31, 1995, assuming a 3.00% sales load and no sales
load, was 4.50% and 7.69%, respectively. The average annual total return on the
Class D Shares of the fund for the year ended December 31, 1995, assuming a
1.00% CDSC, was 6.09%, and no CDSC, was 7.08%.

The Fund may advertise the cumulative total return on its shares.
Cumulative total return of shares is computed on a per share basis and assumes
the reinvestment of dividends and distributions. Cumulative total return of
shares generally is expressed as a percentage rate which is calculated by
combining the income and principal changes for a specified period and dividing
by the net asset value per share at the beginning of the period. Advertisements
may include the percentage rate of total return of shares or may include the
value of a hypothetical investment in shares at the end of the period which
assumes the application of the percentage rate of total return.

The cumulative total return on the Class A Shares of the Fund for
the period from inception (November 1, 1990) to December 31, 1995, assuming a
3.00% sales load and no sales load was 22.55% and 26.34%, respectively. The
cumulative total return on the Class D Shares of the Fund for the period from
inception (July 31, 1993) to December 31, 1995, was 3.88%.

The cumulative total return on the Class A Shares of the Fund for
the five-year period ended December 31, 1995, assuming a 3.00% sales load and
no sales load, was 19.30% and 22.96%, respectively.

As indicated in the Fund's Prospectus, the Fund may advertise
certain yield information for the Fund or a class of shares. As and to the
extent required by the SEC, yield for each class of shares of the Fund will be
calculated based on a 30-day (or one month) period, computed by dividing the
net investment income per share of each class earned during the period by the
maximum offering price per share of each class on the last day of the period,
according to the following formula: YIELD = 2[((a-b:-cd)+1)6-1], where a =
dividends and interest earned during the period; b = expenses accrued for the
period (net of reimbursements); c = the average daily number of shares of each
class outstanding during the period that were entitled to receive dividends;
and d = the maximum offering price per share each class of shares on the last
day of the period. The net investment income attributable to a class of shares
includes actual interest income, plus or minus amortized purchase discount
(which may include original issue discount) or premium, less accrued expenses.
Realized and unrealized gains and losses on portfolio securities are not
included in net investment income. For purposes of sales literature, yield also
may be calculated on the basis of the net asset value per share of each class
rather than the public offering price, or based on the assumption that a sales
charge other than the maximum sales charge

13
<PAGE> 478
(reflecting a Volume Discount) was assessed, provided that the yield data
derived pursuant to the calculation described above also are presented.

The yield on the Class A Shares of the Fund for the 30-day period
ended December 31, 1995, assuming the maximum 3.00% sales charge and no sales
charge, was 4.74% and 4.89%, respectively. The yield for the Class D Shares of
the Fund for the thirty-day period ended December 31, 1995, assuming the
maximum CDSC, was 3.98%, and assuming no CDSC, was 4.40%.

The yields for each class of shares will fluctuate from time to
time, unlike bank deposits or other investments that pay a fixed yield for a
stated period of time, and do not provide a basis for determining future yields
since they are based on historical data. Yield is a function of portfolio
quality, composition, maturity and market conditions as well as the expenses
allocated to the Fund or to a particular class of the Fund.

In addition, investors should recognize that changes in the net
asset values of shares of each class of the Fund will affect the yield of the
respective class of shares for any specified period, and such changes should be
considered together with such class' yield in ascertaining such class' total
return to shareholders for the period. Yield information for each class of
shares may be useful in reviewing the performance of the class of shares and
for providing a basis for comparison with investment alternatives. The yield of
each class of shares, however, may not be comparable to the yields from
investment alternatives because of differences in the foregoing variables and
differences in the methods used to value portfolio securities, compute expenses
and calculate yield.

The Company may disclose in sales literature, information and
statements, the distribution rate of Fund shares. Distribution rate, which may
be annualized, is the amount determined by dividing the dollar amount per share
of the most recent dividend by the most recent NAV or maximum offering price
per share as of a date specified in the sales literature. Distribution rate
will be accompanied by the standard 30-day yield as required by the SEC.

From time to time and only to the extent the comparison is
appropriate for each class of shares of the Fund, the Company may quote the
performance or price-earning ratio of each class of shares of the Fund in
advertising and other types of literature as compared to the performance of the
Lehman Brothers Municipal Bond Index, 1-Year Treasury Bill Rate, S&P Index, the
Dow Jones Industrial Average, the Lehman Brothers 20+ Treasury Index, the
Lehman Brothers 5-7 Year Treasury Index, Donoghue's Money Fund Averages, Real
Estate Investment Averages (as reported by the National Association of Real
Estate Investment Trusts), Gold

14
<PAGE> 479
Investment Averages (provided by the World Gold Council), Bank Averages (which
is calculated from figures supplied by the U.S. League of Savings Institutions
based on effective annual rates of interest on both passbook and certificate
accounts), average annualized certificate of deposit rates (from the Federal
Reserve G-13 Statistical Releases or the Bank Rate Monitor), the Salomon One
Year Treasury Benchmark Index, the Consumer Price Index (as published by the
U.S. Bureau of Labor Statistics), Ten Year U.S. Government Bond Average, S&P's
Corporate Bond Yield Averages, Schabacter Investment Management Indices,
Salomon Brothers High Grade Bond Index, Lehman Brothers Long-Term High Quality
Government/Corporate Bond Index, other managed or unmanaged indices or
performance data of bonds, stocks or government securities (including data
provided by Ibbotson Associates), or by other services, companies, publications
or persons who monitor mutual funds on overall performance or other criteria.
The S&P Index and the Dow Jones Industrial Average are unmanaged indices of
selected common stock prices. The performance of each class of shares of the
Fund also may be compared to the performance of other mutual funds having
similar objectives. This comparative performance could be expressed as a
ranking prepared by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Bloomberg Financial Markets or Morningstar, Inc.,
independent services which monitor the performance of mutual funds. The
performance of each class of shares of the Fund will be calculated by relating
net asset value per share of each class at the beginning of a stated period to
the net asset value of the investment, assuming reinvestment of all capital
gains distributions and dividends paid, at the end of the period. Any such
comparisons may be useful to investors who wish to compare the past performance
of each class of shares of the Fund with the performance of the Fund's
competitors. Of course, past performance cannot be a guarantee of future
results. The Company also may include, from time to time, a reference to
certain marketing approaches of the Distributor, including, for example, a
reference to a potential shareholder being contacted by a selected broker or
dealer. General mutual fund statistics provided by the Investment Company
Institute may also be used.

The Company 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 the 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 the Fund; (ii) other government
statistics, including, but not limited to, The Survey of Current Business, may
be used to illustrate investment attributes of each class of shares of the Fund
or the general economic, business, investment, or financial environment in
which the Fund operates; (iii) the effect of tax-deferred compounding on the
investment returns of each class of shares of the Fund or on returns in
general, may be illustrated by graphs, charts, etc., where such graphs or
charts would compare, at various points in time, the

15
<PAGE> 480
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
dividends and assuming one or more tax rates) with the return on a taxable
basis; and (iv) the sectors or industries in which the Fund invests may be
compared to relevant indices of stocks or surveys (e.g., S&P Industry Surveys)
to evaluate the historical performance or current or potential value of each
class of shares of the Fund with respect to the particular industry or sector.

The Company also may discuss in advertising and other types of
literature that the Fund has been assigned a rating by a nationally recognized
statistical rating organization ("NRSRO"), such as Standard & Poor's Rating
Group ("S&P") or Moody's Investors Service, Inc. ("Moody's"). Such rating would
assess the creditworthiness of the investments held by the Fund. The assigned
rating would not be a recommendation to purchase, sell or hold the Fund's
shares since the rating would not comment on the market price of the Fund's
shares or the suitability of the Fund for a particular investor. In addition,
the assigned rating would be subject to change, suspension or withdrawal as a
result of changes in, or unavailability of, information relating to the Fund or
its investments. The Company may compare the performance of each class of
shares of the Fund with other investments which are assigned ratings by NRSROs.
Any such comparisons may be useful to investors who wish to compare each class'
past performance with other rated investments.

The Company also may disclose in advertising and other types of
literature, information and statements that Wells Fargo Bank, the Company's
Investment Adviser, is listed in Nelson Publications' ("Nelson's") "Top 20"
performance rankings as published in the 1994 edition of "America's Best Money
Managers." The Nelson survey ranks the performance of money managers in over 30
asset/style categories and is based on analysis of performance composites and
surveys of institutional money managers. The Company may also disclose in
advertising and other types of sales literature the assets and categories of
assets under management by the Company's investment adviser and the total
amount of assets under management by Wells Fargo Investment Management Group
("IMG"). As of December 31, 1995, IMG had $30.1 billion in assets under
management.

The Company may disclose in advertising, statements and other
literature the amount of assets and mutual fund assets managed by Wells Fargo
Bank. As of April 1, 1996, Wells Fargo Bank and its affiliates provided
investment advisory services for approximately $56 billion of assets of
individuals, trusts, estates and institutions and $17 billion of mutual fund
assets.

DETERMINATION OF NET ASSET VALUE

Net asset value per share for each class of the Fund is determined
by Wells Fargo Bank on each day the Exchange is open for trading.

16
<PAGE> 481
maturing in 60 days or less, the valuations are based on latest quoted bid
prices. Money market instruments maturing in 60 days or less are valued at
amortized cost. The assets of the Fund other than money market instruments
maturing in 60 days or less are valued at latest quoted bid prices. In all
cases, bid prices will be furnished by a reputable independent pricing service
approved by the Board of Directors. Prices provided by an independent pricing
service may be determined without exclusive reliance on quoted prices and may
take into account appropriate factors such as institutional-size trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data. All other securities and
other assets of the Fund for which current market quotations are not readily
available are valued at fair value as determined in good faith by the Company's
Directors and in accordance with procedures adopted by the Directors.

PORTFOLIO TRANSACTIONS

The Company has no obligation to deal with any dealer or group of
dealers in the execution of transactions in portfolio securities. Subject to
policies established by the Company's Board of Directors, Wells Fargo Bank is
responsible for the Fund's portfolio decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Company to obtain the
best results taking into account the dealer's general execution and operational
facilities, the type of transaction involved and other factors such as the
dealer's risk in positioning the securities involved. While Wells Fargo Bank
generally seeks reasonably competitive spreads or commissions, the Fund will
not necessarily be paying the lowest spread or commission available.

Purchases and sales of securities will usually be principal
transactions. Portfolio securities normally will be purchased or sold from or
to dealers serving as market makers for the securities at a net price. The Fund
also will purchase portfolio securities in underwritten offerings and may
purchase securities directly from the issuer. Generally, ARMS and CMOs are
traded on a net basis and do not involve brokerage commissions. The cost of
executing the Fund's portfolio securities transactions will consist primarily
of dealer spreads and underwriting commissions. Under the 1940 Act, persons
affiliated with the Company are prohibited from dealing with the Company as a
principal in the purchase and sale of securities unless an exemptive order
allowing such transactions is obtained from the SEC or an exemption is
otherwise available. The Fund may purchase securities from underwriting
syndicates of which Stephens or Wells Fargo Bank is a member under certain
conditions in accordance with the provisions of a rule adopted under the 1940
Act and in compliance with procedures adopted by the Board of Directors.

Wells Fargo Bank, as the Investment Adviser of the Fund, may, in
circumstances in which two or more brokers are in a position to offer
comparable results for the Fund portfolio transaction, give preference to a
broker that has provided statistical or other research services to Wells Fargo
Bank. By allocating transactions in this manner, Wells Fargo Bank is able to
supplement its research and analysis with the views and information of
securities firms. Information so received will be in addition to, and not in
lieu of, the services required to be performed by Wells Fargo Bank under the
Advisory Contract, and the expenses of Wells Fargo Bank will not necessarily be
reduced as a result of the receipt of this supplemental research

17
<PAGE> 482

information. Furthermore, research services furnished by dealers through which
Wells Fargo Bank places securities transactions for the Fund may be used by
Wells Fargo Bank in servicing its other accounts, and not all of these services
may be used by Wells Fargo Bank in connection with advising the Fund. For the
fiscal year ended December 31, 1995, the Fund paid no brokerage commissions.

Brokerage Commissions. For the year ended December 31, 1995, the
Fund did not pay any brokerage commissions.

Securities of Regular Broker/Dealers. On December 31, 1995, the
Fund owned securities of its "regular brokers or dealers" or their parents, as
defined in the 1940 Act as follows: $1,448,000 of Goldman Sachs & Co. Pooled
Repurchase Agreements.

FEDERAL INCOME TAXES

The Prospectus of the Fund describes generally the tax treatment
of distributions by the Fund. This section of the SAI includes additional
information concerning federal income taxes.

Qualification of the Fund as a "regulated investment company"
under the Code requires, among other things, that (a) at least 90% of the
Fund's annual gross income be derived from interest, payments with respect to
securities loans, dividends and gains from the sale or other disposition of
securities or options thereon; (b) the Fund derives less than 30% of its gross
income from gains from the sale or other disposition of securities or options
thereon held for less than three months; and (c) the Fund diversifies its
holdings so that, at the end of each quarter of the taxable year, (i) at least
50% of the market value of the Fund's assets is represented by cash, government
securities and other securities limited in respect of any one issuer to an
amount not greater than 5% of the Fund's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of
its assets is invested in the securities of any one issuer (other than U.S.
Government securities and the securities of other regulated investment
companies), or of two or more issuers which the Fund controls and which are
determined to be engaged in the same or similar trades or businesses or related
trades or businesses. As a regulated investment company, the Fund will not be
subject to federal income tax on its net investment income and net capital
gains distributed to its shareholders, provided that it distributes to its
shareholders at least 90% of the sum of its net investment income and net
tax-exempt income earned in each year.

Gains or losses on sales of portfolio securities by the Fund
generally will be long-term capital gains or losses if the securities have been
held by it for more than one year, except in

18
<PAGE> 483
certain cases including where the Fund acquires a put or grants a call thereon.
Other gains or losses on the sale of securities will be short- term capital
gains or losses. To the extent that the Fund recognizes long-term capital
gains, such gains will be distributed at least annually. Such distributions
will be taxable to shareholders as long-term capital gains, regardless of how
long a shareholder has held Fund shares. Such distributions will be designated
as capital gain distributions in a written notice mailed by the Fund to
shareholders not later than 60 days after the close of the Fund's taxable year.

If a shareholder receives designated capital gain distributions
(to be treated by the shareholder as a long-term capital gain) with respect to
a Fund share and such Fund share is held for six months or less, then (unless
otherwise disallowed) any loss on the sale or exchange of that Fund share will
be treated as a long-term capital loss to the extent of the designated capital
gain distributions.

Dividends will be declared daily based on the Fund's daily
earnings. However, for federal income tax purposes, the Fund's respective
earnings and profits will be determined at the end of each taxable year and
will be allocated pro rata over the entire year. For federal income tax
purposes, only amounts paid out of earnings and profits will qualify as
dividends. Thus, if during a taxable year, the Fund's declared dividends (as
declared daily throughout the year)

19
<PAGE> 484
exceed the Fund's net income (as determined at the end of the year), only that
portion of the year's distributions which equals the year's earnings and
profits will be deemed to have constituted a dividend. It is expected that the
Fund's net income, on an annual basis, will equal the dividends declared during
the year.

Other Matters. Investors should be aware that the investments
to be made by the Fund may involve sophisticated tax rules such as the original
issue discount, marked to market and real estate mortgage investment conduit
("REMIC") rules that would result in income or gain recognition by the Fund
without corresponding current cash receipts. Although the Fund will seek to
avoid significant noncash income, such noncash income could be recognized by
the Fund, in which case the Fund may distribute cash derived from other sources
in order to meet the minimum distribution requirements described above.

CAPITAL STOCK

The Variable Rate Government Fund is comprised of two classes of
shares, Class A Shares and Class D Shares. 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, on any matter submitted to a vote
of shareholders, all shares then entitled to vote will be voted separately by
Fund or portfolio of the Company unless otherwise required by the 1940 Act, in
which case all shares will be voted in the aggregate. For example, a change in
one of the Fund's fundamental investment policies would be voted upon only by
shareholders of such Fund and not shareholders of the Company's other
investment portfolios. Additionally, approval of an advisory contract is a
matter to be determined separately by portfolio. Approval by the shareholders
of one portfolio is effective as to that portfolio whether or not sufficient
votes are received from the shareholders of the other portfolios to approve the
proposal as to those portfolios. As used in the Prospectus and in this SAI, the
term "majority," when referring to approvals to be obtained from shareholders
of the Fund or a class, means the vote of the lesser of (i) 67% of the shares
of the Fund or class represented at a meeting if the holders of more than 50%
of the outstanding shares of the Fund or class are present in person or by
proxy, or (ii) more than 50% of the outstanding shares of the Fund or class.
The term "majority," when referring to the approvals to be obtained from
shareholders of the Company as a whole, means the vote of the lesser of (i) 67%
of the Company's shares represented at a meeting if the holders of more than
50% of the Company's

20
<PAGE> 485
outstanding shares are present in person or by proxy, or (ii) more than 50% of
the Company's outstanding shares. Shareholders are entitled to one vote for
each full share held and fractional votes for fractional shares held. The
Company may dispense with annual meetings of shareholders in any year in which
it is not required to elect Directors under the 1940 Act.

Each share of a class of the Fund represents an equal proportional
interest in the Fund with each other share of the same class and is entitled to
such dividends and distributions out of the income earned on the assets
belonging to the Fund as are declared in the discretion of the Directors. In
the event of the liquidation or dissolution of the Company, shareholders of the
Fund are entitled to receive the assets attributable to that 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 Directors in their sole
discretion may determine.

Shareholders are not entitled to any preemptive rights. All
shares, when issued, will be fully paid and non-assessable by the Company.

As of February 29, 1996 the shareholders identified below were
known by the Company to own the indicated percentage of the outstanding Class A
and Class D Shares of the Fund in the following capacity:

<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE
NAME OF FUND OF SHAREHOLDER OF CLASS CAPACITY
- ------------ --------------- --------- --------
<S> <C> <C> <C>
Variable Rate San Bernadino County 15.19% Beneficial
Government 172 West 3rd St., 1st Floor
Fund (Class A) San Bernadino, CA 92415-0360

Boeing Employee's Credit Union 6.05% Beneficial
Investment Dept. 6th Floor
12770 Gateway Drive
Tukwila, WA 98168

APCO Employees Credit Union 5.25% Beneficial
1608 7th Ave.
Birmingham, AL 35203
</TABLE>

21
<PAGE> 486

<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE
NAME OF FUND OF SHAREHOLDER OF CLASS CAPACITY
- ------------ --------------- --------- --------
<S> <C> <C> <C>
Variable Rate Merrill Lynch Pierce 30.31% Record
Government Fenner & Smith Inc.
Fund (Class D) Trade House Account
P.O. Box 30561
New Brunswick, NJ 08989-0561

J.C. Bradford & Co. Cust. FBO 11.32% Record
DCIP Limited Partner II
330 Commerce St.
Nashville, TN 37201-1899

City of Waterville 6.12% Beneficial
P.O. Box 9
Waterville, MN 56096
</TABLE>

OTHER

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP has been selected as the independent
auditors for the Company. KPMG Peat Marwick LLP provides audit services, tax
return preparation and assistance and consultation in connection with review of
certain SEC filings. KPMG Peat Marwick LLP's address is Three Embarcadero
Center, San Francisco, California 94111.

FINANCIAL INFORMATION

[/R]
The portfolio of investments, audited financial statements and
independent auditors' report for the year ended December 31, 1995, for the
Variable Rate Government Fund are hereby incorporated by reference in this SAI
to Amendment No. 8 to the Registration Statement of Master Investment Trust
(SEC File No. 811-6415), as filed on Form N-1A with the SEC on March 21, 1996.
The portfolio of investments, audited financial statements and independent
auditors' report are attached to all SAIs delivered to shareholders or
prospective shareholders.
[/R]

22
<PAGE> 487
APPENDIX

The following is a description of the ratings given by Moody's and
S&P to corporate bonds and commercial paper.

Corporate Bonds

Commercial Paper

A-1
<PAGE> 488
OVERLAND EXPRESS FUNDS, INC.
FILE NO. 33-16296; 811-8275

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Financial Statements:

The portfolio of investments, audited financial statements and
independent auditors' report for the year ended December 31, 1995 for the Asset
Allocation, California Tax-Free Bond, California Tax-Free Money Market, Money
Market, Municipal Income, Overland Sweep, Short-Term Municipal Income,
Short-Term Government-Corporate Income, U.S. Government Income, U.S. Treasury
Money Market and Variable Rate Government Funds are hereby incorporated by
reference to the Company's Annual Reports, as filed with the SEC on March 8,
1996.

The portfolio of investments, audited financial statements and
independent auditors' report for the year ended December 31, 1995 for the Cash
Investment Trust, Short-Term Municipal Income and Short-Term
Government-Corporate Income Master Portfolios are hereby incorporated by
reference to the Company's Annual Reports, as filed with the SEC on March 8,
1996.

(b) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1 - Restated Articles of Incorporation, incorporated by reference to Post-Effective
Amendment No. 30 filed on November 29, 1995.

2 - By-Laws (as amended), incorporated by reference to the Registration Statement on Form N-
1A filed on August 5, 1987.

3 - Not Applicable.

4 - Specimen Stock Certificates, incorporated by reference to Post-Effective Amendment
No. 21 filed on March 3, 1993.

5(a)(i) - Amended Advisory Contract on behalf of the Asset Allocation Fund, incorporated by
reference to Post-Effective Amendment No. 24 filed on April 29, 1994.

5(a)(ii) - Form of Sub-Advisory Contract with BZW Barclays Global Fund Advisors on behalf of the
Asset Allocation Fund, filed herewith.

(b) - Advisory Contract on behalf of the U.S. Government Income Fund, incorporated by
reference to Pre-Effective Amendment No. 2 filed on April 4, 1988.
</TABLE>

C-1
<PAGE> 489

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
(c) - Advisory Contract on behalf of the California Tax-Free Money Market Fund, incorporated
by reference to Post-Effective Amendment No. 6 filed on August 2, 1989.

(d) - Advisory Contract on behalf of the California Tax-Free Bond Fund, incorporated by
reference to Post-Effective Amendment No. 6 filed on August 2, 1989.

(e) - Advisory Contract on behalf of the Money Market Fund, incorporated by reference to Post-
Effective Amendment No. 6 filed on August 2, 1989.

(f) - Advisory Contract on behalf of the Variable Rate Government Fund, incorporated by
reference to Post-Effective Amendment No. 8 filed on August 6, 1990.

(g) - Advisory Contract on behalf of the Municipal Income Fund, incorporated by reference to
Post-Effective Amendment No. 16 filed on January 17, 1992.

(h) - Advisory Contract on behalf of the U.S. Treasury Money Market Fund, incorporated by
reference to Post-Effective Amendment No. 22 filed on May 28, 1993.

6(a) - Distribution Agreement with Stephens Inc. (as amended), incorporated by reference to
Post-Effective Amendment No. 18 filed on April 30, 1992.

(b) - Distribution Agreement on behalf of the Overland Sweep Fund, incorporated by reference
to Post-Effective Amendment No. 14 filed on August 20, 1991.

(c) - Amended and Restated Distribution Agreement with Stephens Inc., incorporated by
reference to Post-Effective Amendment No. 31 filed on December 18, 1995.

7 - Not Applicable.

8(a) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Asset Allocation Fund,
incorporated by reference to the Registration Statement on Form N-1A filed on August 5,
1987.

(b) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the U.S. Government Income
Fund, incorporated by reference to Post-Effective Amendment No. 9 filed on February 7,
1991.

(c) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Money
Market Fund, incorporated by reference to Post-Effective Amendment No. 9 filed on
February 7, 1991.

(d) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Bond
Fund, incorporated by reference to Post-Effective Amendment No. 9 filed on February 7,
1991.

(e) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Money Market Fund,
incorporated by reference to Post-Effective Amendment No. 9 filed on February 7, 1991.
</TABLE>

C-2
<PAGE> 490

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
(f) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Variable Rate Government
Fund, incorporated by reference to Post-Effective Amendment No. 9 filed on February 7,
1991.

(g) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Municipal Income Fund,
incorporated by reference to Post-Effective Amendment No. 16 filed on January 17, 1992.

(h) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the U.S. Treasury Money
Market Fund, incorporated by reference to Post-Effective Amendment No. 23 filed on
March 2, 1994.

(i) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Strategic Growth Fund,
incorporated by reference to Post-Effective Amendment No. 23 filed on March 2, 1994.

(j) - Custody Agreement on behalf of the Overland Sweep Fund, the 1-3 Year Duration Municipal
Income Fund, the 1-3 Year Duration Government Income Fund and the 1-3 Year Duration Full
Faith and Credit Government Income Fund, incorporated by reference to Post-Effective
Amendment No. 30 filed on November 29, 1995.

(k) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the National Tax-Free
Institutional Money Market Fund, filed herewith.

9(a)(i) - Administration Agreement on behalf of the Asset Allocation Fund, incorporated by
reference to Pre-Effective Amendment No. 2 filed on April 4, 1988.

(ii) - Administration Agreement on behalf of the U.S. Government Income Fund, incorporated by
reference to Pre-Effective Amendment No. 2 filed on April 4, 1988.

(iii) - Administration Agreement on behalf of the California Tax-Free Money Market Fund (as
amended), incorporated by reference to Pre-Effective Amendment No. 2 filed on April 4,
1988.

(iv) - Administration Agreement on behalf of the California Tax-Free Bond Fund, incorporated by
reference to Post-Effective Amendment No. 3 filed on October 3, 1988.

(v) - - Administration Agreement on behalf of the Money Market Fund, incorporated by reference to
Post-Effective Amendment No. 6 filed on August 2, 1989.

(vi) - Administration Agreement on behalf of the Variable Rate Government Fund, incorporated by
reference to Post-Effective Amendment No. 8 filed on August 6, 1990.

(vii) - Administration Agreement on behalf of the Municipal Income Fund, incorporated by
reference to Post-Effective Amendment No. 16 filed on January 17, 1992.

(viii) - Administration Agreement on behalf of the Overland Sweep Fund, Short-Term Municipal
Income Fund (formerly, the 1-3 Year Duration Municipal Income Fund), 1-3 Year Duration
Government Income Fund (liquidated) and Short-Term
</TABLE>

C-3
<PAGE> 491

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
Government-Corporate Income Fund (formerly, the 1-3 Year Duration Full Faith and Credit
Government Income Fund), incorporated by reference to Post-Effective Amendment No 30
filed on November 29, 1995.

(ix) - Administration Agreement on behalf of the U.S. Treasury Money Market Fund, incorporated
by reference to Post-Effective Amendment No. 30 filed on November 29, 1995.

(x) - Administration Agreement on behalf of the Strategic Growth Fund, incorporated by
reference to Post-Effective Amendment No. 22 filed on May 28, 1993.

(xi) - Administration Agreement with Stephens Inc. on behalf of the National Tax-Free
Institutional Money Market Fund, filed herewith.

9(b)(i) - Agency Agreement between the Overland Sweep Fund, the 1-3 Year Duration Municipal Income
Fund, the 1-3 Year Duration Government Income Fund, the 1-3 Year Duration Full Faith and
Credit Government Income Fund and Wells Fargo Bank, N.A., incorporated by reference to
Post-Effective Amendment No. 24 filed on April 29, 1994.

(b)(ii) - Agency Agreement with Wells Fargo Bank, N.A. on behalf of the National Tax-Free
Institutional Money Market Fund, filed herewith.

(c)(i) - Shareholder Servicing Agreement on behalf of the Overland Sweep Fund, incorporated by
reference to Post-Effective Amendment No. 22 filed on May 28, 1993.

(c)(ii) - Servicing Agreement on behalf of Class D Shares, incorporated by reference to Post-
Effective Amendment No. 21 filed on March 3, 1993.

(d)(i) - Servicing Plan on behalf of the Class D Shares of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 22 filed on May 28, 1993.

(d)(ii) - Servicing Plan on behalf of the Class D Shares of the U.S. Government Income Fund,
incorporated by reference to Post-Effective Amendment No. 22 filed on May 28, 1993.

(d)(iii) - Servicing Plan on behalf of the Class D Shares of the California Tax-Free Bond Fund,
incorporated by reference to Post-Effective Amendment No. 22 filed on May 28, 1993.

(d)(iv) - Servicing Plan on behalf of the Class D Shares of the Variable Rate Government Fund,
incorporated by reference to Post-Effective Amendment No. 22 filed on May 28, 1993.

(d)(v) - Servicing Plan on behalf of the Class D Shares of the Municipal Income Fund,
incorporated by reference to Post-Effective Amendment No. 22 filed on May 28, 1993.

(d)(vi) - Servicing Plan on behalf of the Class D Shares of the Strategic Growth Fund,
incorporated by reference to Post-Effective Amendment No. 22 filed on May 28, 1993.
</TABLE>

C-4
<PAGE> 492

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10 - Opinion and Consent of Counsel, filed herewith.

11 - Consents of Independent Auditors - KPMG Peat Marwick, LLP, filed herewith.

12(a) - None.

13 - Investment Letter, incorporated by reference to Pre-Effective Amendment No. 2 filed on
April 4, 1988.

14 - Not Applicable.

15(a) - Amended Distribution Plan on behalf of the Class A Shares of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 22 filed on May 28, 1993.

(b) - Amended Distribution Plan on behalf of the Class A Shares of the U.S. Government Income
Fund, incorporated by reference to Post-Effective Amendment No. 22 filed on May 28,
1993.

(c) - Distribution Plan on behalf of the California Tax-Free Money Market Fund, incorporated
by reference to Pre-Effective Amendment No. 2 filed on April 4, 1988.

(d) - Amended Distribution Plan on behalf of the Class A Shares of the California Tax-Free
Bond Fund, incorporated by reference to Post-Effective Amendment No. 22 filed on May 28,
1993.

(e) - Amended Distribution Plan on behalf of the Class A Shares of the Money Market Fund,
incorporated by reference to Post-Effective Amendment No. 24 filed on April 29, 1994.

(f) - Amended Distribution Plan on behalf of the Class A Shares of the Variable Rate
Government Fund, incorporated by reference to Post-Effective Amendment No. 22 filed on
May 28, 1993.

(g) - Amended Distribution Plan on behalf of the Class A Shares of the Municipal Income Fund,
incorporated by reference to Post-Effective Amendment No. 22 filed on May 28, 1993.

(h) - Distribution Plan on behalf of the Overland Sweep Fund, incorporated by reference to
Post-Effective Amendment No. 14 filed on August 20, 1991.

(i) - Amended Distribution Plan on behalf of the Class A Shares of the U.S. Treasury Money
Market Fund, incorporated by reference to Post-Effective Amendment No. 24 filed on
April 29, 1994.

(j) - Amended Distribution Plan on behalf of the Class A Shares of the Strategic Growth Fund,
incorporated by reference to Post-Effective Amendment No. 22 filed on May 28, 1993.
</TABLE>

C-5
<PAGE> 493

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
(k) - Distribution Plan on behalf of the Class D Shares of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 23 filed on March 2, 1994.

(l) - Distribution Plan on behalf of the Class D Shares of the California Tax-Free Bond Fund,
incorporated by reference to Post-Effective Amendment No. 23 filed on March 2, 1994.

(m) - Distribution Plan on behalf of the Class D Shares of the Municipal Income Fund,
incorporated by reference to Post-Effective Amendment No. 23 filed on March 2, 1994.

(n) - Distribution Plan on behalf of the Class D Shares of the Strategic Growth Fund,
incorporated by reference to Post-Effective Amendment No. 23 filed on March 2, 1994.

(o) - Distribution Plan on behalf of the Class D Shares of the U.S. Government Income Fund
,incorporated by reference to Post-Effective Amendment No. 23 filed on March 2, 1994.

(p) - Distribution Plan on behalf of the Class D Shares of the Variable Rate Government Fund
,incorporated by reference to Post-Effective Amendment No. 23 filed on March 2, 1994.

(q) - Distribution Plan on behalf of the Short-Term Municipal Income Fund (formerly, the 1-3
Year Duration Municipal Income Fund), incorporated by reference to Post-Effective
Amendment No. 24 filed on April 29, 1994.

(r) - Distribution Plan of the Short-Term Government-Corporate Income Fund (formerly, the 1-3
Year Duration Full Faith and Credit Government Income Fund), incorporated by reference
to Post-Effective Amendment No. 24 filed on April 29, 1994.

16(a) - Schedules for Computation of Performance Quotations, incorporated by
reference to Post-Effective Amendment No. 3 filed on October 3, 1988.

(b) - Schedule of Computation of Performance data, incorporated by reference to Post-Effective
Amendment No. 21 filed on May 1, 1995.

17 - Powers of Attorney, incorporated by reference to Post-Effective Amendment No. 14 to the
Registration Statement filed on August 20, 1991.

18 - Rule 18f-3 Multi-Class Plan, incorporated by reference to Post-Effective Amendment No.
28 to the Registration Statement filed on April 4, 1995.

27 - Financial Data Schedules for the Asset Allocation, California Tax-Free Bond, California
Tax-Free Money Market, Money Market, Municipal Income, Overland Sweep, Short-Term
Municipal Income, Short-Term Government-Corporate Income, U.S. Treasury Money Market and
Variable Rate Government Funds, incorporated by reference to the Form N-SAR, as filed
with the SEC on February 29, 1996.
</TABLE>

C-6
<PAGE> 494
Item 25. Persons Controlled by or under Common Control with Registrant.

As of April 15, 1996, the Strategic Growth and National Tax-Free
Institutional Money Market Funds owned approximately 93% and 99% respectively,
of the outstanding beneficial interests of the Capital Appreciation and
Tax-Free Money Market Master Portfolios, respectively, of Master Investment
Trust ("MIT"). As of April 15, 1996, the Overland Sweep, Short- Term Municipal
Income and Short-Term Government-Corporate Income Funds each owned
approximately 99% of the outstanding beneficial interests of the Cash
Investment Trust, Short-Term Municipal Income and Short-Term
Government-Corporate Income Master Portfolios, respectively, of MIT. As such,
each Fund could be considered a "controlling person" (as defined in the 1940
Act) of the corresponding Master Portfolio.

Item 26. Number of Holders of Securities.

As of March 29, 1996, the number of record holders of each class
of securities of the Registrant was as follows:

<TABLE>
<CAPTION>
TITLE OF CLASS NUMBER OF RECORD HOLDERS
- -------------- ------------------------
<S> <C>
Asset Allocation Fund
Class A 1,085
Class D 434

California Tax-Free Bond Fund
Class A 3,817
Class D 58

California Tax-Free Money Market Fund 1,768

Money Market Fund
Class A 1,359
Institutional Class 351

Municipal Income Fund
Class A 1,121
Class D 239

Overland Sweep Fund 2,586

Short-Term Municipal Income Fund 28

Short-Term Government-Corporate Income Fund 17

Strategic Growth Fund
Class A 5,856
Class D 1,255
</TABLE>

C-7
<PAGE> 495

<TABLE>
<S> <C>
U.S. Government Income Fund
Class A 544
Class D 60

U.S. Treasury Money Market Fund
Class A 660
Institutional Class 105

Variable Rate Government Fund
Class A 1,317
Class D 79

National Tax-Free Institutional Money Market Fund 1
</TABLE>

27. Indemnification.

Section 4 of Article VI of the Registrant's Articles of
Incorporation provides:

To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no person who is or was a
director or officer of this Corporation shall be personally liable to
the Corporation or its stockholders for money damages. No amendment of
the charter of the Corporation or repeal of any of its provisions shall
limit or eliminate the benefits provided to any person who is or was a
director or officer under this provision with respect to any act or
omission which occurred prior to such amendment or repeal. The rights of
indemnification under this provision shall neither be exclusive of, nor
be deemed in limitation of, any right to which any person may otherwise
be entitled or permitted by contract or otherwise. This Section 4 shall
not protect any person who is or was a director or officer of the
Corporation against any liability to the Corporation or its stockholders
to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.

Item 28. Business and Other Connections of Investment Adviser.

Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly owned
subsidiary of Wells Fargo & Company, serves as investment adviser to all of the
Registrant's investment portfolios, other than the National Tax-Free
Institutional Money Market Fund, Overland Sweep Fund, Short-Term Municipal
Income Fund, Short-Term Government-Corporate Income Fund and Strategic Growth
Fund, which currently do not retain an investment adviser, and to certain other
registered open-end management investment companies. Wells Fargo Bank's
business is that of a national banking association with respect to which it
conducts a variety of commercial banking and trust activities.

C-8
<PAGE> 496
To the knowledge of Registrant, none of the directors or executive
officers of Wells Fargo Bank, except those set forth below, is or has been at
any time during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
executive officers also hold various positions with and engage in business for
Wells Fargo & Company. Set forth below are the names and principal businesses
of the directors and executive officers of Wells Fargo Bank who are or during
the past two fiscal years have been engaged in any other business, profession,
vocation or employment of a substantial nature for their own account or in the
capacity of director, officer, employee, partner or trustee. All the directors
of Wells Fargo Bank also serve as directors of Wells Fargo & Company.

<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL BUSINESS(ES) AND ADDRESS(ES)
AT WELLS FARGO BANK DURING AT LEAST THE LAST TWO FISCAL YEARS
- ------------------- ------------------------------------------
<S> <C>
H. Jesse Arnelle Senior Partner of Arnelle & Hastie
Director 455 Market Street
San Francisco, CA 94105

Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408

William R. Breuner General Partner in Breuner Associates, Breuner Properties and
Director Breuner-Pavarnick Real Estate Developers. Retired Chairman of the
Board of Directors of John Breuner Co.
2300 Clayton Road, Suite 1570
Concord, CA 94520

Vice Chairman of the California State Railroad
Museum Foundation.
111 I Street
Old Sacramento, CA 95814

William S. Davila President and Director of The Vons Companies, Inc.
Director 618 Michillinda Avenue
Arcadia, CA 91007

Officer of Western Association of Food Chains
825 Colorado Blvd. #203
Los Angeles, CA 90041

Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065

Director of Tejon Ranch Co.
P.O. Box 1000
Lebec, CA 93243
</TABLE>

C-9
<PAGE> 497

<TABLE>
<S> <C>
Director of Turner Casting Corp.
P.O. Box 1099
Cudahy, CA 90201

Director of The Bakersfield Californian
P.O. Box 440
1707 I Street
Bakersfield, CA 93302

Director of Kern County Economic Development Corp.
P.O. Box 1229
2700 M Street, Suite 225
Bakersfield, CA 93301

Chairman of the Board of Trustees of Whittier College
13406 East Philadelphia Avenue
P.O. Box 634
Whittier, CA 90608

Paul Hazen Chairman of the Board of Directors of
Chairman of the Wells Fargo & Company
Board of Directors 420 Montgomery Street
San Francisco, CA 94105

Director of Pacific Telesis Group
130 Kearny Street
San Francisco, CA 94108

Director of Phelps Dodge Corp.
2600 North Central Avenue
Phoenix, AZ 85004

Director of Safeway Inc.
Fourth and Jackson Streets
Oakland, CA 94660

Robert K. Jaedicke Accounting Professor and Dean Emeritus of
Director Graduate School of Business, Stanford University
MBA Admissions Office
Stanford, CA 94305

Director of Homestake Mining Co.
650 California Street
San Francisco, CA 94108

Director of California Water Service Company
1720 North First Street
San Jose, CA 95112

Director of Boise Cascade Corp.
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728
</TABLE>

C-10
<PAGE> 498
<TABLE>
<S> <C>
Director of Enron Corp.
1400 Smith Street
Houston, TX 77002

Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333

Paul A. Miller Chairman of Executive Committee and Director of
Director Pacific Enterprises
633 West Fifth Street
Los Angeles, CA 90071

Trustee of Mutual Life Insurance Company of New York
1740 Broadway
New York, NY 10019

Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355

Trustee of University of Southern California
University Park TGF 200
665 Exposition Blvd.
Los Angeles, CA 90089

Ellen M. Newman President of Ellen Newman Associates
Director 323 Geary Street, Suite 507
San Francisco, CA 94102

Chair of Board of Trustees of
University of California at San Francisco Foundation
250 Executive Park Blvd., Suite 2000
San Francisco, CA 94143

Director of American Conservatory Theater
30 Grant Avenue
San Francisco, CA 94108

Director of California Chamber of Commerce
1201 K Street, 12th Floor
Sacramento, CA 95814

Philip J. Quigley Chairman, Chief Executive Officer and
Director Director of Pacific Telesis Group
130 Kearney Street, Rm. 3700
San Francisco, CA 94108

Director of Varian Associates
3050 Hansen Way
P.O. Box 10800
Palo Alto, CA 94303
</TABLE>

C-11
<PAGE> 499

<TABLE>
<S> <C>
Carl E. Reichardt Chairman and Chief Executive Officer of the
Director Board of Directors of Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105

Director of Ford Motor Company
The American Road
Dearborn, MI 48121

Director of Hospital Corporation of America,
HCA-Hospital Corp. of America
One Park Plaza
Nashville, TN 37203

Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105

Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355

Donald B. Rice President, Chief Operating Officer and Director of
Director Teledyne, Inc.
2049 Century Park East
Los Angeles, CA 90067

Director of Vulcan Materials Company
One Metroplex Drive
Birmingham, AL 35209

Retired Secretary of the Air Force

Susan G. Swenson President and Chief Executive Officer of Cellular One
Director 651 Gateway Blvd.
San Francisco, CA 94080

Chang-Lin Tien Chancellor of University of California at Berkeley
Director UC at Berkeley
Berkeley, CA 94720

John A. Young President, Director and Chief Executive Officer of
Director Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304

Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104
</TABLE>

C-12
<PAGE> 500
<TABLE>
<S> <C>
William F. Zuendt Director of 3Com Corp.
President 5400 Bayfront Plaza
P.O. Box 58145
Santa Clara, CA 95052

Director of MasterCard International
888 Seventh Avenue
New York, NY 10106

Trustee of Golden Gate University
536 Mission Street
San Francisco, CA 94163
</TABLE>

BZW Barclays Global Fund Advisors ("BGFA"), a wholly-owned
subsidiary of BZW Barclays Global Investors, N.A. ("BGI", formerly, Wells Fargo
Institutional Trust Company), serves as sub-adviser to the Asset Allocation
Fund of the Company and as adviser or sub-adviser to certain other open-end
management investment companies.

The directors and officers of BGFA consist primarily of persons
who during the past two years have been active in the investment management
business of the former sub-adviser to the Asset Allocation Fund, Wells Fargo
Nikko Investment Advisors ("WFNIA") and, in some cases, the service business of
BGI. With the exception of Irving Cohen, each of the directors and executive
officers of BGFA will also have substantial responsibilities as directors
and/or officers of BGI. To the knowledge of the Registrant, except as set forth
below, none of the directors or executive officers of BGFA is or has been at
any time during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature.

<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL BUSINESS(ES) DURING AT
AT BGFA LEAST THE LAST TWO FISCAL YEARS
- -------- --------------------------------
<S> <C>
Frederick L.A. Grauer Chairman and Director of WFNIA and WFITC+
Chairman, Director

Donald L. Luskin Chief Executive Officer of WFNIA's Defined
Vice Chairman & Director Contribution Group+

Irving Cohen Chief Financial Officer and Chief Operating
Director Officer of Barclays Bank PLC, New York Branch and
Chief Operating Officer of Barclays Group, Inc.
(USA)*: previously Chief Financial Officer of
Barclays de Zoete Wedd Securities Inc. (1994)*

Andrea M. Zolberti Chief Financial Officer of WFNIA and WFITC+
Chief Financial Officer

Vincent J. Bencivenga Previously Vice President at State Street Bank &
Chief Fiduciary Officer Trust Company++

</TABLE>

C-13
<PAGE> 501
* 222 Broadway, New York, New York, 10038.

+ 45 Fremont Street, San Francisco, California 94105.

++ One Financial Center, Boston, Massachusetts 02111.

Prior to January 1, 1996, WFNIA served as sub-adviser to the Asset
Allocation Fund of the Company and as adviser or sub-adviser to various other
open-end management investment companies. For additional information, see
"Advisory, Administration and Distribution Arrangements" in the Prospectus
describing the Asset Allocation Fund and "Management" in the Statement of
Additional Information of such Fund. For information as to the business,
profession, vocation or employment of a substantial nature of each of the
officers and management committees of WFNIA, reference is made to WFNIA's Form
ADV and Schedules A and D filed under the Investment Advisers Act of 1940, File
No. 801-36479, incorporated herein by reference.

Item 29. Principal Underwriters.

(a) Stephens Inc., distributor for the Registrant, does not
presently act as investment adviser for any other registered investment
companies, but does act as principal underwriter for Stagecoach Funds, Inc.,
Stagecoach Inc., and Stagecoach Trust; and is the exclusive placement agent for
Master Investment Trust, Managed Series Investment Trust, Life & Annuity Trust
and Master Investment Portfolio, which are registered open-end management
investment companies, and has acted as principal underwriter for the Liberty
Term Trust, Inc., Nations Government Income Term Trust 2003, Inc., Nations
Government Income Term Trust 2004, Inc. and the Managed Balanced Target
Maturity Fund, Inc., which are closed-end management investment companies, and
Nations Fund Trust, Nations Fund, Inc., Nations Fund Portfolios, Inc. and the
Capitol Mutual Funds, which are open-end management investment companies.

(b) Information with respect to each director and officer of
the principal underwriter is incorporated by reference to Form ADV and
Schedules A and D filed by Stephens Inc. with the Securities and Exchange
Commission pursuant to The Investment Advisers Act of 1940 (file no.
501-15510).

Item 30. Location of Accounts and Records.

(a) The Registrant maintains accounts, books and other
documents required by Section 31(a) of the Investment Company Act of 1940 and
the rules thereunder (collectively, "Records") at the offices of Stephens Inc.,
111 Center Street, Little Rock, Arkansas 72201.

C-14
<PAGE> 502
(b) Wells Fargo Bank maintains all Records relating to its
services as investment adviser and custodian and transfer and dividend
disbursing agent at 525 Market Street, San Francisco, California 94105.

(c) WFNIA and Wells Fargo Institutional Trust Company, N.A.
maintain all Records relating to their services as sub-adviser and custodian,
respectively, to the Asset Allocation Fund for the period prior to January 1,
1996, at 45 Fremont Street, San Francisco, California 94105.

(d) BGFA maintains all Records relating to its services as
sub-adviser to the Asset Allocation Fund for the period beginning January 1,
1996 at 45 Fremont Street, San Francisco, California 94105.

(e) Stephens maintains all Records relating to its services as
sponsor, administrator and distributor at 111 Center Street, Little Rock,
Arkansas 72201.

Item 31. Management Services.

Other than as set forth under the captions "Management of the Fund
and the Master Portfolio" in the Prospectus constituting Part A of this
Registration Statement and "Management" in the Statement of Additional
Information constituting Part B of this Registration Statement, the Registrant
is not a party to any management-related service contract.

Item 32. Undertakings.

(a) Not Applicable.

(b) Not Applicable.

(c) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant
to the provisions set forth above in response to Item 27,
or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
such Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

C-15
<PAGE> 503
(d) Registrant undertakes to hold a special meeting of its
shareholders for the purpose of voting on the question of
removal of a director or directors if requested in writing
by the holders of at least 10W of the Company's outstanding
voting securities, and to assist in communicating with
other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.

(e) Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of its most current
annual report to shareholders, upon request and without
charge.

C-16
<PAGE> 504
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 Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to the Registration Statement on Form N-1A
to be signed on its behalf by the undersigned, thereto duly authorized in the
City of Little Rock, State of Arkansas, on the 29th day of April, 1996.

OVERLAND EXPRESS FUNDS, INC.

By: /s/ Richard H. Blank, Jr.
--------------------------------
Richard H. Blank, Jr.
Secretary and Treasurer
(Principal Financial Officer)

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
* Director, Chairman, President
- ----------------------------------- (Principal Executive Officer)
(R. Greg Feltus)

/s/ Richard H. Blank, Jr. Secretary and Treasurer
- ----------------------------------- (Principal Financial Officer)
(Richard H. Blank, Jr.)

* Director
- -----------------------------------
(Jack S. Euphrat)

* Director
- -----------------------------------
(Thomas S. Goho)

* Director
- -----------------------------------
(Zoe Ann Hines)

* Director
- -----------------------------------
(W. Rodney Hughes)

* Director
- -----------------------------------
(Robert M. Joses)

* Director
- -----------------------------------
(J. Tucker Morse)

April 29, 1996

*By: /s/ Richard H. Blank, Jr.
------------------------------
(Richard H. Blank, Jr.)
As Attorney-in-Fact
</TABLE>
<PAGE> 505
SIGNATURES

MASTER INVESTMENT TRUST

By: Richard H. Blank, Jr.
---------------------------------
Richard H. Blank, Jr.
Secretary and Treasurer
(Principal Financial Officer)

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>

* Chairman, President (Principal
- ----------------------------------- Executive Officer) and Trustee
(R. Greg Feltus)

/s/ Richard H. Blank, Jr. Chief Operating Officer,
- ----------------------------------- Secretary and Treasurer
(Richard H. Blank, Jr.) (Principal Financial Officer)

* Trustee
- -----------------------------------
(Jack S. Euphrat)

* Trustee
- -----------------------------------
(Thomas S. Goho)

* Trustee
- -----------------------------------
(Zoe Ann Hines)

* Trustee
- -----------------------------------
(W. Rodney Hughes)

* Trustee
- -----------------------------------
(Robert M. Joses)

* Trustee
- -----------------------------------
(J. Tucker Morse)

April 29, 1996

*By: /s/ Richard H. Blank, Jr.
------------------------------
(Richard H. Blank, Jr.)
As Attorney-in-Fact
</TABLE>

<PAGE> 506
OVERLAND EXPRESS FUNDS, INC.
SEC FILE NOS. 33-16296; 811-8275

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C> <C>
EX-99.B5(a)(ii) o Form of Sub-Advisory Contract on behalf of the Asset Allocation
Fund

EX-99.B6(k) o Custody Agreement on behalf of the National Tax-Free
Institutional Money Market Fund

EX-99.B9(a)(xi) o Administration Agreement on behalf of the National Tax-Free
Institutional Money Market Fund

EX-99.B9(b)(ii) o Agency Agreement on behalf of the National Tax-Free
Institutional Money Market Fund

EX-99.B10 o Opinion and Consent of Counsel

EX-99.B11 o Consents of Auditors - KPMG Peat Marwick LLP
</TABLE>

<PAGE> 1
EX-99.b5(a)(ii)

Form Of
SUB-ADVISORY CONTRACT
Asset Allocation Fund
a portfolio of
OVERLAND EXPRESS FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201

January 1, 1996

BZW Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105

Dear Sirs:

This will confirm the agreement by and among Wells Fargo Bank, N.A.
(the "Adviser"), Overland Express Funds, Inc. (the "Company"), on behalf of the
Asset Allocation Fund (the "Fund"), and BZW Barclays Global Fund Advisors (the
"Sub-Adviser") as follows:

1. The Company is a registered open-end management investment
company currently consisting of thirteen 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 the Fund in the manner and in accordance with the
investment objective and restrictions specified in the Company's currently
effective 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 Sub-Adviser. Any amendments
to the Registration Statement shall be furnished to the Sub-Adviser promptly.

2. The Company has engaged the Adviser to manage the investing
and reinvesting of the assets of the Fund and to provide the advisory services
specified elsewhere in the Amended Advisory Contract between the Company and
the Adviser, dated September 1, 1994, subject to the overall supervision of the
Board of Directors of the Company. Pursuant to an administration agreement
between the Company, on behalf of the Fund, and an administrator (the
"Administrator"), the Company has engaged the Administrator to provide the
administrative services specified therein.

3. (a) The Adviser hereby employs the Sub-Adviser to perform for
the Fund certain advisory services and the Sub-Adviser hereby accepts such
employment. The Adviser shall retain the authority to establish and modify,
from time to time, the investment strategies and approaches to be followed by
the Sub-Adviser, subject, in all respects, to the supervision and direction of
the Company's Board of Directors and subject to compliance with the investment
objectives, policies and restrictions set forth in the Registration Statement.

(b) Subject to the overall supervision and control of the
Adviser and the Company, the Sub-Adviser shall be responsible for investing and
reinvesting the Fund's assets in a manner consistent with the investment
strategies and approaches referenced in subparagraph (a), above. In this
regard, the Sub-Adviser, in accordance with the investment objectives, policies
and restrictions set forth in the Registration Statement, the Act and the
provisions of the Internal Revenue Code of 1986 relating to regulated
investment companies, shall be responsible for implementing and monitoring the
performance of the investment model employed with respect to the Fund and shall
furnish to the Adviser periodic reports on the investment activity and
performance of the Fund. The Sub-Adviser shall also furnish such
<PAGE> 2
additional reports and information as the Adviser and the Company's Board of
Directors and officers shall reasonably request.

(c) The Sub-Adviser shall, at its expense, employ or associate
with itself such persons as the Sub-Adviser believes appropriate to assist it
in performing its obligations under this contract.

4. The Adviser shall be responsible for the fees paid to the
Sub-Adviser for its services hereunder. The Sub-Adviser agrees that it shall
have no claim against the Company or the Fund respecting compensation under
this contract. In consideration of the services to be rendered by the
Sub-Adviser under this contract, the Adviser shall pay the Sub-Adviser a fee on
the first business day of each calendar month, at the annual rate of 0.20% of
the average daily value (as determined on each day that such value is
determined for the Fund at the time set forth in the Registration Statement for
determining net asset value per share) of the Fund's net assets during the
preceding month. The Sub-Adviser will also receive an annual fee from the
Adviser of $60,000 payable in monthly installments. If the fee payable to the
Sub-Adviser pursuant to this Paragraph 4 begins to accrue on a day after the
first day of any month or if this contract terminates before the end of any
month, the fee for the period from the effective date to the end of the month
or from the beginning of that month to the termination date, shall be prorated
according to the proportion that such period bears to the full month in which
the effectiveness or termination occurs. For purposes of calculating the
monthly fee, the value of the Fund's net assets shall be computed in the manner
specified in the Registration Statement and the Company's Articles of
Incorporation for the computation of the value of the Fund's net assets in
connection with the determination of the net asset value of Fund shares.

5. The Sub-Adviser shall give the Company the benefit of the
Sub-Adviser's best judgment and efforts in rendering services under this
contract. As consideration and as an inducement to the Sub-Adviser's
undertaking to render these services, the Company and the Adviser agree that
the Sub-Adviser shall not be liable under this contract for any mistake in
judgment or in any other event whatsoever except for lack of good faith,
provided that nothing in this contract shall be deemed to protect or purport to
protect the Sub-Adviser against any liability to the Adviser, the Company or
its shareholders to which the Sub-Adviser would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of the
Sub-Adviser's duties under this contract or by reason of reckless disregard of
its obligations and duties hereunder.

6. This contract shall become effective as of its execution date
and shall thereafter continue in effect, provided that this contract shall
continue in effect for a period of more than two years from the date hereof
only so long as the continuance is specifically approved at least annually (a)
by the vote of a majority of the 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 specifically for the purpose of continuing
this Sub-Advisory Contract, 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, upon 60 days' written notice
to the Sub-Adviser, by the Company, without the payment of any penalty, by a
vote of a majority of the 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.
The Sub-Adviser may terminate 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).

7. Except to the extent necessary to perform the Sub-Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Sub-Adviser, or any affiliate of the Sub-Adviser, or
any employee of the Sub-Adviser, to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, firm, individual or association.

8. The Sub-Adviser and the Company each agree that the phrase
"Overland Express", which comprises a component of the Company's name, is a
property right of the parent of the Adviser. The Company and the Sub-Adviser
agree and consent that the use of such phrase is subject to the provisions set
forth in the Advisory Contract between the Adviser and the Company.

9. This contract shall be governed by and construed in accordance
with the laws of the State of California.

2
<PAGE> 3
If the foregoing correctly sets forth the agreement between the
Company, the Adviser and the Sub-Adviser, please so indicate by signing and
returning to the Company the enclosed copy hereof.

Very truly yours,

WELLS FARGO BANK, N.A.

By:_______________________________

Name:_____________________________

Title:____________________________

By:_______________________________

Name:_____________________________

Title:____________________________

ACCEPTED as of the date
set forth above:

OVERLAND EXPRESS FUNDS, INC.
on behalf of the Asset Allocation Fund

By:_________________________________

Name:_______________________________

Title:______________________________

BZW BARCLAYS GLOBAL FUND ADVISORS

Name:_______________________________

By:_________________________________

Title:______________________________

By:_________________________________

Name:_______________________________

Title:______________________________

<PAGE> 1

EX-99.B6(k)

CUSTODY AGREEMENT

OVERLAND EXPRESS FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201

This Agreement is made as of the 5th day of January 1996 (the
"Agreement"), by and between OVERLAND EXPRESS FUNDS, INC. (the "Company"), on
behalf of the National Tax-Free Institutional Money Market Fund (the "Fund"),
and WELLS FARGO BANK, N.A. (the "Custodian").

W I T N E S S E T H :

that for and in consideration of the mutual promises hereinafter set forth, the
Company and the Custodian agree as follows:

ARTICLE I
DEFINITIONS

Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meaning:

1. "Authorized Person" shall be deemed to include the treasurer,
the controller or any other person, whether or not any such person is an
Officer or employee of the Company, duly authorized by the Board of Directors
("Directors") to give Oral Instructions and Written Instructions on behalf of
the Fund and listed in the Certificate attached hereto as Appendix A or such
other Certificate as may be received from time to time by the Custodian.

2. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its
successor(s) and its nominee(s).

3. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Custodian, which is actually received by the Custodian and signed on behalf
of the Fund by any two Officers of the Company.

4. "Clearing Member" shall mean a registered broker-dealer that is
a member of a national securities exchange qualified to act as a custodian for
an investment company, or any broker-dealer reasonably believed by the
Custodian to be such a clearing member.

5. "Depository" shall mean The Depository Trust Company ("DTC"),
Participants Trust Company ("PTC"), and any other clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, its successor(s) and its nominee(s), provided the
Custodian has received a certified copy of a

<PAGE> 2
resolution of the Board of Directors specifically approving deposits in DTC,
PTC or such other clearing agency. The term "Depository" shall further mean and
include any person authorized to act as a depository pursuant to Section 17,
Rule 17f-4 or Rule 17f-5 thereunder, under the Investment Company Act of 1940,
its successor(s) and its nominee(s), specifically identified in a certified
copy of a resolution of the Board of Directors specifically approving deposits
therein by the Custodian.

6. "Margin Account" shall mean a segregated account in the name of
a broker, dealer, or Clearing Member, or in the name of the Company or the Fund
for the benefit of a broker, dealer, or Clearing Member, or otherwise, in
accordance with an agreement between the Company on behalf of the Fund, the
Custodian and a broker, dealer, or Clearing Member (a "Margin Account
Agreement"), separate and distinct from the custody account, in which certain
Securities and/or moneys of the Fund shall be deposited and withdrawn from time
to time in connection with such transactions as the Fund may from time to time
determine. Securities held in the Book-Entry System or the Depository shall be
deemed to have been deposited in, or withdrawn from, a Margin Account upon the
Custodian's effecting an appropriate entry on its books and records.

7. "Money Market Securities" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to principal and interest
by the government of the United States or agencies or instrumentalities
thereof, commercial paper, certificates of deposit and bankers' acceptances,
repurchase and reverse repurchase agreements with respect to the same and bank
time deposits, where the purchase and sale of such securities normally requires
settlement in federal funds on the same date as such purchase or sale.

8. "Officers" shall be deemed to include the President, Vice
President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary, any Assistant Treasurer or any other person or persons duly
authorized by the Directors of the Company to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund and listed in the
Certificate attached hereto as Appendix B or such other Certificate as may be
received by the Custodian from time to time.

9. "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person.

10. "Reverse Repurchase Agreement" shall mean an agreement
pursuant to which the Fund sells Securities and agrees to repurchase such
Securities at a described or specified date and price.

11. "Security" or "Securities" shall be deemed to include, without
limitation, Money Market Securities, Reverse Repurchase Agreements, common
stock and other instruments or rights having characteristics similar to common
stocks, preferred stocks, debt obligations issued by state or municipal
governments and by public authorities (including, without limitation, general
obligations bonds), bonds, debentures, notes, mortgages or other obligations,
and any certificates,

-2-
<PAGE> 3
receipts, warrants or other instruments representing rights to receive,
purchase, sell or subscribe for the same, or evidencing or representing any
other rights or interest therein, or any property or assets.

12. "Segregated Security Account" shall mean an account maintained
under the terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or other
assets of the Fund shall be deposited and withdrawn from time to time in
accordance with Certificates received by the Custodian in connection with such
transactions as the Fund may from time to time determine.

13. "Shares" shall mean the shares of common stock of the Fund,
each of which, in the case of the Fund having Series, is allocated to a
particular Series.

14. "Written Instructions" shall mean written communications
actually received by the Custodian from an Authorized Person or from a person
reasonably believed by the Custodian to be an Authorized Person by telex or any
other such system whereby the receiver of such communications is able to verify
by codes or otherwise with a reasonable degree of certainty the authenticity of
the sender of such communication.

ARTICLE II
APPOINTMENT OF A CUSTODIAN

1. The Company on behalf of the Fund hereby constitutes and
appoints the Custodian as custodian of all the Securities and moneys at any
time owned by the Fund during the term of this Agreement.

2. The Custodian hereby accepts appointment as such custodian and
agrees to perform all the duties thereof as set forth in this Agreement.

ARTICLE III
CUSTODY OF CASH AND SECURITIES

1. Except as otherwise provided in Article V, the Fund will
deliver or cause to be delivered to the Custodian all Securities and all moneys
owned by it, including cash received for the issuance of its Shares, at any
time during the term of this Agreement. The Custodian will not be responsible
for such Securities and such moneys until actually received by it. The
Custodian will be entitled to reverse any credits made on the Fund's behalf
where such credits have been previously made and moneys are not finally
collected. The Fund shall deliver to the Custodian a certified resolution of
the Directors of the Company authorizing and instructing the Custodian on a
continuous and ongoing basis to deposit in the Book-Entry System all Securities
eligible for deposit therein and to utilize the Book- Entry System to the
extent possible in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of Securities
collateral.

-3-
<PAGE> 4
Prior to a deposit of Securities of the Fund in the Depository, the Fund shall
deliver to the Custodian a certified resolution of the Directors of the Company
approving, authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate actually
received by the Custodian to deposit in the Depository all Securities eligible
for deposit therein and to utilize the Depository to the extent possible in
connection with its performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities collateral. Securities and
moneys of the Fund deposited in either the Book-Entry System or the Depository
will be represented in accounts which include only assets held by the Custodian
for customers, including, but not limited to, accounts in which the Custodian
acts in a fiduciary or representative capacity.

2. The Custodian shall credit to a separate account in the name of
the Fund all moneys received by it for the account of the Fund, and shall
disburse the same only:

(a) In payment for Securities purchased, as provided in Article IV
hereof;

(b) In payment of dividends or distributions, as provided in
Article VIII hereof;

(d) In payment for Shares redeemed by it, as provided in Article
IX hereof;

(e) Pursuant to Certificate(s) setting forth the name(s) and
address(es) of the person(s) to whom payment is to be made, and the purpose for
which payment is to be made; or

(f) In payment of the fees and in reimbursement of the expenses
and liabilities of the Custodian, as provided in Article XII hereof.

3. Promptly after the close of business on each day, the Custodian
shall furnish the Fund with confirmations and a summary of all transfers to or
from the account of the Fund during said day. Where Securities are transferred
to the account of the Fund, the Custodian shall also by book-entry or otherwise
identify as belonging to the Fund a quantity of Securities in a fungible bulk
of Securities registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-Entry System or the
Depository. The Custodian shall furnish the Fund at least monthly with a
detailed statement of the Securities and moneys held for the Fund under this
Agreement.

4. Except as otherwise provided in Article V, all Securities held
for the Fund which are issued or issuable only in bearer form, except such
Securities as are held in the Book-Entry System, shall be held by the Custodian
in that form; all other Securities held for the Fund may be registered in the
name of the Fund, in the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine, or in the name of
the Book-Entry System or the Depository or their successor(s) or their
nominee(s). The Company agrees to furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver

-4-
<PAGE> 5
in proper form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or the Depository, any
Securities which it may hold for the account of the Fund and which may from
time to time be registered in the name of the Fund. The Custodian shall hold
all such Securities which are not held in the Book-Entry System or in the
Depository in a separate account in the name of the Fund physically segregated
at all times from those of any other person or persons.

5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custodian by itself,
or through the use of the Book-Entry System or the Depository with respect to
the Securities therein deposited, shall, with respect to all Securities held
for the Fund in accordance with this Agreement:

(a) Collect all income due or payable;

(b) Present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may be amended
at any time by the Custodian upon five business days' prior notification to the
Fund;

(d) Surrender Securities in temporary form for definitive
Securities;

(e) Execute, as Custodian, any necessary declarations or
certificates of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and

(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of the
Fund all rights and similar securities issued with respect to any Securities
held by the Custodian hereunder.

6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book- Entry System or the Depository, shall:

(a) Execute and deliver to such persons as may be designated in
such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities may be exercised;

(b) Deliver any Securities held for the Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;

-5-
<PAGE> 6
(c) Deliver any Securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other instruments
or documents as may be issued to it to evidence such delivery;

(d) Make such transfer or exchanges of the assets of the Fund and
take such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund; and

(e) Present for payment and collect the amount payable upon
Securities not described in preceding paragraph 5(b) of this Article which may
be called as specified in the Certificate.

ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND

1. Promptly after each purchase or sale (as applicable) of
Securities by the Fund, other than a purchase or sale of any Reverse Repurchase
Agreement, the Fund shall deliver to the Custodian (i) with respect to each
purchase or sale of Securities which are not Money Market Securities, a
Certificate; and (ii) with respect to each purchase or sale of Money Market
Securities, a Certificate, Oral Instructions or Written Instructions,
specifying with respect to each such purchase or sale: (a) the name of the
issuer and the title of the Securities; (b) the number of shares or the
principal amount purchased or sold and accrued interest, if any; (c) the date
of purchase or sale and settlement date; (d) the purchase or sale price per
unit; (e) the total amount payable upon such purchase or sale; (f) the name of
the person from whom or the broker through whom the purchase or sale was made,
and the name of the clearing broker, if any; (g) in the case of a purchase, the
name of the broker to which payment is to be made; and (h) in the case of a
sale, the name of the broker to whom the Securities are to be delivered. In the
case of a purchase, the Custodian shall, upon receipt of Securities purchased
by or for the Fund, pay out of the moneys held for the account of the Fund the
total amount payable to the person from whom, or the broker through whom, the
purchase was made, provided that the same conforms to the total amount payable
as set forth in such Certificate, Oral Instructions or Written Instructions. In
the case of a sale, the Custodian shall deliver the Securities upon receipt of
the total amount payable to the Fund upon such sale, provided that the same
conforms to the total amount payable as set forth in such Certificate, Oral
Instructions or Written Instructions. Subject to the foregoing, the Custodian
may accept payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs prevailing
among dealers in securities.

-6-
<PAGE> 7
ARTICLE V
SHORT SALES

1. Promptly after any short sale, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the name of the issuer and the title of
the Security; (b) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (c) the dates of the sale and settlement; (d)
the sale price per unit; (e) the total amount credited to the Fund upon such
sale, if any (f) the amount of cash and/or the amount and kind of Securities,
if any, which are to be deposited in a Margin Account and the name in which
such Margin Account has been or is to be established; (g) the amount of cash
and/or the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account; and (h) the name of the broker through which such
short sale was made. The Custodian shall upon its receipt of a statement from
such broker confirming such sale and that the total amount credited to the Fund
upon such sale, if any, as specified in the Certificate is held by such broker
for the account of the Custodian (or any nominee of the Custodian) as custodian
of the Fund, issue a receipt or make the deposits into the Margin Account and
the Segregated Security Account specified in the Certificate.

2. In connection with the closing-out of any short sale, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect
to each such closing-out: (a) the name of the issuer and the title of the
Security; (b) the number of shares or the principal amount, and accrued
interest or dividends, if any, required to effect such closing-out to be
delivered to the broker; (c) the dates of the closing-out and settlement; (d)
the purchase price per unit; (e) the net total amount payable to the Fund upon
such closing-out; (f) the net total amount payable to the broker upon such
closing-out; (g) the amount of cash and the amount and kind of Securities, if
any, to be withdrawn, from the Margin Account; (h) the amount of cash and/or
the amount and kind of Securities, if any, to be withdrawn from the Segregated
Security Account; and (i) the name of the broker through which the Fund is
effecting such closing-out. The Custodian shall, upon receipt of the net total
amount payable to the Fund upon such closing-out and the return and/or
cancellation of the receipts, if any, issued by the Custodian with respect to
the short sale being closed-out, pay out the moneys held for the account of the
Fund to the broker the net total amount payable to the broker, and make the
withdrawals from the Margin Account and the Segregated Security Account, as the
same are specified in the Certificate.

ARTICLE VI
REVERSE REPURCHASE AGREEMENTS

1. Promptly after the Fund enters into a Reverse Repurchase
Agreement with respect to Securities and money held by the Custodian hereunder,
the Fund shall deliver to the Custodian a Certificate, or in the event such
Reverse Repurchase Agreement is a Money Market Security, a Certificate, Oral
Instructions or Written Instructions specifying: (a) the total amount payable
to the Fund in connection with such Reverse Repurchase Agreement; (b) the
broker or dealer through or with which the Reverse Repurchase Agreement is
entered; (c) the amount and kind of Securities to be delivered by the Fund to
such broker or dealer; (d) the date of such Reverse Repurchase Agreement; and
(e) the amount of cash and/or the amount and kind of Securities, if

-7-
<PAGE> 8
any, to be deposited in a Segregated Security Account in connection with such
Reverse Repurchase Agreement. The Custodian shall, upon receipt of the total
amount payable to the Fund specified in the Certificate, Oral Instructions or
Written Instructions make the delivery to the broker or dealer, and the
deposits, if any, to the Segregated Security Account, specified in such
Certificate, Oral Instructions or Written Instructions.

2. Upon the termination of a Reverse Repurchase Agreement
described in paragraph 1 of this Article VI, the Fund shall promptly deliver a
Certificate or, in the event such Reverse Repurchase Agreement is a Money
Market Security, a Certificate, Oral Instructions or Written Instructions to
the Custodian specifying: (a) the Reverse Repurchase Agreement being
terminated; (b) the total amount payable by the Fund in connection with such
termination; (c) the amount and kind of Securities to be received by the Fund
in connection with such termination; (d) the date of termination; (e) the name
of the broker or dealer with or through which the Reverse Repurchase Agreement
is to be terminated; and (f) the amount of cash and/or the amount and kind of
Securities to be withdrawn from the Segregated Security Account. The Custodian
shall, upon receipt of the amount and kind of Securities to be received by the
Fund specified in the Certificate, Oral Instructions or Written Instructions,
make the payment to the broker or dealer, and the withdrawals, if any, from the
Segregated Security Account, specified in such Certificate, Oral Instructions
or Written Instructions.

ARTICLE VII
MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS

1. The Custodian shall, from time to time, make such deposits to,
or withdrawals from, a Segregated Security Account as specified in a
Certificate received by the Custodian. Such Certificate shall specify the
amount of cash and/or the amount and kind of Securities to be deposited in, or
withdrawn from, the Segregated Security Account. In the event that the Fund
fails to specify in a Certificate the name of the issuer, the title and the
number of shares or the principal amount of any particular Securities to be
deposited by the Custodian into, or withdrawn from, a Segregated Securities
Account, the Custodian shall be under no obligation to make any such deposit or
withdrawal and shall so notify the Fund.

2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer or Clearing Member in whose name, or for whose
benefit, the account was established as specified in the Margin Account
Agreement.

3. Amounts received by the Custodian as payments or distributions
with respect to Securities deposited in any Margin Account shall be dealt with
in accordance with the terms and conditions of the Margin Account Agreement.

4. The Custodian shall have a continuing lien and security
interest in and to any property at any time held by the Custodian in any
Collateral Account described herein.

-8-
<PAGE> 9
5. On each business day, the Custodian shall furnish the Fund with
a statement with respect to the Fund's Margin Account in which money or
Securities are held specifying as of the close of business on the previous
business day: (a) the name of the Margin Account; (b) the amount and kind of
Securities held therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker or dealer specified
in the name of a Margin Account a copy of the statement furnished the Fund with
respect to such Margin Account.

6. Promptly after the close of business on each business day in
which cash and/or Securities are maintained in a Collateral Account, the
Custodian shall furnish the Fund with a statement with respect to the Fund's
Collateral Account specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business next succeeding
the delivery to the Fund of such statement, the Fund shall furnish the
Custodian with a Certificate or Written Instructions specifying the then market
value of the Securities described in such statement.

ARTICLE VIII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

1. The Fund shall furnish the Custodian with a copy of the
resolution of the Directors, certified by the Secretary or any Assistant
Secretary, either (i) setting forth the date of the declaration of a dividend
or distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of that date and the total amount
payable to the Dividend Agent of the Fund on the payment date, or (ii)
authorizing the declaration of dividends and distributions on a daily basis or
some other periodic basis and authorizing the Custodian to rely on Oral
Instructions, Written Instructions or a Certificate setting forth the date of
the declaration of such dividend or distribution, the date of payment thereof,
the record date as of which shareholders entitled to payment shall be
determined, the amount payable per share to the shareholders of record as of
that date and the total amount payable to the Dividend Agent on the payment
date.

2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions or Certificate, the Custodian shall pay out
the moneys held for the account of the Fund the total amount payable to the
Dividend Agent of the Fund.

ARTICLE IX
SALE AND REDEMPTION OF SHARES

1. Whenever the Fund shall sell any of its Shares, it shall
deliver to the Custodian a Certificate duly specifying the number of Shares
sold, trade date, price and the amount of money to be received by the Custodian
for the sale of such Shares.

2. Upon receipt of such money from the Transfer Agent or a
co-transfer agent, the Custodian shall credit such money to the account of the
Fund.

-9-
<PAGE> 10
3. Upon issuance of any of the Fund's Shares in accordance with
the foregoing provisions of this Article IX, the Custodian shall pay, out of
the money held for the account of the Fund, all original issue or other taxes
required to be paid by the Fund in connection with such issuance upon the
receipt of a Certificate specifying the amount to be paid.

4. Except as provided hereinafter, whenever the Fund shall redeem
any of its Shares, it shall furnish the Custodian with a Certificate specifying
the number of Shares redeemed and the amount to be paid for the Shares
redeemed.

5. Upon receipt from the Transfer Agent or co-transfer agent of an
advice setting forth the number of Shares received by the Transfer Agent or
co-transfer agent for redemption, and that such Shares are valid and in good
form for redemption, the Custodian shall make payment to the Transfer Agent or
co-transfer agent, as the case may be, out of the moneys held for the account
of the Fund of the total amount specified in the Certificate issued pursuant to
paragraph 4 of this Article IX.

6. Notwithstanding the above provisions regarding the redemption
of any of the Fund's Shares, whenever its Shares are redeemed pursuant to any
check redemption privilege which may from time to time be offered by the Fund,
the Custodian, unless otherwise instructed by a Certificate, shall, upon
receipt of an advice from the Fund or its agent setting forth that the
redemption is in good form for redemption in accordance with the check
redemption procedure, honor the check presented as part of such check
redemption privilege out of the money held in the account of the Fund for such
purposes.

ARTICLE X
OVERDRAFTS OR INDEBTEDNESS

1. If the Custodian should in its sole discretion advance funds on
behalf of the Fund which results in an overdraft because the moneys held by the
Custodian for the account of the Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a Certificate or
Oral Instructions issued pursuant to Article IV, or which results in an
overdraft for some other reason, or if the Fund is, for any other reason,
indebted to the Custodian (except a borrowing for investment or for temporary
or emergency purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this Article X), such
overdraft or indebtedness shall be deemed to be a loan made by the Custodian to
the Fund payable on demand and shall bear interest from the date incurred at a
rate per annum (based on a 360-day year for the actual number of days involved)
equal to 1/2% over the Custodian's prime commercial lending rate in effect from
time to time, such rate to be adjusted on the effective date of any change in
such prime commercial lending rate but in no event to be less than 6% per
annum. Any such overdraft or indebtedness shall be reduced by an amount equal
to the total of all amounts due the Fund which have not been collected by the
Custodian on behalf of the Fund when due because of the failure of the
Custodian to make timely demand or presentment for payment. In addition, the
Company on behalf of the Fund hereby agrees that the Custodian

-10-
<PAGE> 11
shall have a continuing lien and security interest in and to any property at
any time held by it for the benefit of the Fund or in which the Fund may have
an interest which is then in the Custodian's possession or control or in
possession or control of any third party acting on the Custodian's behalf. The
Company authorizes the Custodian, in its sole discretion, at any time to charge
any such overdraft or indebtedness together with interest due thereon against
any balance of account standing to the Fund's credit on the Custodian's books.

2. The Fund will cause to be delivered to the Custodian by any
bank (including, if the borrowing is pursuant to a separate agreement, the
Custodian) from which it borrows money for investment or for temporary or
emergency purposes using Securities as collateral for such borrowings, a notice
or undertaking in the form currently employed by any such bank setting forth
the amount which such bank will loan to the Fund against delivery of a stated
amount of collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a) the name of the
bank; (b) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly endorsed by the
Fund, or other loan agreement; (c) the time and date, if known, on which the
loan is to be entered into; (d) the date on which the loan becomes due and
payable; (e) the total amount payable to the Fund on the borrowing date; (f)
the market value of Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of shares or the
principal of any particular Securities; and (g) a statement specifying whether
such loan is for investment purposes or for temporary or emergency purposes and
that such loan is in conformance with the Investment Company Act of 1940 and
the Fund's prospectus. The Custodian shall deliver on the borrowing date
specified in a Certificate the specified collateral and the executed promissory
note, if any, against delivery by the lending bank of the total amount of the
loan payable, provided that the same conforms to the total amounts payable as
set forth in the Certificate. The Custodian may, at the option of the lending
bank, keep such collateral in its possession, but such collateral shall be
subject to all rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver such Securities
as additional collateral as may be specified in a Certificate to collateralize
further any transaction described in this paragraph. The Fund shall cause all
Securities released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to
specify in a Certificate the name of the issuer, the title and number of shares
or the principal amount of any particular Securities to be delivered as
collateral by the Custodian, the Custodian shall not be under any obligation to
deliver any Securities.

ARTICLE XI
LOANS OF PORTFOLIO SECURITIES OF THE FUND

1. If the Fund is permitted by the terms of the Company's Articles
of Incorporation and as disclosed in the Fund's most recent and currently
effective prospectus to lend its portfolio Securities, within twenty-four (24)
hours after each loan of portfolio Securities the Fund shall deliver or cause
to be delivered to the Custodian a Certificate specifying with respect to each
such loan: (a) the name of the issuer and the title of the Securities; (b) the
number of shares or the

-11-
<PAGE> 12
principal amount loaned; (c) the date of loan and delivery; (d) the total
amount to be delivered to the Custodian against the loan of the Securities,
including the amount of cash collateral and the premium, if any, separately
identified; and (e) the name of the broker, dealer or financial institution to
which the loan was made. The Custodian shall deliver the Securities thus
designated to the broker, dealer or financial institution to which the loan was
made upon receipt of the total amount designated as to be delivered against the
loan of Securities. The Custodian may accept payment in connection with a
delivery otherwise than through the Book-Entry System or Depository only in the
form of a certified or bank cashier's check payable to the order of the Fund or
the Custodian drawn on New York Clearing House funds and may deliver Securities
in accordance with the customs prevailing among dealers in securities.

2. Promptly after each termination of the loan of Securities by
the Fund, it shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan termination and return of
Securities: (a) the name of the issuer and the title of the Securities to be
returned; (b) the number of shares or the principal amount to be returned; (c)
the date of termination; (d) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the Certificate.

ARTICLE XII
THE CUSTODIAN

1. Except as hereinafter provided, neither the Custodian nor its
nominee shall be liable for any loss or damage, including attorney's fees,
resulting from its action or omission to act or otherwise, either hereunder or
under any Margin Account Agreement, except for any such loss or damage arising
out of its own negligence or willful misconduct. The Custodian may, with
respect to questions of law arising hereunder or under any Margin Account
Agreement, apply for and obtain the advice and opinion of counsel to the Fund
or of its own counsel, at the expense of the Fund, and shall be fully protected
with respect to anything done or omitted by it in good faith in conformity with
such advice or opinion. The Custodian shall be liable to the Fund for any loss
or damage resulting from the use of the Book-Entry System or any Depository
arising by reason of any negligence, misfeasance or willful misconduct on the
part of the Custodian or any of its employees or agents.

2. Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for:

-12-
<PAGE> 13
(a) The validity of the issue of any Securities purchased, sold or
written by or for the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount paid or received thereof;

(b) The legality of the issue or sale of any of the Fund's Shares,
or the sufficiency of the amount to be received therefor;

(d) The legality of the declaration or payment of any dividend by
the Fund;

(e) The legality of any borrowing by the Fund using Securities as
collateral;

(f) The legality of any loan of portfolio Securities pursuant to
Article XI of this Agreement, nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral delivered to it by a broker,
dealer or financial institution or held by it at any time as a result of such
loan of portfolio Securities of the Fund is adequate collateral for the Fund
against any loss it might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under any duty or
obligation periodically to check or notify the Fund that the amount of such
cash collateral held by it for the Fund is sufficient collateral for the Fund,
but such duty or obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities of the
Fund are lent pursuant to Article XI of this Agreement makes payment to it of
any dividends or interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due; or

(g) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Segregated Security Account or
Collateral Account in connection with transactions by the Fund. In addition,
the Custodian shall be under no duty or obligation to see that any broker,
dealer, or Clearing Member makes payment to the Fund of any variation margin
payment or similar payment which the Fund may be entitled to receive from such
broker, dealer, or Clearing Member, to see that any payment received by the
Custodian from any broker, dealer, or Clearing Member is the amount the Fund is
entitled to receive, or to notify the Fund of the Custodian's receipt or
non-receipt of any such payment; provided, however, that the Custodian, upon
the Fund's written request, shall as Custodian, demand from any broker, dealer,
or Clearing Member identified by the Fund the payment of any variation margin
payment or similar payment that the Fund asserts it is entitled to receive
pursuant to the terms of a Margin Account Agreement or otherwise from such
broker, dealer, or Clearing Member.

3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such

-13-
<PAGE> 14
money directly or by the final crediting of the account representing the Fund's
interest at the Book-Entry System or the Depository.

4. The Custodian shall have no responsibility and shall not be
liable for ascertaining or acting upon any calls, conversions, exchanges,
offers, tenders, interest rate changes or similar matters relating to
Securities held in the Depository unless the Custodian shall have actually
received timely notice from the Depository. In no event shall the Custodian
have any responsibility or liability for the failure of the Depository to
collect, or for the late collection or late crediting by the Depository of any
amount payable upon Securities deposited in the Depository which may mature or
be redeemed, retired, called or otherwise become payable. However, upon receipt
of a Certificate from the Fund of an overdue amount on Securities held in the
Depository, the Custodian shall make a claim against the Depository on behalf
of the Fund, except that the Custodian shall not be under any obligation to
appear in, prosecute or defend any action, suit or proceeding in respect to any
Securities held by the Depository which in its opinion may involve it in
expense or liability, unless indemnity satisfactory to it against all expense
and liability be furnished as often as may be required.

5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution by
the Transfer Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agreement.

6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by
a Certificate and (ii) it shall be assured to its satisfaction of reimbursement
of its costs and expenses in connection with any such action.

7. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as sub- custodian(s), including, but not limited
to, banking institutions located in foreign countries, of Securities and moneys
at any time owned by the Fund, upon terms and conditions approved in a
Certificate, which shall, if requested by the Custodian, be accompanied by an
approving resolution of the Company's Board of Directors adopted in accordance
with Rule 17f-5 under the Investment Company Act of 1940, as amended.

8. The Custodian shall not be under any duty or obligation to
ascertain whether any Securities at any time delivered to or held by it for the
account of the Fund are such as properly may be held by the Fund under the
provisions of its Articles of Incorporation.

9. The Custodian shall not be entitled to compensation for
providing custody services to the Fund so long as the Custodian receives fees
for providing agency services to the Fund. If it no longer receives
compensation for providing such services, the Custodian shall be entitled to
such reasonable fees as it may from time to time negotiate with the Fund.

-14-
<PAGE> 15
10. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing received by the Custodian and reasonably
believed by the Custodian to be a Certificate. The Custodian shall be entitled
to rely upon any Oral Instructions and any Written Instructions actually
received by the Custodian pursuant to Article IV or VII hereof. The Fund agrees
to forward to the Custodian a Certificate or facsimile thereof, confirming such
Oral Instructions or Written Instructions in such manner so that such
Certificate or facsimile thereof is received by the Custodian, whether by hand
delivery, telex or otherwise, by the close of business of the same day that
such Oral Instructions or Written Instructions are given to the Custodian. The
Fund agrees that the fact that such confirming instructions are not received by
the Custodian shall in no way affect the validity of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions given to the Custodian
hereunder concerning such transactions, provided such instructions reasonably
appear to have been received from an Authorized Person.

11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, or Clearing Member.

12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws, rules and
regulations. The Fund, or the Fund's authorized representative(s), shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative(s) at the Fund's expense.

13. The Custodian shall provide the Company with any report
obtained by the Custodian on the system of internal accounting control of the
Book-Entry System or the Depository and with such reports on its own systems of
internal accounting control as the Company may reasonably request from time to
time.

14. The Fund agrees to indemnify the Custodian against and save
the Custodian harmless from all liability, claims, losses and demands
whatsoever, including attorney's fees, howsoever arising or incurred because of
or in connection with the Custodian's payment or non-payment of checks pursuant
to paragraph 6 of Article IX as part of any check redemption privilege program
of the Fund, except for any such liability, claim, loss and demand arising out
of the Custodian's own negligence or willful misconduct.

15. Subject to the foregoing provisions of this Agreement, the
Custodian may deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to

-15-
<PAGE> 16
be made and received by the Custodian in accordance with the customs prevailing
from time to time among brokers or dealers in such Securities.

16. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set
forth in this Agreement or Appendix D attached hereto, and no covenant or
obligation shall be implied in this Agreement against the Custodian.

ARTICLE XIII
TERMINATION

1. This Agreement shall continue until January 5, 1997, and
thereafter shall continue automatically for successive annual periods ending on
the last day of December of each year, provided such continuance is
specifically approved at least annually by (i) the Company's Directors or (ii)
vote of a majority (as defined in the Investment Company Act of 1940) of the
Fund's outstanding voting securities, provided that in either event its
continuance also is approved by a majority of the Company's Directors who are
not "interested persons" (as defined in said Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable without penalty, on sixty (60)
days' notice, by the Company's Directors or, by vote of holders of a majority
of the Fund's Shares or, upon not less than ninety (90) days' notice, by the
Custodian. In the event such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Directors of the Company on behalf
of the Fund, certified by the Secretary or any Assistant Secretary, electing to
terminate this Agreement and designating a successor custodian or custodians,
each of which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. In the event such notice is
given by the Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of the Directors, certified by
the Secretary or any Assistant Secretary, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the Custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon
the date set forth in such notice, this Agreement shall terminate and the
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date deliver directly to the successor custodian all
Securities and moneys then owned by the Fund and held by it as Custodian, after
deducting all fees, expenses, and other amounts for the payment of
reimbursement of which shall then be entitled.

2. If a successor custodian is not designated by the Company on
behalf of the Fund or the Custodian in accordance with the preceding paragraph,
the Fund shall, upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities (other than
Securities held in the Book-Entry System which cannot be delivered to the Fund)
and moneys then owned by the Fund, be deemed to be its own custodian, and the
Custodian shall thereby be relieved of all duties and responsibilities pursuant
to this Agreement, other than the duty with respect to Securities held in the
Book-Entry System, in any Depository or by a Clearing Member which cannot be
delivered to the Fund, to hold such Securities hereunder in accordance with
this Agreement.

-16-
<PAGE> 17
ARTICLE XIV
MISCELLANEOUS

1. Annexed hereto as Appendix A is a Certificate signed by two of
the present Officers of the Company under its seal, setting forth the names and
the signatures of the present Authorized Persons. The Company agrees to furnish
to the Custodian a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or in the event
that other or additional Authorized Persons are elected or appointed. Until
such new Certificate shall be received, the Custodian shall be fully protected
in acting under the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the last delivered
Certificate.

2. Annexed hereto as Appendix B is a Certificate signed by two of
the present Officers of the Company under its seal, setting forth the names and
the signatures of the present Officers of the Company. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event any
such present Officer ceases to be an Officer of the Company, or in the event
that other or additional Officers are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully be protected in
acting under the provisions of this Agreement upon the signatures of the
Officers as set forth in the last delivered Certificate.

3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall be deemed
sufficiently given if addressed to the Custodian and mailed or delivered to it
at its offices at 420 Montgomery Street, San Francisco, California, 94105, or
at such other place as the Custodian may from time to time designate in
writing.

4. Any notice or other instrument in writing, authorized or
required by this Agreement to be given by or on behalf of the Fund, shall be
deemed sufficiently given if addressed to the Fund and mailed or delivered to
it at its office at 111 Center Street, Little Rock, Arkansas, 72201, or at such
other place as the Fund may from time to time designate in writing.

5. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties to this Agreement and
approved by a resolution of the Directors of the Company.

6. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successor(s) and assign(s); provided,
however, that this Agreement shall not be assignable by the Company without the
written consent of the Custodian, or by the Custodian without the written
consent of the Company, authorized or approved by a resolution of its
Directors.

7. This Agreement shall be construed in accordance with the laws
of the State of California.

-17-
<PAGE> 18
8. This Agreement may be executed in any number of counterparts,
each which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.

-18-
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective Officers, thereunto duly authorized, as of
the day and year first above written.

OVERLAND EXPRESS FUNDS, INC. WELLS FARGO BANK, N.A.

By: /s/ Richard H. Blank, Jr. By: /s/ Elizabeth A. Gottfried
------------------------------ --------------------------------
Name: Richard H. Blank Name: Elizabeth A. Gottfried
---------------------------- ------------------------------
Title: Chief Operating Officer Title: Vice President
--------------------------- -----------------------------

By: /s/ Vito P. Limitone
--------------------------------
Name: Vito P. Limitone
------------------------------
Title: Senior Vice President
-----------------------------

-19-
<PAGE> 20
APPENDIX A

AUTHORIZED PERSONS

Pursuant to Article I, Par. 1, and Article XIV, Para. 1, of
the Custody Agreement, the following persons have been authorized by the Board
of Directors to give Oral Instructions and Written Instructions on behalf of
the Fund.

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

By: ________________________ By: ________________________

Name: ______________________ Name: ______________________

Title: _____________________ Title: _____________________

A
<PAGE> 21
APPENDIX B

OFFICERS

Pursuant to Article I, Para. 8, and Article XIV, Para. 2,
of the Custody Agreement, the term "Officers" does not include any persons
other than the President, Vice President, Secretary, Treasurer, Controller,
Assistant Secretary and Assistant Treasurer; and the following persons are
Officers of the Company authorized by the Board of Directors to execute any
Certificate, instruction, notice or other instrument on behalf of the Fund.

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

Signature: ________________________

Name: _____________________________

By: ________________________ By: ________________________

Name: ______________________ Name: ______________________

Title: _____________________ Title: _____________________

B
<PAGE> 22
APPENDIX C

DESIGNATED PUBLICATIONS LIST FOR CALLED INSTRUMENTS

The following publications are designated publications for the
purposes of Article III, Para. 5(b):

A. The Bond Buyer

B. The Depository Trust Company Notices

C. Financial Daily Card Services

D. The New York Times

E. Standard & Poor's Called Bond Record

F. The Wall Street Journal

C
<PAGE> 23
APPENDIX D

COMPANY AND FUND ACCOUNTING SERVICES:
Schedule of Services

A. Maintain Fund general ledger and journal.

B. Prepare and record disbursements for direct Fund expenses.

C. Prepare daily money transfers.

D. Reconcile all Fund bank and custodian accounts.

E. Assist Fund independent auditors as appropriate.

F. Prepare daily projection of available cash balances.

G. Record trading activity for purposes of determining net asset values and
daily dividend.

H. Prepare daily portfolio evaluation report to value portfolio Securities
and determine daily accrued income.

I. Determine the daily net asset value per share.

J. Determine the daily dividend per share.

K. Prepare monthly, quarterly, semi-annual and annual financial statements.

L. Provide financial information for reports to the Securities and Exchange
Commission in compliance with the provisions of the Investment Company
Act of 1940 and the Securities Act of 1933, the Internal Revenue Service
and any other regulatory or governmental agencies as required.

M. Provide financial, yield, net asset value, etc., information to National
Association of Securities Dealers, Inc., and other survey and statistical
agencies as instructed from time to time by the Fund.

<PAGE> 1

EX-99.B9(a)(xi)

ADMINISTRATION AGREEMENT

National Tax-Free Institutional Money Market Fund

a portfolio of

OVERLAND EXPRESS FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201

January 5, 1996

Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201

Dear Sirs:

This will confirm the agreement between the undersigned (the
"Company") on behalf of the National Tax-Free Institutional Money Market Fund
(the "Fund") and Stephens Inc. (the "Administrator") as follows:

1. The Company is a registered open-end, management investment
company currently consisting of fifteen investment portfolios, but which may
from time to time consist of a greater or lesser number of investment
portfolios (the "Funds"). The Company proposes to engage in the business of
investing and reinvesting the assets of the Fund in the manner and in
accordance with the investment objective and restrictions specified 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 Administrator. Any amendments
to the Registration Statement shall be furnished to the Administrator promptly.

2. The Company is engaging the Administrator to provide the
administrative services specified elsewhere in this agreement, subject to the
overall supervision of the Board of Directors of the Company. The Company's
Board of Directors has directed that the Fund achieve its investment objective
by investing the Fund's assets in a corresponding portfolio of Master
Investment Trust (the "Trust"), another registered investment company, which is
advised by Wells Fargo Bank, N.A. (the "Adviser"), until such time as the Board
decides to invest the Fund's assets in another registered investment company or
enters into an advisory contract to directly manage the Fund's assets.

3. The Administrator shall, at its expense, provide the following
administrative services in connection with the operations of the Company and
the Fund: (a) furnishing office space and certain facilities required for
conducting the business of the Fund; (b) general supervision of the operation
of the Fund, including coordination of the services performed by the Trust's or
Company's investment adviser (if any), transfer agent, shareholder servicing
agents, custodian, independent auditors and legal counsel; regulatory

<PAGE> 2
compliance, including the compilation of information for documents such as
reports to, and filings with, the Securities and Exchange Commission and state
securities commissions; and preparation of proxy statements and shareholder
reports for the Company; (c) the compensation of the Company's directors,
officers and employees who are affiliated with the Administrator; (d) general
supervision relating to the compilation of data required for the preparation of
periodic reports on the performance of its obligations under this agreement and
statements of the Fund that are distributed to the Company's officers and Board
of Directors and the preparation of such additional reports and information as
the Company's Board of Directors or officers shall reasonably request; and (e)
all other administrative services reasonably necessary for the operation of the
Fund, other than those services that are to be provided by the Company's
shareholder servicing agents and transfer and dividend disbursing agent.

4. Except as provided in each of the Company's advisory contracts and
administration agreements, the Company shall bear all costs of its operations,
including any Fund's pro rata share of the cost of operations of a Master
Portfolio in which it invests; the compensation of its directors who are not
affiliated with any investment adviser of the Company's Funds, the
Administrator or any of their affiliates; any advisory, shareholder servicing
and administration fees; payments for distribution-related expenses pursuant to
any Rule 12b-1 Plan, i.e., a plan of distribution of the Company adopted on
behalf of any of the Funds pursuant to Rule 12b-1 under the Act; 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; any 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; pricing services, if any; organizational
expenses; and any extraordinary expenses. Expenses attributable to one or more,
but not all, of the 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.

5. The Administrator shall give the Company the benefit of the
Administrator's best judgment and efforts in rendering services under this
agreement. As an inducement to the Administrator's undertaking to render these
services, the Company agrees that the Administrator shall not be liable under
this agreement for any mistake in judgment or in any other event whatsoever
except for lack of good faith, provided that nothing in this agreement shall be
deemed to protect or purport to protect the Administrator against any liability
to the Company or its shareholders to which the Administrator would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of the Administrator's duties under this agreement or by reason
of reckless disregard of its obligations and duties hereunder.

6. In consideration of the service to be rendered by the
Administrator under this agreement, the Company shall pay the Administrator a
monthly fee on the first business day of each month, at the annual rate of
0.05% of the average daily value (as determined on each business day at the
time set forth in the Registration Statement for determining net

2
<PAGE> 3
asset value per share) of the Fund's net assets during the preceding month. If
the fee payable to the Administrator pursuant to this paragraph 6 begins to
accrue after the beginning of any month or if this agreement terminates before
the end of any month, the fee for the period from the effective date to the end
of that month or from the beginning of that month to the termination date,
respectively, shall be prorated according to the proportion that the period
bears to the full month in which the effectiveness or termination occurs. For
purposes of calculating each such monthly fee, the value of the Fund's net
assets shall be computed in the manner specified in the Company's Registration
Statement and the Company's Articles of Incorporation for the computation of
the value of the Fund's net assets in connection with the determination of the
net asset value of Fund shares.

7. If in any fiscal year the total expenses incurred by, or allocated
to, the Fund, excluding taxes, interest, brokerage commissions and other
portfolio transaction expenses, other expenditures that are capitalized in
accordance with generally accepted accounting principles, extraordinary
expenses and amounts accrued or paid under a Rule 12b-1 Plan of the Fund, but
including the fees provided for in paragraph 6 and those provided for pursuant
to any investment advisory contract of the Fund or Trust ("includable
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 Administrator 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 6 hereof, and the denominator of which shall be the
sum of such percentage plus the percentage at which the excess portion
attributable to any fee payable pursuant to an investment advisory contract of
the Fund and/or the Trust, to the extent the Fund has invested its assets in
the Trust, is calculated (the "Applicable Ratio"), but only to the extent of
the fee hereunder for the fiscal year. If the fees payable under this agreement
and/or the Fund's or Trust's investment advisory contract 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 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 includable expenses accrued during that fiscal year to
the end of that period and shall estimate the includable expenses for the
balance of that fiscal year. If as a result of that review and estimation it
appears likely that the includable expenses will exceed the limitations
referred to in this paragraph 7 for a fiscal year with respect to the Fund, the
monthly fee set forth in paragraph 6 payable to the Administrator for such
month shall be reduced, subject to a later adjustment, but 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 includable expenses for the fiscal year are expected to
exceed the limitations provided for in this paragraph 7. For purposes of
computing the excess, if any, over the most restrictive applicable expense
limitation, the value of the Fund's net assets shall be computed in the manner
specified in the last sentence of paragraph 6, and any reimbursements required
to be made by the Administrator shall be made once a year promptly after the
end of the Company's fiscal year.

8. This agreement shall become effective on its execution date and
shall thereafter continue in effect for a period of no less than two years.
Thereafter, this agreement may be terminated at any time, without the payment
of any penalty, by a vote of a majority of the Fund's outstanding voting
securities (as defined in the Act) and by a vote of a majority of the Company's
entire Board of Directors on 60 days' written notice to the Administrator or by
the Administrator on 60 days' written notice to the Company.

3
<PAGE> 4
9. Except to the extent necessary to perform the Administrator's
obligations under this agreement, nothing herein shall be deemed to limit or
restrict the right of the Administrator, or any affiliate of the Administrator,
or any employee of the Administrator 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.

10. This agreement shall be governed by and construed in accordance
with the laws of the State of Arkansas.

If the foregoing correctly sets forth the agreement between the
Company and the Administrator, please so indicate by signing and returning to
the Company the enclosed copy hereof.

Very truly yours,

OVERLAND EXPRESS FUNDS, INC.,
on behalf of the National Tax-Free
Institutional Money Market Fund

By: /s/ Richard H. Blank, Jr.
----------------------------------
Name: Richard H. Blank, Jr.

Title: Chief Operating Officer,
Secretary and Treasurer

ACCEPTED as of the date
set forth above:

STEPHENS INC.

By: /s/ Richard H. Blank, Jr.
--------------------------------
Title: Vice President
-----------------------------

<PAGE> 1
EX-99.B9(b)(ii)

AGENCY AGREEMENT

This agreement is made and entered into as of this 5th day of
January, 1996 (the "Agreement"), by and between OVERLAND EXPRESS FUNDS, INC., a
registered management investment company incorporated under the laws of the
State of Maryland (the "Company"), and Wells Fargo Bank, N.A., a national
banking association ("Agent"), for transfer agency and dividend disbursing
services as follows:

I. SERVICES.

A. Appointment of Agent. The Company hereby appoints
Agent as its transfer and dividend disbursing agent for National Tax-Free
Institutional Money Market Fund (the "Fund") and Agent accepts such
appointment.

B. Description of Services. Agent agrees to provide the
Fund with the facilities and services described and set forth on Schedule A
attached hereto and incorporated herein by reference.

The Fund invests all of its assets in the Tax-Free Money
Market Master Portfolio (the "Master Portfolio") of Master Investment Trust.
Agent serves as the investment adviser to the Master Portfolio. Agent will not
be entitled to receive a fee for providing transfer and dividend disbursing
services to the Fund so long as Agent is entitled to receive advisory fees from
the Master Portfolio.

II. EXPENSES. The Company, on behalf of the Fund, shall promptly
reimburse Agent for all reasonable out-of- pocket expenses incurred by Agent in
connection with the performance of services under this Agreement, including,
without limitation, the following:

A. Postage, including first class mail insurance in
connection with mailing share certificates, express delivery, etc.;

B. Envelopes, check forms, continuous forms, forms for
reports and statements, stationery and other similar supplies;

C. Fees and costs of outside legal counsel employed by
Agent;

D. Banking services, fees, and costs for wire transfers,
deposit accounts, etc.;

E. Expenses of fidelity and liability insurance and
bonding;

F. Fees and costs relating to the use, licensing,
development or implementation of data processing software used by or for the
Company;

G. Data transmission expenses;

1
<PAGE> 2
H. Costs and microfilm/microfiche; and

I. Costs for telephone lines and equipment.

III. TERM. This Agreement shall become effective as of the date
first above written and shall continue until terminated pursuant to its
provisions.

IV. INSURANCE. Agent agrees to procure and maintain such fidelity
bond coverage as may be required by the Investment Company Act of 1940 (the
"1940 Act"), in the amounts and with such deductibles as are required by or
permitted under the 1940 Act, as it may be amended from time to time.

V. REGISTRATION AND COMPLIANCE.

A. Agent represents that it is registered as a transfer
agent with the Securities and Exchange Commission ("SEC") pursuant to Section
17A of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules
and regulations promulgated thereunder, and Agent agrees to maintain said
registration current and comply with all of the requirements of the Exchange
Act, rules and regulations during the term of this Agreement.

B. The Company represents that it is a management
investment company registered with the SEC in accordance with the 1940 Act and
the rules and regulations promulgated thereunder. The Company is authorized to
offer and sell Fund shares pursuant to the 1940 Act, the Securities Act of
1933, as amended ("1933 Act"), and the rules and regulations promulgated
thereunder. The Company agrees promptly to advise Agent of any change in or
limitation upon its authority to carry on business as an investment company
pursuant to the 1940 Act, the Exchange Act and the 1933 Act and the statutes,
rules and regulations of each and every jurisdiction to which it is subject.

VI. DOCUMENTATION. The Company and Agent shall each supply to the
other upon request such documentation as is required by them to carry out their
respective obligations under this Agreement including, but not limited to,
articles of incorporation, bylaws, codes of ethics, registration statements,
permits, financial reports, third party audits, certificates of authority,
computer tapes and related items.

VII. PROPRIETARY INFORMATION. It is agreed that all records and
documents, excepting computer data processing programs and any related
documentation used or prepared by, or on behalf of Agent for the performance of
its services hereunder, are the property of the Company and shall be open to
audit or inspection by the Company or its agents during the normal business
hours of Agent, shall be maintained in a manner designed to preserve the
confidentiality thereof and to comply with applicable federal and state laws
and regulations, and shall, in whole or any specified part, be surrendered to
the Company or its duly authorized agents upon receipt by Agent of reasonable
notice of and request therefor.

2
<PAGE> 3
VIII. INDEMNITY. The Company, on behalf of the Fund, shall indemnify
and hold Agent harmless against any losses, claims, damages, liabilities or
expenses (including reasonable attorney's fees and expenses) resulting from any
claim, demand, action or suit brought by any person other than the Company
(including a shareholder naming the Company or the Fund as a party) and not
resulting from Agent's bad faith, willful misfeasance, reckless disregard of
its obligations and duties, gross negligence or breach of this Agreement, and
arising out of, or in connection with:

A. Agent's performance hereunder;

B. Any error or omission in any record (including but
not limited to magnetic tapes, computer printouts, hard copies and microfilm or
microfiche copies) delivered, or caused to be delivered, by the Company to
Agent in connection with this Agreement;

C. Bad faith, willful misfeasance, reckless disregard of
its obligations and duties or negligence of the Company or Agent's acting upon
any instructions reasonably believed by it to have been properly executed or
communicated by any person duly authorized by the Company;

D. Agent's acting in reliance upon advice given by
counsel for Agent or upon advice reasonably believed by it to have been given
by counsel for the Company; or

E. Agent's acting in reliance upon any instrument
reasonably believed by it to have been genuine and signed, countersigned or
executed by the proper person(s) in accordance with the currently effective
certificate(s) of authority delivered to Agent by the Company.

In the event that Agent requests the Company to
indemnify or hold it harmless hereunder, agent shall use its best efforts to
inform the Company of the relevant facts concerning the matter in question.
Agent shall use reasonable care to identify and promptly notify the Company
concerning any matter which presents, or appears likely to present, a claim for
indemnification against the Company or the Fund.

The Company shall have the election of defending
Agent against any claim which may be the subject of indemnification hereunder.
In the event the Company so elects, it will so notify Agent and thereupon the
Company shall take over defense of the claim, and (if so requested by the
Company) Agent shall incur no further legal limit or other expenses related
thereto for which it would be entitled to indemnity hereunder; provided,
however, that nothing herein contained shall prevent Agent from retaining, at
its own expense, counsel to defend any claim. Except with the Company's prior
consent, Agent shall in no event confess any claim or make any compromise in
any matter in which the Company will be asked to indemnify or hold harmless
hereunder.

3
<PAGE> 4
IX. LIABILITY

A. Damages. Agent shall not be liable to the Company, or
any third party, for punitive, exemplary, indirect, special or consequential
damages (even if Agent has been advised of the possibility of such damages)
arising from its obligations and the services provided under this Agreement,
including but not limited to loss of profits, loss of use of the shareholder
accounting system, cost of capital and expenses of substitute facilities,
programs or services.

B. Force Majeure. Anything in this Agreement to the
contrary notwithstanding, Agent shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts or civil or military authority, national emergencies, work
stoppage, fire, flood, catastrophe, earthquake, acts of God, insurrection, war,
riot, data processing and communications downtime (where such downtime occurs
for reasons other than Agent's gross negligence or willful misconduct) or
interruption of power supply.

X. AMENDMENT. This Agreement and the Schedule attached hereto and
made a part hereof may be amended at any time, with or without shareholder
approval (except as otherwise required by law), in writing signed by each of
the parties hereto. Any change in the Company's registration statements or
other documents of compliance or in the forms relating to any plan, program or
service offered by its current prospectuses which would require a change in
Agent's obligations hereunder shall be subject to Agent's approval, which
approval shall not be unreasonably withheld.

XI. TERMINATION. This Agreement may be terminated by either party
without cause upon one hundred twenty (120) days prior written notice to the
other, and at any time for cause in the event that such cause remains
unremedied for more than thirty (30) days after receipt by the other party of
written specification of such cause.

In the event the Company designates a successor to any of
Agent's obligations hereunder, Agent shall, at the expense and pursuant to the
direction of the Company, transfer promptly to such successor all relevant
books, records and other data of the Company in the possession or under the
control of Agent.

XII. SEVERABILITY. If any clause or provision of this Agreement is
determined to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, then such clause or provision shall be
considered severed herefrom and the remainder of this Agreement shall continue
in full force and effect.

XIII. APPLICABLE LAW. This Agreement shall be subject to and
construed in accordance with the laws of the State of California.

XIV. ENTIRE AGREEMENT. Except as otherwise provided herein, this
Agreement constitutes the entire and complete agreement of the parties hereto
relating to the subject matter hereof and supersedes and merges all prior
contracts and discussions between the parties.

4
<PAGE> 5
XV. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
Agreement and each of which shall be deemed an original.

OVERLAND EXPRESS FUNDS, INC. WELLS FARGO BANK, N.A.

By: /s/ Richard H. Blank, Jr. By: /s/ Elizabeth Gottfried
------------------------------- ------------------------------
Name: Richard H. Blank, Jr. Name: Elizabeth Gottfried
----------------------------- ----------------------------
Title: Chief Operating Officer Title: Vice President
---------------------------- ---------------------------

By: /s/ James Nolan
------------------------------
Name: James Nolan
----------------------------
Title: Vice President
---------------------------

5
<PAGE> 6
SCHEDULE A

SCHEDULE OF SERVICES

1. Share Transfer and Dividend Disbursing Services

A. Maintaining shareholder accounts, including processing new
accounts.

B. Posting address changes and other file maintenance for
shareholder accounts.

C. Posting all transactions to the shareholder file,
including:

- Direct purchase
- Wire order purchases
- Direct redemptions
- Telephone redemption
- Wire order redemption
- Direct exchanges
- Dividend payments
- Dividend reinvestments
- Telephone Exchanges
- Transfers

D. Insuring accuracy and deduction of fees.

E. Preparing daily reconciliations of shareholder processing
to money movement instructions.

F. Issuing all checks and stopping and replacing checks.

G. Performing certain of the Trust's other mailings,
including:

- Dividend and capital gain distributions
- K-1/year-end shareholder reporting
- Furnish certified list of shareholders (hard copy of
microfilm)

H. Maintaining and retrieving all required past history for
shareholders and provide research capabilities as follows:

- Daily monitoring of all processing activity to verify
back-up documentation
- Providing exception reports
- Microfilming
- Storing, retrieving and archiving records in
accordance with Rules 31a-1, 31a-2, and 31a-3
under the 1940 Act.

I. Reporting and remitting as necessary for state escheat
requirements.

<PAGE> 1
EX-99.B10

April 30, 1996 (202) 887-1500

Overland Express Funds, Inc.
111 Center Street
Little Rock, Arkansas 72201

Re: Shares of Common Stock of Overland Express Funds, Inc.

Ladies/Gentlemen:

We refer to Post-Effective Amendment No. 33 and Amendment No. 35
to the Registration Statement on Form N-1A (SEC File Nos. 33-16296 and
811-8275) (the "Registration Statement") of Overland Express Funds, Inc., (the
"Company") relating to the registration of an indefinite number of shares of
common stock of the Asset Allocation, California Tax- Free Bond, California
Tax-Free Money Market, Money Market, Municipal Income, Overland Sweep,
Short-Term Municipal Income, Short-Term Government-Corporate Income, U.S.
Government Income, U.S. Treasury Money Market and Variable Rate Government
Funds of the Company (collectively, the "Shares").

We have been requested by the Company to furnish this opinion as
Exhibit 10 to the Registration Statement.

We have examined documents relating to the organization of the
Company and its series and the authorization and issuance of shares of its
series. We have also verified with the Company's transfer agent the maximum
number of shares issued by the Company during fiscal year 1995.

Based upon and subject to the foregoing, we are of the opinion
that:

The issuance and sale of the Shares by the Company have been duly
and validly authorized by all appropriate action, and assuming delivery by sale
or in accord with the Fund's dividend reinvestment plan, in accordance with the
description set forth in
<PAGE> 2
the Funds' current prospectuses the Shares will be legally issued, fully paid
and nonassessable by the Company.

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 our firm under the caption "Legal Counsel" and the description of
advice rendered by our firm under the heading "Advisory, Administration and
Distribution Arrangements" in the Prospectus which is included as part of the
Registration Statement.

Very truly yours,

/s/ MORRISON & FOERSTER LLP
--------------------------------

MORRISON & FOERSTER LLP

<PAGE> 1
EX-99.B11

Independent Auditors' Consent

The Board of Directors and Shareholders
Overland Express Funds, Inc.:

We consent to incorporation by reference in the Overland Express
Funds, Inc. Post-Effective Amendment No. 33 to the Registration Statement
Number 33-16296 on Form N-1A under the Securities Act of 1933 and Amendment No.
35 to the Registration Statement Number 811-8275 on Form N-1A under the
Investment Company Act of 1940 of our report dated February 14, 1996, on the
statement of assets and liabilities, including the portfolio of investments, of
the Asset Allocation Fund, California Tax-Free Bond Fund, California Tax-Free
Money Market Fund, Money Market Fund, Municipal Income Fund, Short-Term
Government-Corporate Income Fund (formerly the 1-3 Year Duration Full Faith and
Credit Government Income Fund), Short-Term Municipal Income Fund (formerly the
1-3 Year Duration Municipal Income Fund), Strategic Growth Fund, U.S.
Government Income Fund, U.S. Treasury Money Market Fund, and Variable Rate
Government Fund (eleven funds comprising Overland Express Funds, Inc.) as of
December 31, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, except for Short-Term Government-Corporate Income Fund which
is for the period from September 19, 1994 (commencement of operations) to
December 31, 1994, and Short-Term Municipal Income Fund which is for the period
from June 3, 1994 (commencement of operations) to December 31, 1994, and the
financial highlights for the periods indicated therein, which report has been
incorporated by reference into the statements of additional information.

We also consent to incorporation by reference of our report dated
February 14, 1996, on the financial statements and financial highlights of
Short-Term Government-Corporate Income Master Portfolio (formerly the 1-3 Year
Duration Full Faith and Credit Government Income Master Portfolio), and
Short-Term Municipal Income Master Portfolio (formerly the 1-3 Year Municipal
Income Master Portfolio), (two of the master portfolios comprising Master
Investment Trust) as of December 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets and
financial highlights for the year then ended and for Short-Term
Government-Corporate Income Master Portfolio, the period from September 19, 1994
(commencement of operations) to December 31, 1994, and for Short-Term Municipal
Income Master Portfolio the period from June 3, 1994 (commencement of
operations) to December 31, 1994, which report has been incorporated by
reference in the statement of additional information.

We also consent to the reference to our firm under the heading
"Financial Highlights" in each prospectus and "Independent Auditors" in each
statement of additional information.

/s/ KPMG PEAT MARWICK LLP

San Francisco, California
April 26, 1996
<PAGE> 2

Independent Auditors' Consent

The Board of Directors and Shareholders
Overland Express Funds, Inc.:

We also consent to incorporation by reference of our report dated
February 14, 1996, on the statement of assets and liabilities, including the
portfolio of investments, of Cash Investment Trust Master Portfolio (one of the
series comprising Master Investment Trust) as of December 31, 1995, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
financial highlights for the periods indicated therein, which report has been
incorporated by reference in the statement of additional information.

We also consent to the reference to our firm under the heading
"Financial Highlights" in the prospectus and "Independent Auditors" in the
statement of additional information.

/s/ KPMG PEAT MARWICK LLP

San Francisco, California
April 26, 1996