<PAGE> 1
As filed with the Securities and Exchange Commission
on July 2, 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. 34
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 36 [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):
[ ] 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)
[X] 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
officer.
<PAGE> 3
EXPLANATORY NOTE
This Post-Effective Amendment to the Registration Statement (the
"Amendment") of Overland Express Funds, Inc. (the "Company") is being filed to
register a new series of the Company offering Class A, Class B and Class D
Shares - the Small Cap Strategy Fund (the "Fund"). The Fund will be a feeder
fund in a master/feeder structure, investing substantially all of its assets
into a newly organized series, the Small Cap Master Portfolio, to be registered
in Master Investment Trust (SEC File No. 811-6415).
This Amendment does not affect the Registration Statement for the
Company's 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 Municipal Income, Short-Term
Government-Corporate Income, Strategic Growth, U.S. Government Income, U.S.
Treasury Money Market and Variable Rate Government Funds.
<PAGE> 4
Cross Reference Sheet
Small Cap Strategy Fund
Form N-1A Item Number
- ---------------------
Part A Prospectus Captions
------ -------------------
1 Cover Page
2 Prospectus Summary; Summary of Expenses
3 Not Applicable
4 Management of the Fund and the Master Portfolio; How the Fund Works
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 Cover Page
13 Investment Restrictions
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 Tax
21 Distribution Plans
22 Performance Calculation
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
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 SMALL CAP STRATEGY FUND (the "Fund"). This Prospectus
describes three classes of shares of the Fund -- Class A Shares, Class B Shares
and Class D Shares.
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK ABOVE-AVERAGE LONG-TERM
CAPITAL APPRECIATION IN ORDER TO PROVIDE INVESTORS WITH A RATE OF TOTAL RETURN
EXCEEDING THAT OF THE RUSSELL 2000 INDEX (BEFORE FEES AND EXPENSES) OVER A TIME
HORIZON OF THREE TO FIVE YEARS. THE FUND SEEKS TO ACHIEVE THIS OBJECTIVE BY
INVESTING ALL OF ITS ASSETS IN THE SMALL CAP MASTER PORTFOLIO ( THE "MASTER
PORTFOLIO") OF MASTER INVESTMENT TRUST (THE "TRUST"), AN OPEN-END, SERIES
INVESTMENT COMPANY, RATHER THAN IN A PORTFOLIO OF SECURITIES. THE MASTER
PORTFOLIO HAS THE SAME INVESTMENT OBJECTIVE AS THE FUND AND THE FUND'S
INVESTMENT EXPERIENCE CORRESPONDS DIRECTLY WITH THE MASTER PORTFOLIO'S
INVESTMENT EXPERIENCE.
The Master Portfolio seeks to achieve its investment objective through
the active management of a broadly diversified portfolio consisting primarily
of growth-oriented common stocks with market capitalizations between $50
million and $1 billion at the time of acquisition.
This Prospectus sets forth concisely the information a prospective
investor should know before investing in the Fund. A Statement of Additional
Information ("SAI") dated September __, 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 1-800-552-9612.
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") 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.
<PAGE> 6
WELLS FARGO IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN
OTHER SERVICES TO THE FUND AND THE MASTER PORTFOLIO, FOR
WHICH IT IS COMPENSATED. STEPHENS INC. ("STEPHENS"),
WHICH IS NOT AFFILIATED WITH WELLS FARGO, 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 SEPTEMBER __, 1996
ii
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . 1
Summary of Expenses . . . . . . . . . . . . . . . . . . . . . 5
Investment Objective and Policies . . . . . . . . . . . . . . 7
Additional Permitted Investment Activities . . . . . . . . . 10
How the Fund Works . . . . . . . . . . . . . . . . . . . . . 15
Management of the Fund . . . . . . . . . . . . . . . . . . . 16
Determination of Net Asset Value . . . . . . . . . . . . . . 21
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . 23
Exchange Privileges . . . . . . . . . . . . . . . . . . . . . 29
Redemption of Shares . . . . . . . . . . . . . . . . . . . . 32
Distribution Plans . . . . . . . . . . . . . . . . . . . . . 35
Servicing Plan . . . . . . . . . . . . . . . . . . . . . . . 35
Dividends and Distributions . . . . . . . . . . . . . . . . . 35
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Custodian and Transfer and Dividend Disbursing Agent . . . . 40
Organization and Capital Stock . . . . . . . . . . . . . . . 40
</TABLE>
iii
<PAGE> 8
PROSPECTUS SUMMARY
The Company, as an open-end investment company, provides a convenient
way for you to invest in a portfolio of securities selected and supervised by
professional management. The following provides information about the Fund and
the Master Portfolio.
Q. WHAT ARE THE INVESTMENT OBJECTIVES AND PERMISSIBLE INVESTMENTS OF THE
FUND AND THE MASTER PORTFOLIO?
A. The SMALL CAP STRATEGY FUND seeks above-average long-term capital
appreciation in order to provide investors with a rate of total return
exceeding that of the Russell 2000 Index (before fees and expenses)
over a time horizon of three to five years. The Fund seeks to achieve
this investment objective by investing all of its assets in the Small
Cap Master Portfolio of the Trust, a professionally managed, open-end
series investment company. The Master Portfolio has the same
investment objective as the Fund. The Master Portfolio seeks to
achieve this investment objective through the active management of a
broadly diversified portfolio consisting primarily of growth-oriented
common stocks with market capitalizations between $50 million and $1
billion or less at the time of acquisition. The Master Portfolio
intends to sell the common stock of any company in its investment
portfolio after such Company's market capitalization exceeds $2
billion.
The Master Portfolio invests primarily in common stocks expected by
Wells Fargo, as investment adviser, to have above-average prospects
for capital appreciation. In pursuing the Master Portfolio's
investment objective, Wells Fargo seeks to invest in smaller-sized
companies, both domestic and foreign, that it believes to be
characterized by new or innovative products, services or processes
which should enhance prospects for growth of future earnings. The
Fund and Master Portfolio are designed to provide above-average
capital growth for investors willing to assume above-average risk. As
with all mutual funds, there can be no assurance that the Fund and
Master Portfolio will achieve their investment objectives.
The Russell 2000 Index is a subset of the larger Russell 3000 Index.
The Russell 3000 Index includes 3000 large U.S. companies that, as of
[September] 1, 1996, constituted approximately [98%] of the
capitalization of the U.S. equity market. The Russell 2000 Index
consists of the 2000 smallest securities in the larger Russell 3000
Index. As of September 1, 1996, the average market capitalization of
companies in the Russell 2000 Index was [$__] million.
See "Investment Objective and Policies" and "Additional Permitted
Investment Activities."
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo, as the investment adviser of the Master Portfolio,
manages the investments of the 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 Master Portfolio.
Wells
1
<PAGE> 9
Fargo also provides the Fund and the Master Portfolio with transfer
agency, dividend disbursing agency and custodial services. Wells Fargo
is entitled to receive a monthly advisory fee at the annual rate of
0.60% of the average daily net assets of the Master Portfolio.
See "Management of the Fund -- Investment Adviser."
Q. WHO IS THE SPONSOR, ADMINISTRATOR AND DISTRIBUTOR?
A. Stephens serves as the sponsor, administrator and distributor for the
Company and the Trust. See "Management of the Fund."
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN
THE FUND?
A. Investments in the Fund and Master Portfolio are not insured against
loss of principal, are not bank deposits or obligations of Wells
Fargo and are not insured by the Federal Deposit Insurance Corporation
("FDIC"). The Master Portfolio's equity investments are subject to
market risk. Market risk is the risk that stock prices will decline
over short or even extended periods. The U.S. stock market
experiences periods when stock prices rise and periods when stock
prices decline. Therefore, you should be prepared to accept some risk
with the money invested in the Fund. As with all mutual funds, there
can be no assurance that the Fund or the Master Portfolio will achieve
its investment objective.
The Master Portfolio may invest a significant portion of its assets in
the securities of smaller and newer issuers. Investments in such
companies may present opportunities for capital appreciation because
of high potential earnings growth. However, such investments may
present greater risks than investments in larger-size companies with
more established operating histories, diverse product lines and
financial capacity. Securities of small and new companies generally
trade less frequently or in limited volume, or only in the over-the-
counter market or on a regional securities exchange. As a result, the
prices of such securities may be more volatile than those of larger,
more established companies and, as a group, these securities may
suffer more severe price declines during periods of generally
declining equity prices.
Because the Master Portfolio engages in active portfolio management,
the Master Portfolio may experience relatively high turnover and
transaction (i.e., brokerage commission) costs. Portfolio turnover
also can generate short-term capital gains tax consequences. You
should consult your individual tax advisor with respect to your
particular tax situation.
See "Investment Objective and Policies" and "Additional Permitted
Investment Activities."
Q. HOW MAY I PURCHASE SHARES?
2
<PAGE> 10
A. Shares of the Fund may be purchased on any day the New York Stock
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 B Shares that are redeemed within four years of
purchase are subject to a maximum contingent-deferred sales charge of
3.00% of the lesser of net asset value at purchase or net asset value
at redemption. Class D Shares that are redeemed within a year of
purchase 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 some cases, the front-end or contingent-deferred sales charges may
be waived or reduced. In most cases, the minimum initial purchase
amount for Fund shares 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 or more. You may purchase
shares of the Fund through Stephens, Wells Fargo, 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 the Fund are declared and paid annually and are
automatically reinvested in additional shares of the same class of the
Fund. You may 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 on any day the Exchange is
open. 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 B 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 OR MASTER PORTFOLIO USE THEM?
3
<PAGE> 11
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. The Master Portfolio uses derivatives only to a
limited extent in ways that are incidental to its overall strategy of
investing directly in common stocks. For example, the Master
Portfolio may, from time to time, hold options, warrants or debt
instruments that are convertible into (and whose value is, therefore,
"derived from") common stocks or may hold derivatives to hedge against
an underlying position in a security.
Q. WHAT STEPS ARE TAKEN TO CONTROL DERIVATIVES-RELATED RISKS?
A. Wells Fargo, as investment adviser to the Master Portfolio, uses a
variety of internal risk management procedures to ensure that
derivatives use is consistent with the Fund's and the Master
Portfolio's investment objectives, does not expose the Fund or the
Master Portfolio to undue risks and is closely monitored. These
procedures include providing periodic reports to the Boards of
Directors and Trustees concerning the use of derivatives. Derivatives
use also is subject to broadly applicable investment policies. For
example, neither the Fund nor the Master Portfolio may invest more
than a specified percentage of its assets in "illiquid securities,"
including those derivatives that do not have active secondary markets.
Nor may certain derivatives be used without establishing adequate
"cover" in compliance with SEC rules limiting the use of leverage.
4
<PAGE> 12
SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
SMALL CAP STRATEGY FUND
-----------------------
CLASS A CLASS B CLASS D
SHARES SHARES SHARES
------- ------ ------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) . . . . . 4.50% 0.00% 0.00%
Sales Charge Imposed in Reinvested Dividends . . None None None
Maximum Sales Charge Imposed on Redemptions . . None 3.00% 1.00%
Exchange Fees . . . . . . . . . . . . . . . . . None None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
SHARES SHARES SHARES
------- ------ ------
<S> <C> <C> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . 0.60% 0.60% 0.60%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.25% 0.75% 0.75%
Total Other Expenses: . . . . . . . . . . . . . . . . . . . . . .
Servicing Fees . . . . . . . . . . . . . . . . . . . . . . . . 0.00% 0.25% 0.25%
Miscellaneous Expenses . . . . . . . . . . . . . . . . . . . . 0.50% 0.50% 0.50%
----- ----- -----
TOTAL FUND OPERATING EXPENSES
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.35% 2.10% 2.10%
</TABLE>
5
<PAGE> 13
EXAMPLE OF EXPENSES
CLASS A SHARES. 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:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class A Shares $ 58 $ 86
</TABLE>
CLASS B SHARES. You would pay the following expenses on a $1,000 investment
in Class B Shares of the Fund, assuming (1) a 5% annual return and (2)
redemption at the end of each time period indicated:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class B Shares $ 51 $ 86
</TABLE>
You would pay the following expenses on the same investment in Class B Shares
of the Fund, assuming no redemption:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class B Shares $ 21 $ 66
</TABLE>
CLASS D SHARES. 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:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class D Shares $ 31 $ 66
</TABLE>
You would pay the following expenses on the same investment in Class D Shares
of the Fund, assuming no redemption:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class D Shares $ 21 $ 66
</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. The tables reflect expenses at both the Fund and Master
Portfolio levels. 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 tables do not reflect any charges
that may be imposed
6
<PAGE> 14
directly by Shareholder Servicing Agents on their customer accounts in
connection with an investment in the Fund.
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell Fund shares. You are subject to a front-end sales charge on purchases
of a Fund's Class A Shares and may be subject to a contingent-deferred sales
charge on purchases of a Fund's Class B and Class D Shares if you redeem such
shares within a specified period. In certain instances, you may qualify for a
reduction or waiver of the front-end sales charge. See "Purchase of Shares."
There are no exchange fees. The Company reserves the right to impose a charge
for wiring redemption proceeds.
ANNUAL FUND OPERATING EXPENSES for the Fund are based on applicable
contract amounts currently in effect, except that the amounts shown under
"Miscellaneous Expenses" and "Total Fund Operating Expenses" are based on
estimated amounts for the current fiscal year, restated to reflect voluntary
fee waivers and expense reimbursements that are expected to continue to reduce
expenses during the current fiscal year. Stephens and Wells Fargo each may
elect, in its sole discretion, to otherwise waive its respective fees or
reimburse expenses. Any waivers or reimbursements would reduce the Fund's total
expenses. There can be no assurance that voluntary fee waivers and
reimbursements will continue. 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").
THE EXAMPLE OF EXPENSES is a hypothetical illustration of the expenses
associated with a $1,000 investment over the periods shown, based on the
expenses in the above tables and an assumed annual rate of return of 5%. 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.
_______________________________
With regard to the combined fees and expenses of the Fund and the
Master Portfolio, the Board of Directors of the Company has considered whether
various costs and benefits of investing all of the Fund's assets in the 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 the Fund and the
Master Portfolio should be less than or approximately equal to those expenses
that would be incurred had the Fund invested directly in the portfolio
securities held by the Master Portfolio. See Prospectus sections under
"Management of the Fund," "Distribution Plans" and "Purchase of Shares" for
more complete descriptions of the various costs and expenses applicable to the
Fund. In addition, if the Fund were to no longer invest in the Master
Portfolio, these expenses may change.
In addition to selling its interests to the Fund, the Master Portfolio
may sell its interests to other mutual funds or accredited investors. The
expenses and, correspondingly, the investment returns of other investment
options in the Master Portfolio may differ from those of the Class A, B and D
Shares of the Fund. Information regarding these and other (if any) investment
options in
7
<PAGE> 15
the Master Portfolio may be obtained by calling Stephens at 1-800-643-9691.
Additional information regarding the Fund's and the Master Portfolio's expenses
is included under the heading "Summary of Expenses."
INVESTMENT OBJECTIVE AND POLICIES
Set forth below is a description of the investment objective and
related policies of the Fund and the Master Portfolio. As with all mutual
funds, there can be no assurance that the Fund or Master Portfolio will achieve
its investment objective.
INVESTMENT OBJECTIVE -- The Small Cap Strategy Fund's investment
objective is to seek above-average long-term capital appreciation in order to
provide investors with a rate of total return exceeding that of the Russell
2000 Index (before fees and expenses) over a time horizon of three to five
years. The Small Cap Strategy Fund seeks to achieve its investment objective
by investing all of its assets in the Small Cap Master Portfolio, which has the
same investment objective as the Fund. The Fund and Master Portfolio are
designed to provide above-average capital growth for investors willing to
assume above-average risk.
The Master Portfolio seeks to achieve this investment objective
through the active management of a broadly diversified portfolio of
growth-oriented common stocks. The Master Portfolio typically invests in
Companies with market capitalizations between $50 million and $1 billion at the
time of acquisition, although it may sometimes invest in companies with
capitalizations greater or less than these amounts. The Master Portfolio
intends to sell the common stock of any company in its investment portfolio
whose market capitalization exceeds $2 billion.
The Master Portfolio invests primarily in common stocks of domestic
and foreign companies believed by Wells Fargo, as investment adviser, to be
characterized by new or innovative products, services or processes and to have
above-average prospects for capital appreciation.
EQUITY SECURITIES -- The equity securities in the Master Portfolio's
investment portfolio may have some of the following characteristics:
- Low or no dividends
- Smaller market capitalizations (less than $1 billion)
- Less market liquidity
- Newly public companies (i.e., recent initial public offering)
- Relatively short operating histories
- Aggressive capitalization structures (including high debt levels)
8
<PAGE> 16
- Involvement in rapidly growing/changing industries and/or new
technologies
Under normal market conditions, the Master Portfolio holds at least 20
common stock issues spread across multiple industry groups and sectors of the
economy. The majority of these holdings consist of smaller capitalization
companies, established growth companies and turnaround or acquisition
candidates. The Master Portfolio may invest in companies with a market
capitalization under $50 million if Wells Fargo believes such investments to be
in the best interests of the Master Portfolio. The Master Portfolio may invest
in attractive larger capitalization companies with market capitalizations
greater than $1 billion, but will sell the common stock of such companies after
their capitalizations have exceeded $2 billion. Additionally, the Master
Portfolio may invest in securities through initial public offerings of
companies whose securities have been offered to the general public for three
months or less ("IPOs") and may invest in securities of start-up companies and
other newer issuers. It is expected that no more than 20% of the Master
Portfolio's assets will be invested in these highly aggressive issues at one
time.
There may be some additional risks associated with investments in
smaller capitalization companies, IPOs and start-up companies or other newer
issuers. Such companies tend to have limited operating histories and their
securities tend to be less liquid than securities of larger companies.
Further, the market price of such companies' securities is generally more
sensitive to changes in the issuer's financial condition and current economic
trends and, therefore, the prices of such companies' securities may be more
volatile than those of larger companies.
Under ordinary market conditions, at least 65% of the value of the
total assets of the Master Portfolio will be invested in common stocks and in
securities which are convertible into common stocks that Wells Fargo, as
investment adviser, believes have better-than-average prospects for
appreciation. At most, 5% of the Master Portfolio's net assets will be
invested in convertible debt securities that are not either rated in the four
highest rating categories by one or more nationally recognized statistical
rating organizations ("NRSROs"), such as Moody's Investor Service, Inc.
("Moody's") or Standard & Poor's Corporation ("S&P"), or unrated securities
determined by Wells Fargo to be of comparable quality. Securities rated in the
fourth highest rating category (i.e., rated "BBB" by S&P or "Baa" by Moody's)
are regarded by S&P 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. Moody's
considers such securities as having speculative characteristics.
From time to time Wells Fargo may determine that conditions in the
securities markets make pursuing the Master Portfolio's basic investment
strategy inconsistent with the best interests of the Master Portfolio's
investors. At such times, Wells Fargo may use temporary alternative strategies,
primarily designed to reduce fluctuations in the value of the Master
Portfolio's assets. In implementing these temporary "defensive" strategies, the
Master Portfolio may invest in preferred stock or investment-grade debt
securities and in money market securities. It is expected that these temporary
"defensive" investments will not exceed 35% of the Master Portfolio's total
assets.
9
<PAGE> 17
The Master Portfolio pursues an active trading investment strategy,
and the length of time the Master Portfolio has held a particular security is
not generally a consideration in investment decisions. Accordingly, the Master
Portfolio's portfolio turnover rate may be higher than that of other funds that
do not pursue an active trading investment strategy. Portfolio turnover
generally involves some expense to the Master Portfolio, including brokerage
commissions or dealer mark-ups and other transactions costs on the sale of
securities and the reinvestment in other securities. Portfolio turnover also
can generate capital gains tax consequences.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
INVESTMENT IN FOREIGN SECURITIES
The Master Portfolio may invest up to 25% of its assets in securities
of foreign governmental issuers that are denominated in and pay interest in
U.S. dollars and also may invest in securities of private issuers that are
denominated in and pay interest in U.S. dollars. These securities may take the
form of American Depositary Receipts ("ADRs") and European Depositary Receipts
("EDRs"). These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued by a United States bank or trust company that evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depositary Receipts ("CDRs"), are
receipts issued in Europe typically by non-United States banks and trust
companies that evidence ownership of either foreign or domestic securities.
Generally, ADRs in registered form are designed for use in the United States
securities markets and EDRs and CDRs in bearer form are designed for use in
Europe.
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, interest 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.
PRIVATELY ISSUED SECURITIES (RULE 144A)
The Master Portfolio may invest in privately issued securities that
may be resold in accordance with Rule 144A under the Securities Act of 1933
("Rule 144A Securities"). Rule 144A Securities are restricted securities that
are not publicly traded. Accordingly, the liquidity of the market for specific
Rule 144A Securities may vary. Wells Fargo, using guidelines approved by the
Trust's
10
<PAGE> 18
Board of Trustees, will evaluate the liquidity characteristics of each Rule
144A Security proposed for purchase by the Master Portfolio on a case-by-case
basis and will consider the following factors, among others, in their
evaluation: (1) the frequency of trades and quotes for the Rule 144A Security;
(2) the number of dealers willing to purchase or sell the Rule 144A Security
and the number of other potential purchasers; (3) dealer undertakings to make a
market in the Rule 144A Security; and (4) the nature of the Rule 144A Security
and the nature of the marketplace trades (e.g., the time needed to dispose of
the Rule 144A Security, the method of soliciting offers and the mechanics of
transfer). Privately issued securities that are determined by Wells Fargo to be
"illiquid" will be subject to the Master Portfolio's policy of not investing
more than 15% of its net assets in illiquid securities.
OPTIONS
The Master Portfolio may purchase or sell options on individual
securities and options on indices of securities as a means of achieving
additional return or of hedging the value of the Master Portfolio's investment
portfolio.
Call and Put Options on Specific Securities - The Master Portfolio may
invest up to 15% of its assets, represented by the premium paid, in the
purchase of call and put options in respect of specific securities (or groups
of "baskets" of specific securities). A call option gives the purchaser of the
option the right to buy, and obligates the writer to sell, an underlying
security at the exercise price at any time during the option period.
Conversely, a put option gives the purchaser of the option the right to sell,
and obligates the writer to buy, an underlying security at the exercise price
at any time during the option period. Investments by the Master Portfolio in
off-exchange options will be treated as "illiquid" and therefore subject to the
Master Portfolio's policy of not investing more than 15% of its net assets in
illiquid securities.
The Master Portfolio may write covered call option contracts to the
extent of 15% of the value of its net assets at the time such option contracts
are written. A covered call option is a call option for which the writer of
the option owns the security covered by the option. Covered call options
written by the Master Portfolio expose the Master Portfolio during the term of
the option (i) to the possible loss of opportunity to realize appreciation in
the market price of the underlying security or (ii) to possible loss caused by
continued holding of a security which might otherwise have been sold to protect
against depreciation in the market price of the security.
To close out a covered call option it has written, the Master
Portfolio makes a "closing purchase transaction" by purchasing an option on the
same security or securities with the same exercise price and expiration date as
the covered call option it has written. To close out an option it has
purchased, the Master Portfolio simply sells it. The Master Portfolio will
realize a profit or loss from a closing purchase transaction based upon the
difference between the amount paid to purchase an option and the amount
received from the sale thereof.
Stock Index Options- The Master Portfolio may purchase call and put
options and write covered call options on stock indices listed on national
securities exchanges or traded in the over-the-counter market to the extent of
15% of the value of its net assets.
11
<PAGE> 19
The effectiveness of purchasing or writing stock index options will
depend upon the extent to which price movements in the Master Portfolio's
investment portfolio correlate with price movements of the stock index
selected. Because the value of a stock index option depends upon changes to
the price of all stocks comprising the index rather than the price of a
particular stock, whether the Master Portfolio will realize a gain or loss from
the purchase or writing of options on an index depends upon movements in the
price of all stocks in the index, rather than movements in the price of a
particular stock. Accordingly, successful use by the Master Portfolio of
options on stock indices will be subject to Wells Fargo's ability to correctly
analyze movements in the direction of the stock market generally or of
particular industry or market segments.
WARRANTS
The Master Portfolio 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 Master Portfolio may only
purchase warrants on securities in which the Master Portfolio may invest
directly.
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, for example, with
changes in specified market rates or indices or 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 Master
Portfolios may, in accordance with SEC rules, account for these instruments as
maturing at the next interest rate readjustment date or the date at which the
Master Portfolios may tender the instrument back to the issuer, whichever is
later. The floating- and variable-rate instruments that the Master Portfolios
may purchase include certificates of participation in such obligations.
Wells Fargo, as investment adviser, will monitor 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 time a Master Portfolio elects
to demand payment and the time payment is due, thereby affecting a Master
Portfolio's ability to obtain payment at par, except when such demand
instruments permit same-day settlement. 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 Master Portfolio may enter into repurchase agreements wherein the
seller of a security to the Master Portfolio agrees to repurchase that security
from the Master Portfolio at a mutually
12
<PAGE> 20
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 Master Portfolio may enter into Repurchase Agreements only with respect to
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities (including government- sponsored enterprises), ("U.S.
Government Obligations") certificates of deposit, bankers acceptances or
commercial paper. All repurchase agreements will be fully collateralized
based on values that are marked to market daily. If the seller defaults and
the value of the underlying securities has declined, the Master Portfolio may
incur a loss. In addition, if bankruptcy proceedings are commenced with
respect to the seller of the security, the Master Portfolio's disposition of
the security may be delayed or limited. The Master Portfolio will only enter
into repurchase agreements with registered broker/dealers, commercial banks and
other financial institutions that meet guidelines established by the Trust's
Board of Trustees and are not affiliated with the investment adviser. The
Master Portfolio may also participate in pooled repurchase agreement
transactions with other funds advised by Wells Fargo.
MONEY MARKET INSTRUMENTS
The Master Portfolio may invest in the following types of money market
instruments that have remaining maturities not exceeding one year: (i) U.S.
Government obligations; (ii) negotiable certificates of deposit, bankers'
acceptances and fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by
the FDIC; and (iii) commercial paper rated at the date of purchase "P-1" by
Moody's or "A-1" or "A-1+" by S&P. The Master Portfolio 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.
CORPORATE REORGANIZATIONS
The Master Portfolio may invest in securities for which a tender or
exchange offer has been made or announced, and in securities of companies for
which a merger, consolidation, liquidation or similar reorganization proposal
has been announced if, in the judgment of Wells Fargo, there is a reasonable
prospect of capital appreciation significantly greater than the added portfolio
turnover expenses inherent in the short term nature of such transactions. The
principal risk associated with such investments is that such offers or
proposals may not be consummated within the time and under the terms
contemplated at the time of the investment, in which case, unless such offers
or proposals are replaced by equivalent or increased offers or proposals which
are consummated, the Master Portfolio may sustain a loss.
OTHER INVESTMENT COMPANIES
13
<PAGE> 21
The Master Portfolio may invest in shares of other open-end,
management investment companies, subject to the limitations of Section 12(d)(1)
of the Investment Company Act of 1940 (the "1940 Act"), and provided that (i)
any such purchases will be limited to temporary investments in shares of
unaffiliated investment companies and (ii) the investment adviser will waive
its advisory fees for that portion of the Master Portfolio's assets so
invested, except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition. Subject to the limitations of the 1940 Act, the
Master Portfolio may purchase shares of exchange-listed closed-end funds
consistent with pursuing its investment objective. The Master Portfolio does
not intend to invest more than 5% of its net assets in such securities during
the coming year.
Notwithstanding any other investment policy or limitation (whether or
not fundamental), as a matter of fundamental policy, the Fund may invest all of
its assets in the securities of a single open-end management investment company
with substantially the same fundamental investment objective, policies and
limitations as the Fund. A decision to so invest all of its assets may,
depending on the circumstances applicable at the time, require the approval of
shareholders.
_______________
The investment objective of the Master Portfolio and the Fund, as set
forth in the second paragraph under the heading "Investment Objectives and
Policies" is fundamental; that is, the investment objective may be changed only
with approval by the vote of the holders of a majority of the outstanding
voting securities of the Master Portfolio or the Fund, as applicable, and, as
described under "Capital Stock" in the SAI. If the Trust's Board of Trustees
determines, however, that the Master Portfolio's investment objective can best
be achieved by a substantive change in a non- fundamental investment policy or
strategy, the Trust may make such change without shareholder approval, and the
Company will disclose any such material changes in the Fund's then-current
prospectus.
In addition, as matters of fundamental policy, the Master Portfolio
may, among other things: (i) not purchase securities of any issuer (except
U.S. Government obligations) if as a result, with respect to 75% of the Master
Portfolio's assets, more than 5% of the value of the Master Portfolio's total
assets would be invested in the securities of such issuer or the Master
Portfolio would own more than 10% of the outstanding voting securities of such
issuer; (ii) 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
borrowings exceed 5% of its net assets); (iii) not make loans of portfolio
securities having a value that exceeds 33 1/3% of the current value of its net
assets; and (iv) not invest 25% or more of its assets (i.e., concentrate) in
any particular industry, except that the Master Portfolio may invest 25% or
more of its assets in U.S. Government obligations.
As a matter of non-fundamental policy, the Master Portfolio may invest
up to 15% of the current value of its net assets in illiquid securities. For
this purpose, illiquid securities include,
14
<PAGE> 22
among others: (i) securities that are illiquid by virtue of the absence of a
readily available market or legal or contractual restrictions on resale; (ii)
fixed time deposits that are subject to withdrawal penalties and that have
maturities of more than seven days; and (iii) repurchase agreements not
terminable within seven days. Disposing of illiquid or restricted securities
may involve additional costs and require additional time.
HOW THE FUND WORKS
MASTER/FEEDER STRUCTURE
The Fund invests all of its assets in the Master Portfolio of the
Trust which has the same investment objective as the Fund. See "Investment
Objective and Policies" for a description of the Fund's and Master Portfolio's
objectives and policies and "Management of the Fund" for a description of the
Fund's and Master Portfolio's management. The Trust is organized as a trust
under the laws of the State of Delaware. See "Organization and Capital Stock."
The Master Portfolio is the successor to certain assets of the Small
Capitalization Growth Fund for Employment Retirement Plans, a collective
investment fund (the "Collective Investment Fund"). The Collective Investment
Fund was a private, non-registered investment fund previously managed by Wells
Fargo. Immediately prior to the commencement of the Fund's operations,
the assets of the Collective Investment Fund were purchased by the Master
Portfolio and the Collective Investment Fund redeemed all of its outstanding
interests and ceased operating as a trust. The master Portfolio manages its
investments in a manner identical in all material respects to the operation of
the Collective Investment Fund.
The Company's Board of Directors believes that if other investors
invest their assets in the Master Portfolio, certain economic efficiencies may
be realized with respect to the Master Portfolio. For example, fixed expenses
that otherwise would have been borne solely by the Fund would be spread among a
potentially larger asset base provided by more than one fund investing in the
Master Portfolio. The Fund and other entities investing in the Master Portfolio
are each liable for all obligations of the Master Portfolio. However, the risk
of the Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed 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 investing Fund assets in the Master Portfolio. However, if a mutual
fund or other investor withdraws its investment from the Master Portfolio, the
economic efficiencies (e.g., spreading fixed expenses among a larger asset
base) that the Company's Board believes may be available through investment in
the Master Portfolio may not be fully achieved. In addition, given the relative
novelty of the master/feeder structure, accounting or operational difficulties,
although unlikely, could arise. See "Management of the Fund" for additional
description of the Fund's and Master Portfolio's expenses and management.
The investment objective and other fundamental policies of the Master
Portfolio cannot be changed without approval by the holders of a majority (as
defined in the 1940 Act) of the Master Portfolio's outstanding interests. See
"Investment Objectives and Policies." Whenever the Fund, as an interestholder
of the Master Portfolio, is requested to vote on any matter submitted to
interestholders of the Master Portfolio, the Fund will hold a meeting of its
shareholders to consider such matters. The Fund will cast its votes in
proportion to the votes received from its
15
<PAGE> 23
shareholders. Shares for which the Fund receives no voting instructions will be
voted in the same proportion as the votes received from the other Fund
shareholders.
Certain policies of the Master Portfolio which are non-fundamental may
be changed by vote of a majority of the Trust's Trustees without interestholder
approval. If the Master Portfolio's investment objective or fundamental or non-
fundamental policies are changed, the 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 interests in 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, 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 Master Portfolio, to the
extent possible. See "Investment Objective and Policies" for additional
information regarding the Fund's and the 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."
The Fund may withdraw its investment in the Master Portfolio only if
the Company's Board of Directors 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 described below with respect to the
Master Portfolio. For a description of the management and expenses of the Fund
and the Master Portfolio, see the Prospectus section "Management of the Fund."
In addition to selling its interests to the Fund, the Master Portfolio
may sell its interests to other mutual funds or accredited investors. The
expenses and, correspondingly, the investment returns of other investment
options in the Master Portfolio may differ from those of the Class A, B and D
Shares of the Fund. Information regarding these and other (if any) investment
options in the Master Portfolio may be obtained by calling Stephens at
1-800-643-9691. Additional information regarding the Fund's and the Master
Portfolio's expenses is included under the heading "Summary of Expenses."
MANAGEMENT OF THE FUND
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 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 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
16
<PAGE> 24
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 Master Portfolio.
The Master Portfolio has retained the services of Wells Fargo as
investment adviser and Stephens as administrator and distributor. The Board of
Trustees of the Trust is responsible for the general management of the Master
Portfolio and supervising the actions of Wells Fargo 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 Fund's
SAI under "Management."
INVESTMENT ADVISER
Pursuant to an Investment Advisory Contract, the Master Portfolio is
advised by Wells Fargo, 420 Montgomery Street, San Francisco, California 94105,
a wholly owned subsidiary of Wells Fargo & Company. Wells Fargo, 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 September 1, 1996, of Wells Fargo and its
affiliates managed more than [$56] billion of assets of individuals, trusts,
estates and institutions. Wells Fargo is the investment adviser to the other
separately managed series of the Company (other than those structured as
"feeder funds"), and acts as adviser or sub-adviser to five other registered
open-end management investment companies, each of which consists of several
separately managed investment portfolios.
Under the Investment Advisory Contract with the Master Portfolio,
Wells Fargo has agreed to furnish to the Master Portfolio investment guidance
and policy direction in connection with the daily portfolio management of the
Master Portfolio. Pursuant to the Investment Advisory Contract, Wells Fargo
also furnishes to the Board of Directors periodic reports on the investment
strategy and performance of the Master Portfolio.
For its services under the Investment Advisory Contract, Wells Fargo
is entitled to receive a monthly advisory fee at the annual rate of 0.60% of
the average daily net assets of the Master Portfolio. From time to time, Wells
Fargo may waive such fees in whole or in part. Any waiver would reduce expenses
of the Master Portfolio and, accordingly, have a favorable impact on the
performance of the Master Portfolio and, in turn, the Fund.
Mr. Jon Hickman, as Manager of the Growth Equity Team, has overseen
the management of the Master Portfolio since its inception. In addition, Mr.
Hickman also manages equity and balanced portfolios for individuals and
employee benefit plans. He has over ten years of experience in the investment
management field and is a member of Wells Fargo's Equity Strategy
17
<PAGE> 25
Committee. Mr. Hickman has a B.A. and an M.B.A. in finance from Brigham Young
University and has been with Wells Fargo since its merger with Crocker National
Bank in 1986.
Ms. Sandra Thornton, as portfolio co-manager of the Master Portfolio,
is primarily responsible for the day-to- day management of the Master
Portfolio. Ms. Thornton has been co-manager of the Master Portfolio since its
inception. Ms. Thornton co-managed the Small Capitalization Fund from
November, 1994 until the sale of its assets to the Master Portfolio in
September 1996. Ms. Thornton manages other equity portfolios for Wells Fargo
and is a member of the Wells Fargo Growth Equity Team. Prior to joining Wells
Fargo in 1993, she worked in the research department of RCM Capital Management.
She obtained her license as a Certified Public Accountant from the State of
California while performing tax/financial planning services at Price
Waterhouse. She holds a B.A. from Albertus Magnus College and is a Chartered
Financial Analyst.
Mr. Steve Enos, as portfolio co-manager of the Master Portfolio, also
is primarily responsible for the day-to- day management of the Master
Portfolio. Mr. Enos has been co-manager of the Master Portfolio since its
inception. Mr. Enos co-managed the Collective Investment Fund since November
1994 until the sale of its assets to the Master Portfolio in September 1996.
Mr. Enos is a member of the Wells Fargo Growth Equity Team. He began his career
with First Interstate Bank, where he was assistant vice president and portfolio
manager. Prior to joining Wells Fargo, he was a principal at Dolan Capital
Management where he managed both personal and pension portfolios. Mr. Enos
received his undergraduate degree in economics from the University of
California at Davis. Mr. Enos is a Chartered Financial Analyst and a member of
the Association for Investment Management and Research.
Purchase and sale orders of the securities held by the Master
Portfolio may be combined with those of other accounts that Wells Fargo
manages, and for which it has brokerage placement authority, in the interest of
seeking the most favorable overall net results. When Wells Fargo determines
that a particular security should be bought or sold for the Master Portfolio
and other accounts managed by Wells Fargo, Wells Fargo undertakes to allocate
those transactions among the participants equitably. From time to time, the
Master Portfolio, to the extent consistent with its investment objective,
policies and restrictions, may invest in securities of companies with which
Wells Fargo has a lending relationship.
Morrison & Foerster, LLP, counsel to the Company and special counsel
to Wells Fargo, has advised the Company and Wells Fargo that Well Fargo Bank
and its affiliates may perform the services contemplated by the Investment
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 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, that
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.
18
<PAGE> 26
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 Master Portfolio. 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 waiver will
reduce expenses of the Fund and, accordingly, have a favorable impact on the
yield or return of the Fund. Under the agreement with the Trust, Stephens is
not entitled to receive a fee for providing administrative services to the
Master Portfolio so long as Stephens is entitled to be compensated for
providing administrative services to another mutual fund that invests all of
its assets in the Master Portfolio.
Under the respective Administration Agreements with the Fund and the
Master Portfolio, Stephens has agreed to provide as administrative services,
among other things, (i) general supervision of the operation of the Fund and
the Master Portfolio, including coordination of the services performed by the
various service providers, including the investment adviser (for the Master
Portfolio), 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 the Master Portfolio; 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 Board of Trustees. Stephens also furnishes office
space and certain facilities required for conducting the business of the Fund
and the Master Portfolio and pays the compensation of the directors, officers
and employees of the Company and the Trust who are affiliated with Stephens.
Stephens, as the principal underwriter of the Fund 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 Fund shares.
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 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. See
"Distribution Plans" for additional information.
Stephens serves as placement agent for the Master Portfolio for which
it is not compensated. 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 60 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
19
<PAGE> 27
The Fund may enter into servicing agreements with one or more
servicing agents on behalf of Class B and 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 B or 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 asset value of the Class B and Class D Shares of the Fund 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.
Custodian and Transfer and Dividend Disbursing Agent - Wells Fargo has
been retained to act as the custodian and transfer and dividend disbursing
agent for the Fund and the Master Portfolio. Wells Fargo's principal place of
business is 420 Montgomery Street, San Francisco, California 94105, and its
transfer and dividend disbursing agency activities are managed at 525 Market
Street, San Francisco, California 94105. For its services as custodian to the
Fund, Wells Fargo is entitled to a net asset charge at the annual rate of
0.0167%, payable monthly, plus specified transaction charges. For its services
as transfer and dividend disbursing agent to the Fund, Wells Fargo is entitled
to receive a monthly fee at the annual rate of 0.070% of the Fund's average
daily net assets.
FUND EXPENSES
The Master Portfolio's Investment Advisory Contract and the
Administration Agreements with the Master Portfolio and the Fund provide that,
if in any fiscal year, the total aggregate expenses of the Master Portfolio and
the Fund incurred by, or allocated to, the 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 a Fund imposed by the securities laws or regulations of the
states in which the Fund's shares are registered for sale, Wells Fargo and
Stephens shall waive their fees proportionately under the Investment 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. The Investment 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
Investment 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 and Stephens, the Company
and the Trust bear all costs of their respective operations, including the
compensation of the Company's directors and the Trust's trustees who are not
officers or employees of Wells Fargo or Stephens or any of their affiliates;
advisory (in the case of the Master Portfolio), shareholder servicing (in the
case of the Fund), and administration fees; payments pursuant to any Plans (in
the case of the Fund); interest charges; taxes; fees and expenses of
independent auditors; legal counsel, transfer agent and dividend disbursing
agent; expenses of redeeming Fund shares or interests in the Master Portfolio;
expenses of preparing and printing prospectuses (except the expense of printing
and mailing prospectuses used for promotional purposes, unless otherwise
payable pursuant to a Plan), shareholders' or investors' reports, notices,
proxy statements and reports to regulatory agencies; insurance premiums and
certain expenses relating to insurance coverage; trade association membership
dues; brokerage and other expenses connected with the execution of portfolio
20
<PAGE> 28
transactions; fees and expenses of the custodian, including those of keeping
books and accounts and calculating the net asset value of the Fund and the
Master Portfolio; expenses of shareholders' or investors' meetings; expenses
relating to the issuance, registration and qualification of shares of the Fund;
pricing services; organizational expenses; and any extraordinary expenses.
Expenses attributable to the Fund and/or the Master Portfolio are charged
against the respective assets of the Fund and/or the Master Portfolio. A pro
rata portion of the expenses of the Company or Trust are charged against the
assets of the Fund or Master Portfolio as applicable.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for the Fund is determined by Wells Fargo on
each day that the New York Stock Exchange ("Exchange") is open for trading 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. 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
and is based on the net asset value of the Small Cap Master Portfolio in which
the Fund invests.
The net asset value of the Master Portfolio is determined as of the
close of the Exchange, which is currently 4:00 p.m. New York time. The net
asset value of an interest in the Master Portfolio is the value of the Master
Portfolio's total assets divided by the number of Master Portfolio interests
outstanding. 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
The performance of each class of shares of the Fund may be advertised
in terms of average annual total return. These performance figures are based
on historical results and are not intended to indicate future performance.
Average annual total return on the shares of each class is based on
the overall dollar or percentage change in value of a hypothetical investment
in such shares and assumes that all dividends and capital gain distributions
attributable to such class are reinvested in shares of that class. The
standardized average annual total return as calculated for Class A Shares
assumes that you have paid the maximum sales charge and, as calculated for
Class B and Class D Shares, assumes you have paid the maximum applicable
contingent deferred sales charge on your hypothetical investment. In addition
to presenting standardized total return, the Funds also may
21
<PAGE> 29
present nonstandardized total returns, yields and distribution rates for
purposes of sales literature. For example, the performance figure of the
shares of a class or Fund may be calculated on the basis of an investment at
the net asset value per share or at net asset value per share plus a reduced
sales charge (see "Investing in the Funds -- How to Buy Shares"), rather than
the public offering price per share. In this case, the figure might not
reflect the effect of the sales charge that you may have paid.
Because of differences in the fees and/or expenses borne by each class
of shares, the performance on any such class of shares can be expected, at any
given time, to differ from the performance on any other such class of shares.
Performance information will be computed separately for each class of shares.
Additional information about the performance of the Fund will be contained in
the Annual Report for the Fund. The Annual Report, when available, may be
obtained free of charge by calling the Company at 800-552-9612.
The performance information advertised by the Fund for periods prior
to September __, 1996, the date the Fund and the Master Portfolio commenced
operations, is based upon the prior performance of the Collective Investment
Fund. The performance information is adjusted to reflect the Fund's and the
Master Portfolio's current level of operating expenses, including any front-end
sales loads or contingent deferred sales charges. The prior performance of the
Collective Investment Fund is deemed relevant because the Fund invests all of
its assets in the Master Portfolio which acquired the assets of the Collective
Investment Fund immediately prior to the commencement of the Fund's
operations. The Master Portfolio, as successor to the assets of the Collective
Investment Fund, is managed by Wells Fargo in a manner that is in all material
respects equivalent to the management of the Collective Investment Fund.
PURCHASE OF SHARES
The minimum initial purchase amount for the Fund is generally $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 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
22
<PAGE> 30
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.
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, 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 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 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.
23
<PAGE> 31
Sales loads relating to orders for the purchase of Class A Shares in
the Fund are as follows:
<TABLE>
<CAPTION>
DEALER
SALES LOAD SALES LOAD ALLOWANCE
CLASS A SHARES AS % OF AS % OF AS % OF
-------------- OFFERING NET AMOUNT OFFERING
AMOUNT OF SHARES 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>
The Fund's Class B and Class D Shares are not subject to front-end
sales charges. Class B Shares that are redeemed within one, two, three or four
years from the receipt of a purchase order affecting such shares are subject to
a contingent-deferred sales charge equal to 3.00%, 2.00%, 2.00% or 1.00%,
respectively, 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 (the "Net Asset Value Amount"). Class D
Shares that are redeemed within one year from the receipt of a purchase order
affecting such shares are subject to a contingent-deferred sales charge equal
to 1.00% of the Net Asset Value Amount. See "Investing in the
Funds--Contingent-Deferred Sales Charges--Class B and Class D Shares."
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 B
and Class D Shares.
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 other portfolios of the Company which assess a sales load
(the "Load Funds"). Because Class B and Class D Shares are not subject to a
front-end sales charge, the amount of Class B or 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 the Class A Shares of the Fund, the sales load
on the
24
<PAGE> 32
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.
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 made and the
charges previously paid.
You may Reinvest proceeds from a redemption of Class A Shares of the
Fund in the 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 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 on the redemption to be disallowed as a tax deduction, depending on
the number of Class A Shares purchased by reinvestment during the period of
time that has elapsed after the redemption, although for 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,
25
<PAGE> 33
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.
Purchases may be made at net asset value, without a front-end sales
charge, to the extent that you are investing proceeds from a redemption of
shares of another open-end investment company for which you paid a front-end
sales load and such redemption occurred within thirty (30) days prior to the
date of the purchase order. You must notify the Fund and/or the transfer agent
at the time you place such purchase order of your eligibility for the waiver of
front-end sales charges and provide satisfactory evidence thereof (e.g., a
confirmation of the redemption and the load paid). Such purchases may not be
made at net asset value to the extent the proceeds are from a redemption of
shares of another open-end investment company that is affiliated with the
Company on which you paid a contingent deferred sales charge upon redemption.
Class A Shares of the Fund may be purchased at net asset value,
without a sales load, by Directors, officers and employees (and their spouses
and children under the age of 21) 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 and
children under the age of 21) of Wells Fargo and its affiliates if Wells Fargo
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 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, 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." 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.
26
<PAGE> 34
CONTINGENT DEFERRED SALES CHARGE -- CLASS B AND CLASS D SHARES
The Fund's Class B and Class D Shares are not subject to front-end sales
charges but may be subject to contingent- deferred sales charges. Class B
Shares that are redeemed within one, two, three or four years from receipt of a
purchase order for such shares are subject to a contingent-deferred sales
charge equal to 3.00%, 2.00%, 2.00% and 1.00%, respectively, 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. Class D Shares that are redeemed within one year from the receipt
of a purchase order for such shares are 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. Contingent-deferred sales
charges are not imposed on amounts representing increases in net asset value
above the net asset value at the time of purchase and are not assessed on Class
B and Class D Shares purchased through reinvestment of dividends or capital
gains distributions. Class B Shares automatically convert to Class A Shares of
the same Fund seven years after the end of the month in which such Class B
Shares were acquired.
The amount of a contingent-deferred sales charge, if any, paid upon
redemption of Class B and Class D Shares is determined in a manner designed to
result in the lowest sales charge rate being assessed. When a redemption
request is made, Class B and Class D Shares acquired pursuant to the
reinvestment of dividends and capital gain distributions are considered to be
redeemed first. After this, Class B and Class D Shares are considered redeemed
on a first-in, first-out basis so that such shares held for a longer period of
time are considered redeemed prior to more recently acquired Class B and Class
D Shares. For a discussion of the interaction between the optional Exchange
Privilege and contingent-deferred sales charges on Class B and Class D Shares,
see "Additional Shareholder Services--Exchange Privilege."
The contingent deferred sales charge is waived on redemptions of Class
B or 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 B or 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 B and 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.
27
<PAGE> 35
INITIAL PURCHASE OF FUND SHARES BY WIRE
1. Telephone toll free (800) 572-7797. Give the name of the Fund,
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 Small Cap Strategy Fund
(designate Class A, B 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 B and Class D Shares, at the net asset value, next
determined after the Account Application is received and accepted.
INITIAL PURCHASE 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 Small Cap Strategy Fund (designate Class A, B or
D)" to its mailing address set forth above.
28
<PAGE> 36
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 Small Cap Strategy Fund (designate Class A, B 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 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 upon notification. 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 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 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
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.
29
<PAGE> 37
EXCHANGE PRIVILEGES
CLASS A SHARES -- Class A Shares of the Fund may be exchanged for
shares of the same class of the Company's other investment portfolios or for
shares of the California Tax-Free Money Market Fund, the Money Market Fund or
the U.S. Treasury Money Market Fund in an identically registered account at
respective net asset values. However, 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 sales loads. In addition,
shares of the other 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 portfolio which you desire to exchange into before
submitting an exchange order.
CLASS B SHARES -- Class B Shares of the Fund may be exchanged 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 B Shares for shares of the Class A Shares of the
Money Market Fund. If you exchange Class B Shares for shares of the 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 B 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 B Shares, you will have to pay a
deferred sales charge equal to the contingent deferred sales charge applicable
to the previously exchanged Class B Shares. If you exchange Class B Shares for
Class A Shares of the Money Market Fund, you may subsequently re-exchange the
acquired Class A Shares only for such Class B Shares. If you re-exchange the
Class A Shares of the Money Market Fund for Class B 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 such Class B Shares.
In addition, the Class A Shares of the Money Market Fund to be acquired in an
exchange must be registered for sale in your state of residence. You should
obtain, read and retain the Prospectus for the Class A Shares of the Money
Market Fund before submitting an exchange order.
CLASS D SHARES -- Class D Shares of the Fund may be exchanged for
Class D Shares of one of the Company's other investment portfolios that offer
such 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
30
<PAGE> 38
Shares of the Money Market Fund, you may subsequently re-exchange the acquired
Class A Shares only for such 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 such Class D Shares. In
addition, shares of the other 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 portfolio which you desire to exchange into
before submitting an exchange order.
CONVERSION - CLASS B SHARES
The Fund's Class B Shares that have been outstanding for seven years
after the end of the month in which the shares were initially purchased
automatically convert to the Fund's Class A Shares. Consequently, such
converted shares will no longer be subject to the higher Rule 12b-1 fees
applicable to Class B Shares of the Fund. Such conversion is effected on the
basis of the relative net asset value of the two classes, without the
imposition of any sales charge or other charge except that the lower Rule 12b-1
fees applicable to Class A Shares shall thereafter be applied to such converted
shares. Because the per share net asset value of the Class A Shares may be
higher than that of the Class B Shares at the time of conversion, a shareholder
may receive fewer Class A Shares than the number of Class B Shares converted,
although the dollar value will be the same. Reinvestments of dividends and
distributions in Class B are considered new purchases for purposes of the
conversion feature. A conversion should not provide a gain or loss for federal
income tax purposes.
If a shareholder effects one or more exchanges among Class B Shares of
any fund, or among shares of the Money Market Mutual Funds during the
seven-year period and exchanges back into Class B Shares, the holding period
for the shares so exchanged is counted toward the seven-year period, and any
Class B Shares held at the end of seven years are converted into Class A
Shares.
GENERAL PROCEDURES -- 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 number for telephone 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 investment 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
31
<PAGE> 39
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.
TELEPHONE EXCHANGE PRIVILEGES -- 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 B or 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 B or 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 the 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.
32
<PAGE> 40
REDEMPTION BY MAIL
1. Write a letter of instruction. Indicate the dollar amount of
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).
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 -- Initial Purchase of Shares by Wire."
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 B or 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 accounts and the proceeds, net of any contingent
deferred sales charge applicable with respect to Class B or 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 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 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 B or 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,
33
<PAGE> 41
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
If shares are not held in certificated form, you may request an
expedited redemption of shares by letter or telephone (unless you have
specifically declined 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.
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 Purchase 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 B or
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 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.
34
<PAGE> 42
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.
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.
DISTRIBUTION PLANS
The Company's Board of Directors has adopted separate Distribution
Plans (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 the
distributor 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 0.75% of the respective average daily net assets of each
of the Class B and Class D Shares of the Fund as compensation for
distribution-related services or to reimburse the distributor for
distribution-related expenses incurred. 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. 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, B and D Shares
attributable to them. The distributor may retain any portion of the total
distribution fee payable hereunder 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. See "Sponsor, Administrator and Distributor"
for additional information.
SERVICING PLAN
35
<PAGE> 43
The Company's Board of Directors has adopted servicing plans
("Servicing Plans") on behalf of each of the Class B and Class D Shares of the
Fund. Pursuant to the Servicing Plans, the Fund may enter into servicing
agreements with one or more servicing agents (which may include Wells Fargo and
its affiliates) who agree to provide administrative support services to their
customers who are the record or beneficial owners of such Class B or Class D
Shares. Servicing Agents are entitled to receive 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 asset value of the Class B and Class D Shares,
or an amount which equals the maximum amount payable to the servicing agent
under applicable laws, regulations or rules. For additional information, see
"Management of the Fund and Master Portfolio - Servicing Agents."
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to declare as a dividend substantially all of its net
investment income annually to 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% excise tax described in the SAI).
Dividends and/or capital gain distributions will have the effect of
reducing the net asset value per share by the amount distributed on the record
date. Although a distribution paid to an investor on newly issued shares
shortly after purchase would represent, in substance, a return of capital, the
distribution would consist of net investment income and, accordingly, would be
taxable as ordinary income.
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 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 B and 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 B 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
36
<PAGE> 44
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
By complying with 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. Dividends from the
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 dividend payments in cash or have them
automatically reinvested in additional shares, they will be taxable. Generally,
dividends are taxable to shareholders at the time they are paid. However,
dividends 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 are actually paid no
later than January 31 of the following year. You may be eligible to defer the
taxation of dividend and capital gain distributions on shares of a Fund which
are held under a qualified tax-sheltered retirement plan. The Fund intends to
pay out all its net investment income and net realized capital gains (if any)
for each year. Corporate shareholders may be eligible for the
dividends-received deduction on the dividends (excluding the net capital gain
dividends) paid by the Fund to the extent the Fund's income is derived from
certain dividends received from domestic corporations. In order to qualify for
the 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.
37
<PAGE> 45
Portions of the Fund's investment income may be subject to foreign
taxes withheld at the source; however, the Fund does not expect to be able to
pass through any portion of the foreign taxes to its shareholders.
The Fund will inform you of the amount and nature of such dividends
and capital gains. 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 dividends paid and redemption proceeds
(including proceeds from exchanges) 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. 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.
The Fund seeks to comply with the applicable provisions of the Code by
investing all of its assets in the Master Portfolio. The Trust intends to
qualify for federal income tax purposes as a partnership. As such, the Fund
will be deemed to own directly its proportionate share of the Trust's assets.
Therefore, any interest, dividends and gains or losses of a Master Portfolio
will be deemed to have been "passed through" to the Fund and other investors in
the Master Portfolio, regardless of whether such interest, dividends, gains or
losses have been distributed by the Master Portfolio or losses have been
realized by the Fund and other investors. Accordingly, if the 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
interest, dividends, gains or losses without receipt of any corresponding
distribution. However, the Master Portfolio will seek to minimize recognition
by investors of interest, dividends, gains or losses without a corresponding
distribution.
Foreign shareholders may be subject to different tax treatment,
including a withholding tax. See "Federal Income Tax - Foreign Shareholders" in
the SAI.
Further federal tax considerations are discussed in the SAI. You
should consult your individual 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.
38
<PAGE> 46
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 fourteen series of shares, each representing an
interest in one of the Overland Express 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, Small Cap
Strategy, 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 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 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. In
addition, whenever the Fund is requested to vote on matters pertaining to the
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. All shares of the Company, when issued, will be fully paid and
nonassessable.
The Trust was established on August 15, 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 nine series of beneficial
interests -- the Asset Allocation, Capital Appreciation, Cash Investment Trust,
Corporate Stock, Short-Term Government-Corporate Income, Short-Term Municipal
Income, Small Cap, Tax-Free Money Market and U.S. Government Allocation Master
Portfolios. The Trust is no longer offering interests of the 1-3 Year Duration
Government Income Master Portfolio.
39
<PAGE> 47
<TABLE>
<S> <C>
OVERLAND EXPRESS FUNDS, INC. Small Cap Strategy Fund
Account Application
c/o Overland Express Shareholder Services, Wells Fargo Bank, N.A Page 1 of 5
Post Office Box 63084, San Francisco, California 94163
FOR PERSONAL SERVICE PLEASE CALL
YOUR INVESTMENT SPECIALIST OR 1-800-572-7797
- ------------------------------------------------------------------------------------------------------------------
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.
Use liness 1 & 2 First Name Initial Last Name Security 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>
<PAGE> 48
[LOGO] Small Cap Strategy Fund
Account Application
Page 2 of 5
- --------------------------------------------------------------------------------
2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $1,000.)
- --------------------------------------------------------------------------------
INVESTMENT AMOUNT: $_______________
TYPE OF ACCOUNT (CHOOSE ONE ONLY):
/ / Class A Shares, or
/ / Class B Shares (not available for purchases of
$9,000,000 or more)
[/ / 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 Small Cap
Strategy Fund (designate Class A, B or D)).
/ / Funds have been wired to my Overland Express Account #
- --------------------------------------------------------------------------------
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 below. 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 Investment 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> 49
Small Cap Strategy Fund
[LOGO] Account Application
Page 3 of 5
- --------------------------------------------------------------------------------
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
/ / 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.)
/ / 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 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 gains distributions by check
AND MAIL CHECKS TO:
/ / The registration address set forth in Section 1. / / The bank account
designated in Section 3.
(CONTINUED)
<PAGE> 50
Small Cap Strategy Fund
Section LOGO} Account Application
Page 4 of 5
- --------------------------------------------------------------------------------
7. AUTHORIZATION FOR TRUSTS AND ORGANIZATIONS (If Applicable.)
- --------------------------------------------------------------------------------
CORPORATIONS, TRUSTS, PARTNERSHIPS OR OTHER ORGANIZATIONS MUST COMPLETE THIS
SECTION.
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.)
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:
Name Title Specimen Signature
---- ----- --------------------
_________________________ _______________________ _____________________
_________________________ _______________________ _____________________
_________________________ _______________________ _____________________
_________________________ _______________________ _____________________
_________________________ _______________________ _____________________
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
<PAGE> 51
Small Cap Strategy Fund
[LOGO] Account Application
Page 5 of 5
- --------------------------------------------------------------------------------
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.
SIGNATURE GUARANTEE: NOT
REQUIRED WHEN ESTABLISHING NEW
ACCOUNTS. Required only if
X___________________________________________ establishing privileges in Block
Individual (or Custodian) 2 on an existing account.
Date Signature Guarantee may be
provided by an "eligible
guarantor institution," which
includes a commercial bank,
trust company, member firm of a
domestic stock exchange, savings
association, or credit union that
is authorized by its charter to
X___________________________________________ provide a signature guarantee.
Joint Owner (if any)
Date
X___________________________________________
Corporate Officer or Trustee
Date
____________________________________________
Title of Corporate Officer or Trustee
AFFIX SIGNATURE GUARANTEE STAMP
________________________________________
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
<PAGE> 52
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
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 AUDITORS
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
Small Cap Strategy Fund
_______________
<PAGE> 53
September ___, 1996
_______________
NOT FDIC INSURED
<PAGE> 54
OVERLAND EXPRESS FUNDS, INC.
SMALL CAP STRATEGY FUND
Telephone: (800) 552-9612
STATEMENT OF ADDITIONAL INFORMATION
DATED SEPTEMBER __, 1996
__________________________________
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 series -- the SMALL CAP STRATEGY FUND
(the "Fund"). The Fund offers three classes of shares -- Class A Shares, Class
B Shares and Class D Shares. This SAI relates to all three classes of shares.
The investment objective of the Fund is described in the Prospectus under the
heading "Investment Objective and Policies." The Fund seeks to achieve its
investment objective by investing all of its assets in the Small Cap Master
Portfolio (at times, the "Master Portfolio") of Master Investment Trust (the
"Trust"), which has the same investment objective as the Fund. The Fund may
withdraw its investment in the Small Cap 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 September __, 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> 55
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . 3
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . 10
Servicing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Performance Calculations . . . . . . . . . . . . . . . . . . . . . . 12
Determination of Net Asset Value. . . . . . . . . . . . . . . . . . . 14
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . 15
Federal Income Tax... . . . . . . . . . . . . . . . . . . . . . . . . 16
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Other.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Custodian and Transfer and Dividend Disbursing Agent . . . . . . . . 22
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . 22
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . 22
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
2
<PAGE> 56
INVESTMENT RESTRICTIONS
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Investment Objectives
and Policies."
FUNDAMENTAL INVESTMENT RESTRICTIONS. The Fund and the Master
Portfolio are subject to the following investment restrictions, all of which
are fundamental policies. These restrictions cannot be changed, as to either
the Fund or the Master Portfolio, without approval by the holders of a majority
(as defined by the 1940 Act) of the outstanding voting securities of the Fund
or the Master Portfolio, as appropriate. Whenever the Fund is requested to
vote on a fundamental policy of the Master Portfolio, the Fund will hold a
meeting of Fund shareholders and it will cast its votes as instructed by such
shareholders.
Neither the Fund nor the 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 investments in that
industry would equal or exceed 25% of the current value of the Fund's total
assets, provided that there is no limitation with respect to investments in
securities issued or guaranteed by the United States Government, its agencies
or instrumentalities; and provided further, that the Fund may invest all its
assets in a diversified, open-end management investment company, or a series
thereof, with substantially the same investment objective, policies and
restrictions as such Fund, without regard to the limitations set forth in this
paragraph (1);
(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, including mortgage passthrough
securities), 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 the Fund's investment program may be deemed to be
an underwriting; and provided further, that the purchase by the Fund of
securities issued by a diversified, open-end management investment company, or
a series thereof, with substantially the same investment objective, policies
and restrictions as such Fund shall not constitute an underwriting for purposes
of this paragraph (4);
(5) make investments for the purpose of exercising control or
management; provided that the Fund may invest all its assets in a diversified,
open-end management
3
<PAGE> 57
company, or a series thereof, with substantially the same investment objective,
policies and restrictions as such Fund, without regard to the limitations set
forth in this paragraph (5);
(6) 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 borrowings exceed
5% of its net assets);
(7) make loans of portfolio securities having a value that
exceeds 33 1/3% of the current value of its total assets, provided that, this
restriction does not apply to the purchase of fixed time deposits, repurchase
agreements, commercial paper and other types of debt instruments commonly sold
in a public or private offering; nor
(8) purchase securities of any issuer (except securities issued
or guaranteed by the U.S. Government, its agencies or 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, provided that the Fund
may invest all its assets in a diversified, open-end management investment
company, or a series thereof, with substantially the same investment objective,
policies and restrictions as such Fund, without regard to the limitations set
forth in this paragraph (8).
With respect to fundamental investment policy (7), the Fund and
the Master Portfolio do not intend to loan their portfolio securities during
the coming year.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The Fund and the Master
Portfolio are subject to the following investment restrictions, all of which
are non-fundamental policies. These restrictions may be changed by a 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 Fund nor the Master Portfolio may:
(1) 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) purchase or sell real estate limited partnership interests;
(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 if, by reason
thereof, the value of its aggregate investment in such securities will exceed
5% of its total assets;
4
<PAGE> 58
(4) purchase securities of any issuer (except securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities) if, as
a result, more than 5% of the value of the Fund's total assets would be
invested in the securities of any one issuer;
(5) invest more than 15% of the Fund's net assets in illiquid
securities. For this purpose, illiquid securities include, among others, (a)
securities that are illiquid by virtue of the absence of a readily available
market or legal or contractual restrictions on resale, (b) fixed time deposits
that are subject to withdrawal penalties and that have maturities of more than
seven days, and (c) repurchase agreements not terminable within seven days;
(6) In addition, as a matter of non-fundamental policy, the
Fund may invest in shares of other open-end, management investment companies,
subject to the limitations of Section 12(d)(1) of the 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; nor
(7) invest more than 25% of their respective net assets in
securities of foreign governmental and foreign private issues that are
denominated in and pay interest in U.S. dollars.
Notwithstanding any other investment policy or limitation (whether
or not fundamental), the Fund may invest all of its assets in the securities of
a single open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the Fund. A
decision to so invest all of its assets may, depending on the circumstances
applicable at the time, require approval of shareholders.
MANAGEMENT
The following information supplements and should be read in
conjunction with the section in the prospectus entitled "The Funds 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, Age and Address Position During Past 5 Years
- --------------------- -------- ---------------------
<S> <C> <C>
Jack S. Euphrat, 74 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.
</TABLE>
5
<PAGE> 59
<TABLE>
<S> <C> <C>
*R. Greg Feltus, 45 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, 54 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, 47 Director Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource
Management.
*W. Rodney Hughes, 70 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901
</TABLE>
6
<PAGE> 60
<TABLE>
<S> <C> <C>
Robert M. Joses, 78 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
*J. Tucker Morse, 52 Director Private Investor; Real Estate
10 Legrae Street Developer; Chairman of
Charleston, SC 29401 Renaissance Properties Ltd.;
President of Morse
Investment Corporation; and
Co-Managing Partner of
Main Street Ventures.
Richard H. Blank, Jr., 40 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 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
</TABLE>
7
<PAGE> 61
<TABLE>
<S> <C> <C>
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 directors and officers 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, prior to January 1, 1996 and the reorganization of
Wells Fargo Nikko Investment Advisors, a former affiliate of Wells Fargo was
considered to be in the same "fund complex," as such term is defined in Form
N-1A under the 1940 Act, as the Company. Effective January 1, 1996, the
Company, Stagecoach Funds, Inc., Stagecoach Trust, Life & Annuity Trust and
Master Investment Trust are considered to be members of the same fund complex
and are no longer part of the same fund complex as MasterWorks Funds Inc.,
Master Investment Portfolio and Managed Series Investment Trust. 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 Master Portfolio (which has the same investment objective as the
Fund, and in which the Fund invests all its assets) is advised by Wells Fargo.
The Advisory Contract provides that Wells Fargo 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
Contract, Wells Fargo furnishes to the Board of Trustees of the Trust periodic
reports on the investment strategy and performance of the Master Portfolio.
Wells Fargo has agreed to provide to the 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 Master Portfolio.
8
<PAGE> 62
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 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 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.
Wells Fargo also serves as Custodian and Transfer and Dividend
Disbursing Agent for both the Fund and the Master Portfolio. See "Custodian
and Transfer and Dividend Disbursing Agent."
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 Master Portfolio.
Under the respective Administration Agreements with the Company and the Trust,
Stephens furnishes the Company and the Trust with office facilities, together
with those ordinary clerical and bookkeeping services that are not furnished by
Wells Fargo. Stephens also has entered into a Distribution Agreement with the
Company pursuant to which Stephens has the responsibility of distributing
shares of the Fund.
Custodian and Transfer and Dividend Disbursing Agent. Wells Fargo
has been retained to act as custodian and transfer and dividend disbursing
agent for the Fund and the Master Portfolio. The custodian, among other
things, maintains a custody account or accounts in the name of the Fund and the
Master Portfolio, receives and delivers all assets for the Fund and the 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 Master Portfolio and pays all expenses of the Fund and the Master
Portfolio. For its services as custodian, Wells Fargo receives an asset-based
fee and transaction charges from the Master Portfolio; and for its services as
transfer and dividend disbursing agent, it receives a base fee and per-account
fees from the Fund.
Collective Investment Fund Management Fees. Prior to September 1,
1996, Wells Fargo provided management and administrative services to the
Collective Investment Fund. For these services Wells Fargo charged fees at an
annual rate of 0.75% of the Collective Investment Fund's average net assets.
Wells Fargo was also entitled to be reimbursed by the Collective Investment
Fund for expenses incurred on its behalf, excluding costs incurred in
establishing and organizing the Fund. The Collective Investment Fund was
entitled to pay up to 0.10% of its net assets for "Audit Expenses." There were
no sales charges. The Collective Investment Fund paid all brokerage
commissions incurred on its portfolio transactions.
DISTRIBUTION PLANS
The following information supplements and should be read in
conjunction with the Prospectus section entitled "Distribution Plans." As
indicated in the Prospectus, the
9
<PAGE> 63
Fund, on behalf of each class of its shares, has adopted a Plan under Section
12(b) of the Act and Rule 12b-1 thereunder (the "Rule"). Each Plan was adopted
by 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 Plans or in any agreement related to the Plans (the
"Qualified Directors"). Under the Plans and pursuant to the Distribution
Agreement, the Fund may pay the distributor 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 0.75% of the respective average
daily net assets of each of the Class B and Class D Shares of the Fund as
compensation for distribution-related services and as reimbursement for
distribution related expenses. 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.
Each Plan will continue in effect from year to year if its
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 Fund. 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, 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.
The Plans require 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 therefore) under such 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.
SERVICING PLAN
As indicated in the Fund's Prospectus, the Fund has adopted
Servicing Plans ("Servicing Plans") with respect to each of its Class B and
Class D Shares.
Under the Servicing Plans and pursuant to the Servicing
Agreements, the Fund may pay one or more servicing agents, as compensation for
performing shareholder administrative and liaison 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 B and 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 for successive annual
periods provided that such Plans are not specifically terminated by a majority
vote of both the
10
<PAGE> 64
Directors of the Company and the Servicing Plans 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 Plans 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 B or Class D Shares of the Fund. The Servicing Plans
may not be amended to increase materially the amount payable thereunder without
the approval of a majority of the outstanding Class B or Class D Shares of the
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 Company's Administrator 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.
PERFORMANCE CALCULATIONS
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 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
redeemable 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 also may, 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 would 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.
In addition to the above performance information, the Fund may
also advertise the cumulative total return of a Class. The cumulative total
return for such periods is based on the overall percentage change in value of a
hypothetical investment in a class of shares, assuming all dividends and
capital gain distributions are reinvested in shares of that class, without
reflecting the effect of any sales charge that would be paid by an investor,
and is not annualized.
Performance information may be advertised for non-standardized
periods, including year-to-date and other periods less than a year.
The total return information presented below and advertised by the
Fund for the period prior to September ___, 1996, the date the Fund commenced
operations, is based upon the prior performance of the Collective Investment
Fund. The performance information is adjusted to reflect each Class' current
level of operating expenses.
11
<PAGE> 65
Average Annual Total Return*
<TABLE>
<CAPTION>
Commencement Commencement
of Operations of Operations to Eight-Month Period
Class 12/31/95 Year Ended 12/31/95 8/31/96 Ended 8/31/96
------ ------------- --------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
A % % % %
B % % % %
D % % % %
</TABLE>
- -------------------------
* Reflects the performance of the Collective Investment Fund adjusted to reflect
the current level of expenses and up-front or contingent deferred sales
charges applicable to each class of shares.
Cumulative Total Return*
------------------------
<TABLE>
<CAPTION>
Commencement of Commencement of
Operations to Operations to
Class 12/31/95 8/31/96
----- ---------------- ---------------
<S> <C> <C>
A % %
B % %
D % %
</TABLE>
- -------------------------
* Reflects the performance of the Collective Investment Fund adjusted to reflect
the current level of expenses and up-front or contingent deferred sales
charges applicable to each class of shares.
From time to time and only to the extent the comparison is
appropriate for 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 the
1-Year Treasury Bill Rate, the S&P Index, the Dow Jones Industrial Average, the
Lehman Brothers 20+ Years 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.
12
<PAGE> 66
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 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 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.
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, 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 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 may also disclose in advertising and other types of
literature, information and statements the distribution rate on the shares of
each class of the Fund.
13
<PAGE> 67
Distribution rate is the amount determined by dividing the dollar amount per
share of the most recent dividend by the most recent NAV per share.
The Company also may discuss in advertising and other types of
literature that the Fund has 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 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 the unavailability of,
information relating to the Fund or its investments. The Company may compare
the performance of the Fund with other investments that are assigned ratings by
the 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 advertising and other types of
literature, information and statements that the Company's investment adviser,
Wells Fargo, 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
("WFIM"). As of September __, 1996, IMG had $56 billion in assets under
management.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the Prospectus section entitled "Purchase of Shares."
Net asset value per share for each class of the Fund and net asset
value per unit of the Master Portfolio are each determined by Wells Fargo on
each day the Exchange is open for trading as of the close of regular trading on
the Exchange, which is currently 4:00 p.m. New York time.
Securities of the Master Portfolio for which market quotations are
available are valued at latest prices. Any security for which the primary
market is an exchange is valued at the last sale price on such exchange on the
day of valuation or, if there was no sale on such day, the latest bid price
quoted on such day. 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
Master Portfolio other than money market instruments maturing in 60 days or
less are valued at
14
<PAGE> 68
latest quoted bid prices. Prices may be furnished by a reputable independent
pricing service approved by the Board of Trustees. Prices provided by an
independent pricing service may be determined without exclusive reliance on
quoted prices and may take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. All other securities and other assets of the Master Portfolio 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
the Master Portfolio's interests and the Fund's shares.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities by the Master Portfolio 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 Portfolio also may purchase portfolio securities in
underwritten offerings and may purchase securities directly from the issuer.
The cost of executing the Master Portfolio's portfolio securities transactions
consists primarily of dealer spreads and underwriting commissions. Under the
1940 Act, persons affiliated with the Trust are prohibited from dealing with
the Trust as a principal in the purchase and sale of securities unless an
exemptive order or other relief allowing such transactions is obtained from the
SEC or an exemption is otherwise available. The Master Portfolio may purchase
securities from underwriting syndicates of which Stephens or Wells Fargo 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.
The Trust has no obligation to deal with any dealer or group of
dealers in the execution of transactions in portfolio securities. Subject to
policies established by the Trust's Board of Trustees, Wells Fargo is
responsible for the Master Portfolio decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Company to obtain the
best overall terms 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 Master
Portfolio will not necessarily be paying the lowest spread or commission
available.
In assessing the best overall terms available for any transaction,
Wells Fargo considers factors deemed relevant, including the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. Wells Fargo may cause a Master Portfolio to pay a
15
<PAGE> 69
broker/dealer which furnishes brokerage and research services a higher
commission than that which might be charged by another broker/dealer for
effecting the same transaction, provided that Wells Fargo determines in
good faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker/dealer, viewed in terms
of either the particular transaction or the overall responsibilities of Wells
Fargo. Such brokerage and research services might consist of reports and
statistics relating to specific companies or industries, general summaries of
groups of stocks or bonds and their comparative earnings and yields, or broad
overviews of the stock, bond, and government securities markets and the
economy.
Supplementary research information so received is in addition to,
and not in lieu of, services required to be performed by Wells Fargo and
does not reduce the advisory fees payable by the Master Portfolios. The Board
of Trustees will periodically review the commissions paid by the Master
Portfolios to consider whether the commissions paid over representative periods
of time appear to be reasonable in relation to the benefits inuring to the
Master Portfolios. It is possible that certain of the supplementary research
or other services received will primarily benefit one or more other investment
companies or other accounts for which investment discretion is exercised.
Conversely, a Master Portfolio may be the primary beneficiary of the research
or services received as a result of portfolio transactions effected for such
other account or investment company.
Broker/dealers utilized by Wells Fargo may furnish statistical,
research and other information or services which are deemed by Wells Fargo to
be beneficial to the Master Portfolios' investment programs. Research services
received from brokers supplement Wells Fargo Bank's own research and may
include the following types of information: statistical and background
information on industry groups and individual companies; forecasts and
interpretations with respect to U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
political developments; portfolio management strategies; performance
information on securities and information concerning prices of securities; and
information supplied by specialized services to Wells Fargo and to the Trust's
Trustees with respect to the performance, investment activities and fees and
expenses of other mutual Funds. Such information may be communicated
electronically, orally or in written form. Research services may also include
the providing of equipment used to communicate research information, the
arranging of meetings with management of companies and the providing of access
to consultants who supply research information.
The outside research assistance is useful to Wells Fargo since
the brokers utilized by Wells Fargo Bank as a group tend to follow a broader
universe of securities and other matters than the staff of Wells Fargo can
follow. In addition, this research provides Wells Fargo with a diverse
perspective on financial markets. Research services which are provided to
Wells Fargo by brokers are available for the benefit of all accounts managed or
advised by Wells Fargo. It is the opinion of Wells Fargo that this material
is beneficial in supplementing their research and analysis; and, therefore, it
may benefit the Master Portfolios by improving the quality of Wells Fargo's
16
<PAGE> 70
investment advice. The advisoryfees paid by the Master Portfolios are not
reduced because Wells Fargo receives such services.
Portfolio Turnover. Portfolio turnover generally involves some
expenses to the Master Portfolio, including brokerage commissions or dealer
mark-ups and other transactions 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 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 deems portfolio changes appropriate.
FEDERAL INCOME TAX
The following information supplements and should be read in
conjunction with the Prospectus sections entitled "Dividends and Distributions"
and "Taxes." The Prospectus describes generally the tax treatment of
distributions by the Company. This section of the SAI includes additional
information concerning federal income tax.
Qualification of the Fund as a regulated investment company under
the Code requires, among other things, that (i) the Fund derive (a) at least
90% of its annual gross income from interest, payments with respect to
securities loans, dividends and gains from the sale or other disposition of
securities or options thereon; (ii) the Fund derive 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 (iii) the Fund diversify its
holdings so that, at the end of each quarter of the taxable year, (a) 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 (b) 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 or the securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar 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 stockholders at least 90% of the sum 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 to the
extent it does not meet certain minimum distribution requirements by the end of
each calendar year. For this purpose, any income or gain retained by the Fund
that is subject to income tax will be considered to have been distributed by
year-end. In addition, dividends and distributions declared payable as of a
record date in October, November or December of any calendar year are deemed
under the Code to have been distributed by the Fund and received by the
shareholders on December 31 of that calendar year if the dividend is actually
paid no later
17
<PAGE> 71
than January 31 of the following year. Such dividends will, accordingly, be
subject to income tax for the year in which the record date falls. The Fund
intends to distribute substantially all of its net investment income and net
capital gains and, thus, expects to avoid the excise tax.
Income and dividends received by the 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 the Fund does not expect to hold more than 50% of the value of its
total assets in securities of foreign issuers, the Fund does not expect to be
eligible to elect to "pass through" foreign tax credits to shareholders.
The Master Portfolio will be treated as a non-publicly traded
partnership rather than as a regulated investment company or a corporation
under the Code. As a non-publicly traded partnership under the Code, any
interest, dividends and gains or losses of the Master Portfolio will be deemed
to have been "passed through" to the Fund and other investors in the Master
Portfolio, regardless of whether such interest, dividends or gains have been
distributed by the Master Portfolio or losses have been realized by the Fund
and other investors. Therefore, to the extent the Master Portfolio were to
accrue but not distribute any interest, dividends or gains, or accrue losses,
the Fund would be deemed to have realized and recognized its proportionate
share of interest, dividends, gains or losses without receipt of any
corresponding distribution. However, the Trust will seek to minimize
recognition by investors of interest, dividends, gains or losses without a
corresponding distribution.
Gains or losses on sales of portfolio securities by the Master
Portfolio 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 the case
where the Master Portfolio acquires a put or writes 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 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. Gain recognized on the disposition of a debt obligation
(including tax-exempt obligations purchased after April 30, 1993) purchased by
the Master Portfolio at a market discount (generally, at a price less than its
principal amount) will be treated as ordinary income to the extent such accrued
market discount had not been previously included as taxable income during the
period of time the Master Portfolio held the debt obligation.
18
<PAGE> 72
As of the printing of this SAI, the maximum individual tax rate
applicable to ordinary income is 39.6% (effective rates may be higher for some
individuals due to phase out of exemptions and eliminations of deductions); the
maximum individual marginal tax rate applicable to net capital gains is 28%;
and the maximum marginal corporate tax rate applicable to ordinary income and
net capital gains is 35% (except that 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 up to $11,750 on taxable income exceeding $100,000 in a
taxable year and corporations which have taxable income in excess of
$15,000,000 for a taxable year will be required to pay an additional tax of up
to $100,000). Naturally, the amount of tax payable by an individual or
corporation will be affected by a combination of tax laws covering, for
example, deductions, credits, deferrals, exemptions, sources of income and
other matters.
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 in 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 Company, ownership of its shares has or
may become concentrated to an extent that could cause the Company to be deemed
a personal holding company within the meaning of the Code, the Company may
require the redemption of shares or reject any order for the purchase of shares
in an effort to prevent such concentration.
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, 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.
19
<PAGE> 73
Other Matters. Investors should be aware that the investments to
be made by the Master Portfolio may involve sophisticated tax rules such as
marked to market rules that would result in income or gain recognition by the
Master Portfolio without corresponding current cash receipts. Although the
Master Portfolio will seek to avoid significant noncash income, such noncash
income could be recognized by the 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.
CAPITAL STOCK
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Organization and
Capital Stock."
The Fund is comprised of three classes of shares, Class A Shares,
Class B 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
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 an advisory contract is a matter to be determined separately by the
Fund. 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 the Fund, means the vote of the lesser of (i) 67% of the shares of
such class of the Fund represented at a meeting if the holders of more than 50%
of the outstanding shares of such class of the Fund are present in person or by
proxy, or (ii) more than 50% of the outstanding shares of such class 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.
However, the Company 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 of the holders of at least 10% of the Company's
outstanding voting securities, and to assist in communicating with other
shareholders as required by Section 16(c) of the Act.
20
<PAGE> 74
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 the Fund that are
available for distribution, and a distribution of any general assets not
attributable to the Fund 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. However, 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 Master Portfolio 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 the Fund is requested to vote on a matter with respect to
the 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 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 September __, 1996, Stephens owned approximately 99% of the
outstanding Class A, Class B and Class D Shares of the Fund and such could be
considered
21
<PAGE> 75
a "control person" of the Fund for purposes of the 1940 Act. However, upon
commencement of the initial public offering of the Fund's shares, it is
expected that Stephens will own a significantly smaller percentage of the
Fund's outstanding voting securities and will no longer be considered a control
person of the Fund.
OTHER
The Registration Statements 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 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 Securities & Exchange Commission filings. KPMG Peat
Marwick LLP's address is Three Embarcadero Center, San Francisco, California
94111.
FINANCIAL INFORMATION
The portfolio of investments, financial statements and independent
auditors' reports for the Company's other Funds is contained in the Company's
Annual Report which is available by calling 1-800-222-8222.
22
<PAGE> 76
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> 77
OVERLAND EXPRESS FUNDS, INC.
FILE NO. 33-16296; 811-8275
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Not Applicable.
(b) Exhibits:
Exhibit
Number Description
- ------- -----------
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, incorporated by
reference to Post-Effective Amendment No. 33 filed on May 1,
1996.
(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.
(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.
C-1
<PAGE> 78
(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.
(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.
C-2
<PAGE> 79
(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, incorporated
by reference to Post-Effective Amendment No. 33 filed on May 1,
1996.
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.
(a)(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.
(a)(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.
(a)(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.
(a)(v) - Administration Agreement on behalf of the Money Market Fund,
incorporated by reference to Post-Effective Amendment No. 6
filed on August 2, 1989.
(a)(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.
(a)(vii) - Administration Agreement on behalf of the Municipal Income
Fund, incorporated by reference to Post-Effective Amendment No.
16 filed on January 17, 1992.
(a)(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 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.
(a)(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.
(a)(x) - Administration Agreement on behalf of the Strategic Growth
Fund, incorporated by reference to Post-Effective Amendment No.
22 filed on May 28, 1993.
C-3
<PAGE> 80
(a)(xi) - Administration Agreement with Stephens Inc. on behalf of the
National Tax-Free Institutional Money Market Fund, incorporated
by reference to Post-Effective Amendment No. 33 filed on May 1,
1996.
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, incorporated
by reference to Post-Effective Amendment No. 33 filed on May 1,
1996.
(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.
(d)(vii) - Servicing Plan on behalf of the Class D Shares of the Small
Cap Strategy Fund, filed herewith.
10 - Opinion and Consent of Counsel, filed herewith.
11 - Not Applicable.
12(a) - None.
C-4
<PAGE> 81
13 - Investment Letter, incorporated by reference to Pre-Effective
Amendment No. 2 filed on April 4, 1988.
14 - Not Applicable.
15(a)(i) - 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.
(a)(ii) - 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.
(b)(i) - 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.
(b)(ii) - 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.
(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)(i) - 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.
(d)(ii) - 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.
(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)(i) - 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.
(f)(ii) - 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.
(g)(i) - 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.
(g)(ii) - 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.
C-5
<PAGE> 82
(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)(i) - 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.
(j)(ii) - 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.
(k) - 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.
(l) - Distribution Plan on behalf 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.
(m)(i) - Distribution Plan on behalf of the Class A Shares of the Small
Cap Strategy Fund, filed herewith.
(m)(ii) - Distribution Plan on behalf of the Class D Shares of the Small
Cap Strategy Fund, filed herewith.
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 - Amended Rule 18f-3 Multi-Class Plan, filed herewith.
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.
Item 25. Persons Controlled by or under Common Control with Registrant.
As of May 31, 1996, the Strategic Growth and National Tax-Free
Institutional Money Market Funds owned approximately 87% and 99% of the
outstanding beneficial interests of the
C-6
<PAGE> 83
Capital Appreciation and Tax-Free Money Market Master Portfolios, respectively,
of Master Investment Trust ("MIT"). As of May 31, 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 May 31, 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 1,043
Class D 471
California Tax-Free Bond Fund
Class A 3,922
Class D 55
California Tax-Free Money Market Fund 1,787
Money Market Fund
Class A 1,395
Institutional Class 291
Municipal Income Fund
Class A 1,182
Class D 226
Overland Sweep Fund 2,672
Short-Term Municipal Income Fund 27
Short-Term Government-Corporate Income Fund 10
Strategic Growth Fund
Class A 5,008
Class D 1,680
U.S. Government Income Fund
Class A 570
Class D 59
U.S. Treasury Money Market Fund
Class A 665
Institutional Class 83
</TABLE>
C-7
<PAGE> 84
<TABLE>
<S> <C>
Variable Rate Government Fund
Class A 1,425
Class D 70
National Tax-Free Institutional Money Market Fund 56
</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 Small Cap Strategy Fund, 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 are feeder funds in master/feeder structures that do not currently
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.
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
C-8
<PAGE> 85
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(00) 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
Director and 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
Director of Turner Casting Corp.
P.O. Box 1099
Cudahy, CA 90201
Director of The Bakersfield Californian
P.O. Box 440
1707 I Street
</TABLE>
C-9
<PAGE> 86
<TABLE>
<S> <C>
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
Director of Enron Corp.
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333
</TABLE>
C-10
<PAGE> 87
<TABLE>
<S> <C>
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
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
</TABLE>
C-11
<PAGE> 88
<TABLE>
<S> <C>
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
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>
C-12
<PAGE> 89
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
at BGFA
- ------- Principal Business(es) During at
Least the Last Two Fiscal Years
---------------------------------
<S> <C>
Frederick L.A. Grauer Chairman and Director of WFNIA and WFITC
Chairman, Director 45 Fremont Street, San Francisco, CA 94105
Donald L. Luskin Chief Executive Officer of WFNIA's Defined Contribution Group
Vice Chairman & Director 45 Fremont Street, San Francisco, CA 94105
Irving Cohen Chief Financial Officer and Chief Operating Officer of Barclays
Director 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)
222 Broadway, New York, NY 10038
Andrea M. Zolberti Chief Financial Officer of WFNIA and WFITC
Chief Financial Officer 45 Fremont Street, San Francisco, CA 94105
Vincent J. Bencivenga Previously Vice President at State Street Bank & Trust Company
Chief Fiduciary Officer One Financial Center, Boston, MA 02111
</TABLE>
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.
C-13
<PAGE> 90
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., MasterWorks Funds Inc.
(formerly, 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 Nations Institutional Reserves (formerly, 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).
(c) Not applicable.
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.
(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.
C-14
<PAGE> 91
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) Registrant undertakes to file a post-effective amendment to the
Registration Statement, for the Small Cap Strategy Fund using
financial statements which need not be certified, within four to six
months from the effective date of this Registration Statement.
(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.
(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-15
<PAGE> 92
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to its 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 1st day of July, 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
Post-Effective Amendment to the Registration Statement on Form N-1A has been
signed below by the following persons in the capacities and on the date
indicated:
Signature Title
- --------- -----
* Director, Chairman and 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)
July 1, 1996
*By /s/Richard H. Blank, Jr.
---------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
<PAGE> 93
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to the Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Little Rock, State of
Arkansas, on the 1st day of July, 1996.
MASTER INVESTMENT TRUST
By: /s/ Richard H. Blank, Jr.
-----------------------------------
Richard H. Blank, Jr.
Secretary and Treasurer
(Principal Financial Officer)
Signature Title
- --------- -----
* 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)
July 1, 1996
*By /s/Richard H. Blank, Jr.
---------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
<PAGE> 94
OVERLAND EXPRESS FUNDS, INC.
SEC FILE NOS. 33-16296; 811-8275
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
EX-99.B9(vii) o Servicing Plan on behalf of the Class D Shares of the Small
Cap Strategy Fund
EX-99.10 o Opinion and Consent of Counsel
EX-99.B15(m)(i) o Distribution Plan on behalf of the Class A Shares of the
Small Cap Strategy Fund
EX-99.B15(m)(ii) o Distribution Plan on behalf of the Class D Shares of the
Small Cap Strategy Fund
EX-99.B18 o Amended Rule 18f-3 Multi-Class Plan
</TABLE>
<PAGE> 1
EX 99.B9(vii)
OVERLAND EXPRESS FUNDS, INC.
SMALL CAP STRATEGY FUND
SERVICING PLAN
CLASS D SHARES
Section 1. Each of the proper officers of Overland Express Funds, Inc.
(the "Company") is authorized to execute and deliver, in the name and on behalf
of the Company, written shareholder servicing agreements based substantially on
the form attached hereto as Appendix A or any other form duly approved by the
Company's Board of Directors ("Agreements") with broker/dealers, banks and
other financial institutions that are dealers of record or holders of record or
that have a servicing relationship with the beneficial owners of Class D shares
("Servicing Agents") in the Company's Small Cap Strategy Fund (the "Fund").
Pursuant to such Agreements, Servicing Agents shall provide shareholder
administrative and liaison services as set forth therein to their clients who
beneficially own Class D shares of the Fund in consideration of a fee, computed
monthly in the manner set forth in the Fund's then current prospectus, at an
annual rate of up to 0.25% of the average daily net asset value of the Class D
shares beneficially owned by or attributable to such clients. The Company's
distributor, administrator and adviser and their respective affiliates are
eligible to become Servicing Agents and to receive fees under this Servicing
Plan. All expenses incurred by the Fund in connection with the Agreements and
the implementation of this Servicing Plan shall be borne entirely by the
holders of the Class D shares of the Fund.
Section 2. The Company's administrator shall monitor the arrangements
pertaining to the Company's Agreements with Servicing Agents. The Company's
administrator shall not, however, be obligated by this Servicing Plan to
recommend, and the Company shall not be obligated to execute, any Agreement
with any qualifying Servicing Agents.
Section 3. So long as this Servicing Plan is in effect, the Company's
administrator shall provide to the Company's Board of Directors, and the
Directors shall review, at least quarterly, a written report of the amounts
expended pursuant to this Servicing Plan and the purposes for which such
expenditures were made.
Section 4. The Plan shall be effective on the date upon which it is
approved by "vote of a majority of the outstanding voting securities," as
defined in the Investment Company Act of 1940, as amended, and rules and
regulations thereunder, of Class D shares of the Fund and a majority of the
Directors of the Company, including a majority of the Qualified Directors,
pursuant to a vote cast in person at a meeting or meetings called for the
purpose of voting on the approval of the Plan, or on the date the Fund
commences operations, if such date is later.
1
<PAGE> 2
Section 5. Unless sooner terminated, this Servicing Plan (and each
related agreement) shall continue in effect for a period of one year from its
effective date and shall continue thereafter for successive annual periods,
provided that such Plan is not specifically terminated by a majority of the
Board of Directors, including a majority of the Directors who are not
"interested persons," as defined in the Investment Company Act of 1940, of the
Company and have no direct or indirect financial interest in the operation of
this Servicing Plan or in any Agreement related to this Servicing Plan (the
"Disinterested Directors") cast in person at a meeting called for the purpose
of voting on such approval.
Section 6. This Servicing Plan may be amended at any time with respect to
the Fund by the Company's Board of Directors, provided that any material
amendment of the terms of this Servicing Plan (including a material increase of
the fee payable hereunder) shall become effective only upon the approvals set
forth in Section 5.
Section 7. This Servicing Plan is terminable at any time with respect to
the Fund by vote of a majority of the Disinterested Directors.
Section 8. While this Servicing Plan is in effect, the selection and
nomination of the Disinterested Directors shall be committed to the discretion
of such Disinterested Directors.
Section 9. Notwithstanding anything herein to the contrary, the Fund
shall not be obligated to make any payments under this Plan that exceed the
maximum amounts payable under Article III, Section 26 of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
Section 10. The Company will preserve copies of this Servicing Plan,
Agreements, and any written reports regarding this Servicing Plan presented to
the Board of Directors for a period of not less than six years.
Dated: ______, 1996
2
<PAGE> 1
EX-99.B10
July 2, 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. 34 and Amendment No. 36 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 Small Cap Strategy Fund 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.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance and sale of the Shares by the Company, upon completion of
such corporate action as is deemed necessary or appropriate, will be duly and
validly authorized by such corporate action, and assuming delivery by sale or
in accord with the Fund's dividend reinvestment plan, in accordance with the
description set forth in the Fund's current prospectus 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.
<PAGE> 2
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 "Management of the Fund and the Master
Portfolio" 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.B15(m)(i)
DISTRIBUTION PLAN
SMALL CAP STRATEGY FUND
A SERIES OF
OVERLAND EXPRESS FUNDS, INC.
CLASS A SHARES
WHEREAS, Overland Express Funds, Inc. (the "Company") is an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Company desires to adopt a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act on behalf of the Class A shares of the
Small Cap Strategy Fund (the "Fund"), and the Board of Directors, including a
majority of the Qualified Directors (as defined below), has determined that
there is a reasonable likelihood that adoption of the Plan will benefit the
Fund and its Class A shareholders;
NOW, THEREFORE, the Fund hereby adopts the Plan in accordance with Rule
12b-1 under the Act on the following terms and conditions:
Section 1. Pursuant to the Plan, the Fund may defray all or part of the
actual cost of preparing and printing prospectuses and other promotional
materials and of providing such prospectuses and other promotional materials to
prospective shareholders of the Fund and may compensate personnel of the
distributor or reimburse the distributor for compensation paid to selling
agents for distribution-related or sales support services and may pay for any
other activities primarily intended to result in the sale of Class A shares of
the Fund. Payments also may be used to compensate or reimburse servicing
agents for shareholder liaison services provided by entities that are dealers
of record or that have a servicing relationship with the beneficial owners of
Class A shares of the Fund under a shareholder servicing agreement in
substantially the form approved by the Board of Directors. Total payments
under the Plan may not exceed 0.25% of the average daily net assets of the
Class A shares of the Fund on an annual basis.
Section 2. The Plan shall be effective on the date upon which it is
approved by "vote of a majority of the outstanding voting securities" (as
defined below) of Class A shares of the Fund and a majority of the Directors of
the Company, including a majority of the Qualified Directors, pursuant to a
vote cast in person at a meeting or meetings called for the purpose of voting
on the approval of the Plan, or the date the Fund commences operations, if such
date is later.
Section 3. The Plan (and each related Agreement) will continue in effect
for one year from its effective date, unless earlier terminated in accordance
with its terms, and will remain in effect from year to year if such continuance
is specifically approved at least annually by vote of a majority of both (a)
the Directors of the Company and (b) the Qualified Directors, cast in person at
a meeting (or meetings) called for the purpose of voting on such approval.
<PAGE> 2
Section 4. The Company shall provide to the Company's Board of Directors
and the Directors shall review, at least quarterly, a written report of the
amounts expended by the Company under the Plan and each related Agreement and
the purposes for which such expenditures were made.
Section 5. The Plan may be terminated at any time by vote of a majority
of the Qualified Directors or by vote of a majority of the outstanding voting
securities of the Class A shares of the Fund.
Section 6. All agreements related to the Plan shall be in writing and
shall be approved by vote of a majority of both (a) the Directors of the
Company and (b) the Qualified Directors, cast in person at a meeting called for
the purpose of voting on such approval. Any agreement related to the Plan
shall provide:
A. That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Qualified
Directors or by vote of a majority of the outstanding voting
securities of the Class A shares of the Fund, on not more than 60
days' written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of
its "assignment" (as defined below).
Section 7. The Plan may not be amended to increase materially the amount
that may be expended by the Fund pursuant to the Plan without the approval by a
vote of a majority of the outstanding voting securities of Class A shares of
the Fund, and no material amendment to the Plan shall be made unless approved
by vote of a majority of both (a) the Directors of the Company and (b) the
Qualified Directors, cast in person at a meeting (or meetings) called for the
purpose of voting on such approval.
Section 8. While the Plan is in effect, the selection and nomination of
each Director who is not an "interested person" (as defined below) of the
Company shall be committed to the discretion of the Directors who are not
interested persons.
Section 9. To the extent any payments made by the Fund pursuant to a
Servicing Agreement are deemed to be payments for the financing of any activity
primarily intended to result in the sale of Class A shares within the context
of Rule 12b-1 under the Act, such payments shall be deemed to have been
approved pursuant to this Plan. Notwithstanding anything herein to the
contrary, the Fund shall not be obligated to make any payments under this Plan
that exceed the maximum amounts payable under Article III, Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
Section 10. The Company shall preserve copies of the Plan, each related
agreement and each report made pursuant to Section 6 hereof, for a period of
not less than six years from the
<PAGE> 3
date of the Plan, such agreement or such report, as the case may be, the first
two years in an easily accessible place.
Section 11. As used in the Plan, (a) the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting securities" shall
have the respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemption as may be granted by the Securities and
Exchange Commission and (b) the term "Qualified Directors" shall mean the
Directors of the Company who are not interested persons of the Company and have
no direct or indirect financial interest in the operation of the Plan or in any
Agreements related to the Plan.
Effective Date of Plan: ________, 1996
<PAGE> 1
EXHIBIT-99.b15(m)(ii)
DISTRIBUTION PLAN
SMALL CAP STRATEGY FUND
A SERIES OF
OVERLAND EXPRESS FUNDS, INC.
CLASS D SHARES
WHEREAS, Overland Express Funds, Inc. ("Company") is an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended ("Act"); and
WHEREAS, the Company desires to adopt a Distribution Plan ("Plan")
pursuant to Rule 12b-1 under the Act on behalf of the Class D shares of the
Small Cap Fund ("Fund") and the Board of Directors, including a majority of the
Qualified Directors (as defined below), has determined that there is a
reasonable likelihood that adoption of the Plan will benefit the Fund and its
Class D shareholders;
NOW THEREFORE, the Fund hereby adopts the Plan in accordance with Rule
12b-1 under the Act on the following terms and conditions:
Section 1. Pursuant to the Plan, the Company may pay to Stephens Inc.
("Distributor"), as compensation for distribution-related services provided, or
reimbursement for distribution-related expenses incurred, a monthly fee at an
annual rate of up to 0.75% of the Fund's average daily net assets attributable
to Class D shares. The actual fee payable to the Distributor shall, within
such limit, be determined from time to time by mutual agreement between the
Company and the Distributor. 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 hereunder to
compensate it for distribution-related services provided by it or to reimburse
it for other distribution-related expenses.
Section 2. The Plan shall be effective on the date upon which it is
approved by "vote of a majority of the outstanding voting securities" (as
defined below) of Class D shares of the Fund and a majority of the Directors of
the Company, including a majority of the Qualified Directors, pursuant to a
vote cast in person at a meeting or meetings called for the purpose of voting
on the approval of the Plan, or on the date the Fund commences operations, if
such date is later.
Section 3. The Plan (and each related agreement) will continue in
effect for one year from its effective date, unless earlier terminated in
accordance with its terms, and will remain in effect from year to year
thereafter if such continuance is specifically approved at least annually by
vote of a majority of both (a) the Directors of the Company and (b) the
1
<PAGE> 2
Qualified Directors, cast in person at a meeting (or meetings) called for the
purpose of voting on such approval.
Section 4. The Company shall provide to the Company's Board of
Directors and the Directors shall review, at least quarterly, a written report
of the amounts expended by the Company under the Plan and each related
agreement and the purposes for which such expenditures were made.
Section 5. The Plan may be terminated at any time by vote of a
majority of the Qualified Directors or by vote of a majority of the outstanding
voting securities of Class D shares of the Fund.
Section 6. All agreements related to the Plan shall be in writing and
shall be approved by vote of a majority of both (a) the Directors of the
Company and (b) the Qualified Directors, cast in person at a meeting called for
the purpose of voting on such approval. Any agreement related to the Plan
shall provide:
A. That such agreement may be terminated at any time, without payment
of any penalty, by vote of a majority of the Qualified Directors
or by vote of a majority of the outstanding voting securities of
Class D shares of the Fund, on not more than 60 days' written
notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of
its "assignment" (as defined below).
Section 7. The Plan may not be amended to increase materially the
amount that may be expended by the Fund pursuant to the Plan without the
approval by a vote of a majority of the outstanding voting securities of Class
D shares of the Fund, and no material amendment to the Plan shall be made
unless approved by vote of a majority of both (a) the Directors of the Company
and (b) the Qualified Directors, cast in person at a meeting (or meetings)
called for the purpose of voting on such approval.
Section 8. While the Plan is in effect, the selection and nomination
of each Director who is not an "interested person" (as defined below) of the
Company shall be committed to the discretion of the Directors who are not
interested persons.
Section 9. To the extent any payments made by the Fund pursuant to a
Servicing Agreement are deemed to be payments for the financing of any activity
primarily intended to result in the sale of Class D shares within the context
of Rule 12b-1 under the Act, such payments shall be deemed to have been
approved pursuant to this Plan. Notwithstanding anything herein to the
contrary, the Fund shall not be obligated to make any payments under this Plan
that exceed the maximum amounts payable under Article III, Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
<PAGE> 3
Section 10. The Company shall preserve copies of the Plan, each
related agreement and each report made pursuant to Section 4 hereof, for a
period of not less than six years from the date of the Plan; such agreement or
such report, as the case may be, the first two years in an easily accessible
place.
Section 11. As used in the Plan, (a) the terms "assignment,"
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and rules
and regulations thereunder, subject to such exemption as may be granted by the
Securities and Exchange Commission and (b) the term "Qualified Directors" shall
mean the Directors of the Company who are not interested persons of the Company
and have no direct or indirect financial interest in the operation of the Plan
or in any agreements related to the Plan.
Effective Date of Plan: _______, 1996
<PAGE> 1
EXHIBIT-99.B18
OVERLAND EXPRESS FUNDS, INC.
RULE 18F-3 MULTI-CLASS PLAN
I. INTRODUCTION
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act"), the following sets forth the method for allocating
fees and expenses among each class of shares in the investment portfolios
("Funds") of Overland Express Funds, Inc. (The "Company"). In addition, this
Rule 18f-3 Multi-Class Plan (the "Plan") sets forth the maximum initial sales
charges, contingent deferred sales charges ("CDSCs"), Rule 12b-1 distribution
fees, shareholder servicing fees, conversion features, exchange privileges and
other shareholder services applicable to a particular class of shares of the
Funds.
The Company is an open-end series investment company registered under
the 1940 Act, the shares of which are registered on Form N-1A under the
Securities Act of 1933. Upon the effective date of Rule 18f-3, the Company
elected to offer multiple classes of shares of the Funds pursuant to the
provisions of Rule 18f-3 and this Plan. The Plan has been amended to reflect
the offerings of additional Funds. Under the Plan, there are no material
changes made to the existing class arrangements and expense allocations
previously approved by the Board of Directors of the Company pursuant to the
exemptive order issued under Section 6(c) of the 1940 Act to Overland Express
Funds, Inc., et al., Wells Fargo Bank, N.A. (the investment adviser of the
Company) (the "Bank") and Stephens Inc. (the principal underwriter of the
Company) ("Stephens"), on May 18, 1993 (I.C. Rel. No. 19479).
The Company (Registration Nos. 33-16296 and 811-8275) currently offers
or will offer the following fourteen separate Funds: 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, Small Cap,
Strategic Growth, U.S. Government Income, U.S. Treasury Money Market, and
Variable Rate Government Funds. Each of the National Tax-Free Institutional
Money Market, Overland Sweep, Short-Term Government- Corporate Income,
Short-Term Municipal Income, and Strategic Growth Funds invests all of its
assets in a separate portfolio (each, a "Master Portfolio") of Master
Investment Trust, an open-end management investment company, rather than
directly in a portfolio of securities. Each Master Portfolio has the same
investment objective as the Fund that invests its assets in the corresponding
Master Portfolio.
The Funds listed below are authorized to issue the following classes
of shares representing interests in such Funds:
(i) Class A shares and Class D shares: Asset Allocation,
California Tax-Fee Bond, Municipal Income, Strategic Growth,
U.S. Government Income and
<PAGE> 2
Variable Rate Government Funds (collectively, the "Non-Money
Market Multi-Class Funds");
(ii) Class A shares and Institutional Class shares: Money Market
Fund and U.S. Treasury Money Market Fund (collectively, the
"Money Market Multi-Class Funds"); and
(iii) Class A shares, Class D shares and Institutional shares:
Small Cap Strategy Fund (also a Non-Money Market Multi-Class
Fund).
The Non-Money Market Multi-Class Funds and the Money Market
Multi-Class Funds are referred to herein collectively as the
"Multi-Class Funds". The differences between these classes are
discussed below.
II. ALLOCATION OF EXPENSES.
Pursuant to Rule 18f-3 under the 1940 Act, the Company
allocates to each class of shares of a Multi-Class Fund (i) any fees and
expenses incurred by the Fund in connection with the distribution of such class
of shares under a distribution plan adopted for such class of shares pursuant
to Rule 12b-1, and (ii) any fees and expenses incurred by the Fund under a
servicing plan in connection with the provision of shareholder administrative
or liaison services to the holders of such class of shares. In addition,
pursuant to Rule 18f-3, the Company may allocate the following fees and
expenses to a particular class of shares of each Multi-Class Fund:
(i) transfer agent fees identified by the transfer agent as being
attributable to such class of shares;
(ii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, notices,
prospectuses, reports, and proxies to current shareholders of
that class or to regulatory agencies with respect to such
class of shares;
(iii) blue sky registration or qualification fees incurred by such
class of shares;
(iv) Securities and Exchange Commission registration fees incurred
by such class of shares;
(v) the expense of administrative personnel and services as
required to support the shareholders of such class of shares;
(vi) litigation or other legal expenses relating solely to such
class of shares; and
(vii) fees of the Company's Directors incurred as result of issues
relating to such class of shares.
<PAGE> 3
The initial determination of the class expenses that are
allocated by the Company to a particular class of shares and any subsequent
changes thereto will be reviewed by the Board of Directors of the Company and
approved by a vote of the Directors of the Company, including a majority of the
Directors who are not interested persons of the Company.
Income, realized and unrealized capital gains and losses, and
any expenses of a Multi-Class Fund not allocable to a particular class of the
Fund pursuant to the Plan shall be allocated to each class of the Fund based
upon the relative net asset value of that class in relation to the aggregate
net asset value of the Fund. In certain cases, Stephens, the Bank or another
service provider for a Multi-Class Fund may waive or reimburse all or a portion
of the expenses of a specific class of shares of the Multi-Class Fund. The
Board of Directors will monitor any such waiver or reimbursements to ensure
that they do not provide a means for cross-subsidization between classes.
III. CLASS ARRANGEMENTS.
The following summarizes the maximum initial sales
charges, CDSCs, Rule 12b-1 distribution fees, shareholder servicing fees,
conversion features, exchange privileges and other shareholder services
applicable to each class of shares of the Multi-Class Funds. Additional
details regarding such fees and services are set forth in the relevant Fund's
current Prospectus and Statement of Additional Information.
A. CLASS A SHARES --NON-MONEY MARKET MULTI-CLASS FUNDS
1. Maximum Initial Sales Charge: 4.50%, except for the
Municipal Income Fund and the Variable Rate
Government Fund, which have maximum initial sales
loads of 3.00%.
2. Contingent Deferred Sales Charge: None
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.25% of
average daily net assets attributable to Class A
shares, except for the California Tax-Free Bond Fund
and U.S. Government Income Fund, which have Rule
12b-1 fees equal to the greater of 0.05% of the
average daily net assets attributable to Class A
shares of each such Fund or $100,000.
4. Shareholder Servicing Fee: None
5. Conversion Features: None
6. Exchange Privileges: Class A shares of any Non-Money
Market Multi-Class Fund may be exchanged for shares
of the same class of any other Fund, or for shares of
a Fund with a single class of shares
<PAGE> 4
(a "Single-Class Fund"), provided that if the other
Fund charges a sales load on the purchase of its
shares that is higher than the sales load paid in
connection with the shares the investor is
exchanging, the investor pays the difference.
7. Other Class-Specific Shareholder Services: None
B. CLASS D SHARES--NON-MONEY MARKET MULTI-CLASS FUNDS
1. Maximum Initial Sales Charge: None
2. Contingent Deferred Sales Charge: Class D shares of
Non-Money Market Multi-Class Funds that are redeemed
within one year of the receipt of a purchase order
are subject to a CDSC equal to 1.00% of an amount
equal to the lesser of the net asset value ("NAV") at
the time of purchase of the Class D shares being
redeemed or the NAV of such shares at the time of
redemption. No CDSC is imposed on shares purchased
through reinvestment of dividends or capital gain
distributions.
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.75% of
average daily net assets attributable to Class D
shares, except for the California Tax-Free Bond Fund,
Municipal Income Fund, U.S. Government Income Fund
and Variable Rate Government Fund, which have Rule
12b-1 fees equal to 0.50% of average daily net assets
attributable to Class D shares.
4. Maximum Annual Shareholder Servicing Fee: 0.25% of
average daily net assets attributable to Class D
shares.
5. Conversion Features: None
6. Exchange Privileges: Class D shares of any Non-Money
Market Multi-Class Fund may be exchanged for Class D
shares of any other Non-Money Market Multi-Class Fund
or for Class A shares of the Money Market Fund.
7. Other Class-Specific Shareholder Services: None
C. INSTITUTIONAL CLASS SHARES -- NON-MONEY MARKET MULTI-CLASS
FUNDS
1. Maximum Initial Sales Charge: None
2. Contingent Deferred Sales Charge: None
3. Maximum Annual Rule 12b-1 Distribution Fee: None
<PAGE> 5
4. Maximum Annual Shareholder Servicing Fee: None
5. Conversion Features: None
6. Exchange Privileges: Institutional Class shares of
any non-Money Market Multi-Class Fund may be
exchanged for Institutional Class shares of any other
non-Money Market Multi-Class Fund, Class A shares or
Class B shares of another of the Company's Funds, or
for shares of the Company's single-class Funds.
7. Other Class-Specific Shareholders Services: None
D. CLASS A SHARES--MONEY MARKET MULTI-CLASS FUNDS
1. Maximum Initial Sales Charge: None
2. Contingent Deferred Sales Charge: None
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.25% of
average daily net assets attributable to Class A
shares.
4. Maximum Annual Shareholder Servicing Fee: None
5. Conversion Features: None
6. Exchange Privileges: Class A shares of either Money
Market Multi-Class Fund may be exchanged for Class A
shares or Class B shares of another of the Company's
Funds or for shares of one of the Company's
single-class Funds.
7. Other Class-Specific Shareholders Services: None
E. INSTITUTIONAL CLASS SHARES--MONEY MARKET MULTI-CLASS FUNDS
1. Maximum Initial Sales Charge: None
2. Contingent Deferred Sales Charge: None
3. Annual Rule 12b-1 Distribution Fee: None
4. Annual Shareholder Servicing Fee: None
5. Conversion Features: None
6. Exchange Privileges: Institutional Class shares of
either Money Market Multi-Class Fund may be exchanged
for Institutional Class shares of the other Money
Market Multi-Class Fund, Class A shares
<PAGE> 6
or Class B shares of another of the Company's Funds,
or for shares of one of the Company's single-class
Funds.
7. Other Class-Specific Shareholder Services: None
IV. BOARD REVIEW.
The Boards of Directors of the Company shall review the Plan as it
deems necessary. Prior to any material amendments(s) to the Plan with respect
to any Fund's shares, the Company's Board of Directors, including a majority of
the Directors that are not interested persons of the Company, shall find that
the Plan, as proposed to be amended (including any proposed amendments to the
method of allocating class and/or Fund expenses), is in the best interest of
each class of shares of the Fund individually and the Fund as a whole. In
considering whether to approve any proposed amendment(s) to the Plan, the
Directors of the Company shall request and evaluate such information as it
considers reasonably necessary to evaluate the proposed amendment(s) to the
Plan.
Adopted by the Company effective April 3, 1995.
Amended by the Company effective ______, 1996.
